Dpc Dash Ltd

Ladies and gentlemen, welcome to DPC-Limited Full Year 2024 Earnings Conference Call. All participants will be in listen-only mode during management's prepared remarks, and there will be a question and answer session to follow. Today's conference call will be recorded. At this time, I would like to turn the call over to Kathy Zong, our Director of DPC-DASH, who will share the process for today's call and provide some important disclosures. Please go ahead, ma'am.

Thank you, Operator. Hello everyone and thank you for joining us on today's call. Again, as a reminder, you are all currently on mute. We will open up the floor during Q&A session after management's prepared remarks. We will try to answer as many questions as time allows. Today you will hear from Eileen Wang, Executive Director and CEO of DPC-DASH, Helen Wu, CFO of DPC-DASH, and Michael Xu, CPO of DPC-DASH. Eileen will provide insights into company's overall performance and share recent developments While Helen will go a bit deeper into the 2024 financial results, the management team will address your questions after their remarks. Before we continue, I'd like to remind you that our earnings call and investment materials contain forward-looking statements about our business that may be considered as forward-looking statements. under applicable security laws, which are based on various assumptions and other factors that are beyond the company's control and are subject to risks, future events, and uncertainties. Accordingly, actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. You can identify these forward-looking statements because they include terminology such as may, will, expect, estimate, believe, going forward, plan, projection, aim, or other similar expressions. Statements that are not historical facts, including but not limited to the statements about the company's beliefs, plans, and expectations are forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the Hong Kong Stock Exchange. Also, this call includes discussions of financial information and certain non-IFRS financial measures. Please refer to our results announcement and annual report to be published in accordance with the rules governing the listing of securities on the Stock Exchange of Hong Kong Limited, which contain a reconciliation of the non-IFRS measures to IFRS measures. All information provided in this earnings call is as of the date of this call. The company, our affiliates, advisors, and representatives undertake no obligation to update any forward-looking statements except as required by law. With that, I will turn the call over to Ms. Eileen Wong, Executive Director and CEO of DPC-DASH. Eileen, please go ahead.

Hello, everyone, and thank you for joining us to review DPC-DASH Limited's performance for the full year of 2024. We're the exclusive master franchisee of Domino's Pizza across mainland China, Hong Kong Special Administrative Region, and Macau Special Administrative Region. Our global franchisor, Domino's Pizza Inc., is one of the world's leading pizza companies, with over 21,300 stores across more than 90 markets. as of December 31st, 2024. This global reach provides us with valuable brand and operational knowledge as we implement our 4D strategy, development, delicious pizza value, delivery, and digital. We're pleased with our performance in 2024, a year that marked several important milestones in our growth journey. According to Fra and Sullivan, Domino's Pizza is now ranked the second nationally based on 2024 pizza sales in China, our total revenues for the year reached RMB 4.3 billion, representing a 41.4% increase compared to RMB 3.1 billion in 2023. This strong growth was mainly attributable to both the increase in our average daily sales per store and our expanded store network. Our average daily sales per store increased by 4.3%, from RMB 12,580 in 2023 to RMB 13,126 in 2024, primarily driven by growth in average daily orders per store, which increased from 145 in 2023 to 160 in 2024. We maintain our track record of positive theme store sales growth, or SSG, in 2024, we achieved a same-store sales growth of 2.5%, following an impressive 8.9% growth in 2023. This achievement marks our 30th consecutive quarter of positive same-store sales, dating back to the third quarter of 2017. This consistent performance is a testament to the effectiveness of our strategy and also the strength of our execution in the China market. By year end, our network expanded to 1,008 stores across 39 cities in China, including our 1,000th store, which was opened in November. We added a net of 240 new stores during 2024, meeting our annual target on top of the 180 net new stores we added in 2023. This accelerated pace of expansion reflects our confidence in market opportunity. In January 2025, we entered six new cities, demonstrating the continued momentum in our expansion. Our profitability metrics also showed meaningful improvement in 2024. Store-level operating profit margin increased to 14.5% from 13.8% in 2023, and store-level operating profit reached RMB 624.0 million, a 48.7% increase from RMB 419.7 million in 2023. At the corporate level, adjusted EBITDA rose to RMB 495.2 million, 64.1% higher than RMB 301.7 million in 2023, with adjusted EBITDA margin improving to 11.5% from 9.9%. We achieved an important milestone with our adjusted net profit reaching RMB 131.2 million up from RMB 8.8 million in 2023, demonstrating a considerable improvement in our profitability. Our reported net profit turned positive at RMB 55.2 million versus the reported net loss of RMB 26.6 million in 2023. This marks our first full year of positive reporting net profit after tax, reflecting the success of our scaling strategy and operational focus. Let me share more specific insights on our 2024 performance through the lens of our 4D strategy. Regarding development, we pursued our balance the go deeper and go broader approach by strengthening our presence in existing markets while strategically expanding into new territories. In 2024, we expanded to 10 new cities, with the total city number reaching 39. We are now ranked as the third-largest Domino's Pizza international market by STOCON as of January 31, 2025. The performance of our new locations has been remarkable. As of early 2025, We hold all 40 top positions in Domino's global system for the first 30-day sales, with our Shenyang First Store setting a new global record with approximately RMB 11.1 million in revenue during its first months. Our expansion economics remain positive. The 80 new stores open across 18 new cities. from December 2023 through December 2024 show payback periods averaging within 12 months, reflecting the efficiency of our site selection and operational capabilities. Our revenue mix continues to evolve. Revenues in Shanghai and Beijing reached RMB 1.6 billion, growing 6.8% year-over-year with 20 net new stores. Meanwhile, our new growth markets delivered impressive results with revenue increasing by 77.0% to RMB 2.7 billion with 220 net new locations. These new growth markets now represent 61.8% of our total revenue, up from 49.4% in 2023, making them the main growth driver for our company. The performance in these new growth markets demonstrate both the potential of our national expansion strategy and the progress in building our brand momentum as we continue to expand our footprint to other major cities in China. Underlying this revenue growth was our continued menu development, excellent product taste, good service and value, and improved brand recognition. On our delicious pizza value dimension, We continue our focus on menu innovation to address evolving consumer preferences. Throughout 2024, we strategically introduced new pizza varieties and crust options, enhancing our menu diversity. Our menu now includes over 30 pizza varieties and approximately 20 crust options, with pizza products accounting for more than 75% of total sales. This variety reinforces our position as one of China's leading pizza brands and allows us to cater to the diverse tastes of Chinese consumers. Regarding delivery, we have continued to refine our service mix based on the market characteristics. In Shanghai and Beijing, delivery remains a cornerstone of our business where our hit rate to deliver within 30 minutes is consistently higher than 90%. while new territories show strong initial demand for dyeing and carry-out as consumers discover our brand. The high dyeing and carry-out volumes in our newly entered markets have led us to voluntarily suspend delivery services temporarily in some locations. We plan to gradually resume delivery services when the timing is appropriate. As a result of the strategic choice and our accelerated expansion into new cities, The percentage of delivery services decreased from 59.2% of total revenue in 2023 to 46.1% in 2024. This shift in delivery mix contributed to a slight decrease in average sales value per order from RMB 86.8 in 2023 to RMB 82.1 in 2024. This flexibility in our service model allows us to adapt effectively to local market conditions while maintaining operational efficiency. Our digital initiative delivered impressive results with our loyalty program membership increasing from 14.6 million at the end of 2023 to 24.5 million by December 31st of 2024, adding nearly 10 million new members in just the one year. Revenue from loyalty members grew from 59.2% to 64.5% our total sales, highlighting the growing engagement of our consumer base. We have effectively leveraged our digital capabilities, supply chain infrastructure, and increasing scale to enhance operational efficiency. These efforts contributed to our improved margins, and we continue to identify opportunities to further optimize our operations as we grow. Looking ahead to 2025, we're continuing our expansion with plans to open about 300 stores while maintaining our focus on operational excellence. Including investments in new stores, store remodeling, relocations, and maintenance, we anticipate capital expenditure of approximately RMB 570 million, which we expect to fund through our existing cash reserves including proceeds from our global offering and cash generated from our operating activities. From the beginning of 2025 to March 14, 2025, we have opened 82 additional stores with 26 locations under construction and 62 sites signed, positioning us well to achieve our 2025 expansion targets. While the China market remains dynamic, In the face of global uncertainty, we believe our proven business model and operational experience position us well to move forward. We're steadfast in our commitment to sustainable growth and to generating long-term value for our shareholders. With that, I'll now hand the call over to Helen Wu, our CFO, to discuss the financial results.

Thank you, Ailin. Hello, everyone. Thank you again for attending the earnings call tonight. To start, I'll walk you through our financial highlights for the full year of 2024. Please note that all the numbers we're presenting today are in RMB terms, and also all the presentation is on a year-over-year basis, unless otherwise stated. We continue to drive solid growth in our revenues and made notable improvements in our profitability at both the store and corporate level in 2024. As Elaine mentioned previously, We also achieved reported net profit positive for the full year of 2024, marking an important milestone for our business. In 2024, our revenues increased by 41.4% to 4.31 billion from 3.05 billion in 2023. This growth was primarily driven by our continued national store network expansion by adding 240 net new stores during the year, together with the strong sales generated our new stores in new markets, and also the continued positive same-store sales growth. Our average daily sales per store increased by 4.3% to 13,126 in 2024 from 12,580 in 2023. The increase was primarily driven by an increase in average daily orders per store, partially offset by a slight decrease in our average sales value per order. A few notes before we get into the specifics of our cost when you review our income statement. First, our raw materials and consumables cost includes the COGS related to both our stores and the Central Kitchen. Staff compensation expenses includes, number one, the store-level cash-based salary, which also includes the labor cost at our Central Kitchen. Number two, corporate-level cash-based salaries. And number three, share based compensation. The vast majority of rental costs are incurred at the store level, as are a majority of our plant and equipment depreciation, utility expenses, and advertising promotion expenses. Meanwhile, the vast majority of amortization of intangible assets is incurred at a corporate level. Please refer to our income statement and financial statement footnotes for more context on both store and corporate level cost components. With that, let's look at cost and margins at both the store and corporate levels. Our raw materials and consumables cost for 2024 amounted to $1,169.8 million, representing an increase of 39.8%, which was in line with our revenue growth for the year. The ratio of raw materials and consumables cost to revenue improves marginally during the year, from 27.4% in 2023 to 27.1% in 2024, thanks to our constant effort to control the procurement costs. For the 2024 financial year, the total staff compensation expenses of the group amounted to $1,509.5 million, representing an increase of $330.8 million, or 28.1%, as compared with $1,178.7 million for the 2023 financial year. The increase of cash-based compensation expenses for store level staff was primarily due to the increase in the number of our store level employees arising from the expansion of our store network and also the increase of the sales order volume. As a percentage of revenue, our cash-based compensation expenses for store-level staff increased from 26.9% in 2023 to 27.5% in 2024, primarily attributable to the increase in the average number of store-level employees per store. In 2024, as we speed up our store openings in the recently entering new markets, we recruited more store-level staff for training in advance in order to better serve the customers and be familiar with new markets. This leads to an increase in the average number of store-level staff per store. The increase of cash-based compensation expenses for corporate-level staff was primarily due to 1. an increase in headcount to support our rapid expansion and 2. the merit-based increase in salary. As a percentage of revenue, our cash-based compensation expenses for corporate-level staff decreased from 7.3% in 2023 to 5.7% in 2024, primarily as our corporate-level staff accumulate more experiences and become well-equipped to support the operation of a larger number of stores. The declining proportion of the cash-based compensation expenses for corporate-level staff also reflects the continued benefit of scaling the economy on cost efficiency at the group headquarters. Our rental and the lease related expenses are reflected in three lines on our income statement under the IFRS 16 accounting rule. First is the depreciation of right of use asset. Second is the variable lease rental payment, short term rental and other related expenses. These two lines aggregate amount was $428.2 million in 2024. as compared with $307.7 million in 2023, representing a 39.2% increase year-over-year. As a percentage of revenue, the charge rate decreased to 9.9% in 2024 from 10.1% in 2023. The third line is lease liability and the finance cost category. recorded under IFRS 16 accounting rule. The aggregate screen lines amount as a percentage of revenue decreased from 12% in 2023 to 11.5% in 2024. The decrease was primarily driven by our robust revenue growth and our continued rental cost control effort as we were able to exercise transit negotiation power thanks to our enhanced brand recognition. For the 2024 financial year, the advertising promotion expenses for the group amounted to $217.6 million, representing an increase of $58.4 million or 36.7% as compared with $159.2 million for the 2023 financial year. The increase was mainly driven by the spending in advertising promotion to grow our revenue. Advertising promotion expenses as a percentage of revenue decreased from 5.2% in 2023 to 5% in 2024. This was mainly due to our ability to leverage our growing store network and strong brand presence to engage in more cost-effective marketing activities. The charge rates of depreciation and amortization and other expenses to total revenue experienced a decrease from 23 to 24 on a stronger revenue growth rate year-over-year as compared to cost and expenses growth. Meanwhile, the charge rates for utility expenses and store operation and maintenance expenses remained relatively stable as a percentage of revenue. Our commitment to operational efficiency drove significant growth in our store-level operating profit. Store-level operating profit reached 622%. $4 million in 2024, a 48.7% increase. Our store-level operating profit margin showed improvement as well, rising to 14.5% in 2024 from 13.8% in 2023. This positive trend also extends to the corporate level. Charge rates for both cash-based compensation expenses for corporate-level staff and depreciation monetization costs decreased during 2024. This improvement aligns with our continued revenue growth and the unfolding benefits of scale and efficiency. Building on our robust revenue growth, effective cost control at the store level, and the increasing benefits of scale and efficiency at the corporate level, our adjusted group EBITDA grew to $495.2 million. This represents a 64.1% year-over-year increase. from $301.7 million in 2023. Our group adjusted EBITDA margin also saw positive growth, rising to 11.5% in 2024 from 9.9% in 2023. As a result, our adjusted net profit reached $131.2 million in 2024 compared to $8.8 million in 2023, an almost 14 times increase. In addition, our reported net profit after tax reached $55.2 million in 2024 as compared to a reported net loss after tax of $26.6 million in 2023. Finally, some updates on liquidity. Our cash position remains strong as we enter 2025. As of December 31, 2024, we held $1.07 billion in cash and cash equivalents, which includes restricted cash. Additionally, we have an interest-bearing bank loan of $200 million, out of which $100 million should be repayable on March 28, 2025. and the remaining $100 million repayable on December 7, 2025. We plan to repay the $100 million bank loan that will be mature on March 28, 2025. The group had unutilized available credit banking facilities of 300 million as of December 31, 2024, which we will be able to draw down to support our working capital requirements as needed. This concludes my prepared remarks for today's call. Operator, we are now ready to take some questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. To remove yourself from the queue, please press star then two. Once again, then a star then one if you have a question. Today's first question comes from Lucy Yu at B of A Securities. Please go ahead.

Hi, Elaine, Helen, Michael, Kathy. Thanks for taking my question. Congratulations on the good results. I got two questions here. First of all, I noticed that the delivery proportion already decreased to below 50%. I think you already explained that because some stores were busy with dying. So how many stores currently have suspended delivery because of the busy dying traffic? And If we think about capturing more demand in the surrounding area, are we thinking about adding more stores in those areas to dilute some sign traffic, meanwhile opening a delivery to capture more demand? So how should we think about that? That's the first question. And the second one is on the things for sale. Again, congratulations on the positive things for the 30 consecutive quarters. Could we please have some updates for the first quarter so far this year? And also considering that there will be a lot of the super high sales stores back in 2023 will be part of the things for calculation this year. So how should we think about the same store for the full year as well? Thank you.

Thank you for the questions, Lucy. So I'll answer the first question. So the first question is about the new market opening delivery, right? So typically, when we open a new market, we actually see very high demand. And then to cope with the demand and serve customers better, we typically will suspend the delivery service temporarily. As we open more stores and open the new markets, so the pressure on the sort of the already opened stores in the new markets is actually getting lower, so then we will actually gradually open the delivery in those stores. So, yes, to answer your question, I think delivery is our strength, and over the time, whenever we see we have capacity, we'll gradually open delivery, even in these new markets. So that's the first question. So the second question is actually on the quarter one things themselves, right? So as you said, right, so we, you know, have two kinds of markets. The first kind of market is sort of the existing markets we opened before probably the end of 2022, right? So these markets, they're doing quite healthily. The baseline, the S&P is actually quite solid year to day. So but then for the new markets, because they broke their global records continuously in the past several years. In the same markets, when we continue to open more stores, Of course, the sales of the first open several stores will actually go down because the sales is sort of, you know, before all these consumers will go to this one or two stores, now they are going to multiple stores, right? So then when these stores enter the same store sales cycle, because of the high base in the past, this will actually create pressure for this new market thing for sales. But overall, we do believe that the nature of our business is quite healthy.

Yeah, go ahead, Lucy. I'm sorry, could we please share a bit color on the first quarter so far? Thank you. Well, as Elaine mentioned, this quarter so far for these existing new markets, which means the stores that we open, all the cities that we entered before December 2022, they're still very healthy. And then despite, you know, the high base they're accounting against. For the new market, for the new stores in the new market, obviously, you know, I mentioned that we have pressures, right? Because they started with exceptionally high sales. But we're still monitoring. It's still early to actually gauge the impact of these doors on the overall, the whole group's stem cell cells growth. Thank you, Hannah. Thank you, Heidi.

Thank you. And our next question comes from Lisa Liao with Jefferies. Please go ahead.

Hi, management team. Thanks for taking my question. Congratulations on our continuous strong growth and resilient results. So I have two questions. The first one is still about delivery. We have observed more Western QSR brands switch to aggregate riders like Meituan and Elema, and the rider costs are actually lower in these platforms. What is our consideration on this, given that delivery service is always one of our focus and strengths? Besides, aggregators also claim that they will pay social insurance for riders gradually. Will this have any influences and what will be our rider cost outlook in the future? My second question is about the 300 store opening plan. It's in the range of previous 300 to 350 guidance, but relatively on the lower range. Is it because we are cautious on overall consumption environment? or because of our current operation capacity? And among these new store opening, is there any percentage split between existing cities and new cities that we haven't entered? Thank you so much.

Thank you very much, Lisa, for the question. As we mentioned that, you know, delivery is one of the Ds of our 4D strategy, right? So it is our strength. So we actually spend a lot on that, you know, including building up the... the network or the system and building up our own rider fleet, et cetera, right? Because we think that having our own rider will give more value to our customers in terms of quality, the speed, and the readiness, and also fulfill our 30-minute promise. So this is more sort of strategy. I mean, cost is only one of the considerations. We're actually looking... beyond the cost. And then also, having said that, in terms of our rider cost, we're still very competitive so far. So we still actually believe that actually having our own riders to deliver the product to our customer is still very important for us. And also, because the riders that we're engaging on our platform are Actually, it's a different nature of the relationship that you're talking about when you mention Meituan or Erlema, et cetera. So there's no impact on us for the security thing that you mentioned. Now, in terms of store opening plan, I think we actually also iterate a few times in the past on actually how we decide on the store opening numbers. The service, the efficiency, and then the service quality and operational efficiency is also one consideration that we were taking into when we actually making decisions on the store opening every year. So you can see that actually from the past, We are adding incremental number of new stores every year. So last year was 240, so this year we actually think the 300 store counts is the right number so far. And then we're not worried about the... No, sorry. The thing that you mentioned that actually is it because the environmental, sorry, not the environment, macro condition, it is not the reason. More sort of on the operation efficiency and the quality of the services, et cetera.

Got it. Thank you so much. Do we have any split between the existing cities and the totally new cities that on the 300 new store opening?

I think Shanghai and Beijing will take less, and then more sort of on that will be actually in the cities that we have entered, and then we may actually add one or two more new markets this year.

Got it. Thank you so much.

Thank you. And our next question comes from Sharon Yee at Macquarie. Please go ahead. Sharon, your line is open. And it looks like we're not receiving any audio from Ms. Yee, so we'll move on to Walter Wu of CMB International. Please proceed.

Hello, Irene. Hello, management. Can you hear me?

Yes, Walter, please go ahead.

Okay, thank you. This is Walter from CNBI. Congratulations on your tremendous results, and thanks for the chance to ask questions. So I have two questions from my side. The first one is regarding the growth across different day parts. So which day parts, for example, breakfast, lunch, dinner, or late night, contribute the most to the growth in 2024? And was the growth mainly driven by the extended store operating hours, And what are the rooms for improvement in 2025? And the second question is about the industry landscapes. So has the Pizza Hut aggressive price competition impact our market shares or traffic? And do we have any counter strategy? Or we are just focusing more on upgrading our own product quality? So basically, how should we see the price gaps or the quality gaps versus our peers? Thank you.

Thank you for the questions. So the first question is on the day part. So when you set up the store, right, you spend this capex, ideally you actually want to extend the day parts to sort of maximize the use of the capex. And then as long as there's consumer demand for that day part, Historically, we've been focusing more on the peak hours, which is lunch and dinner. They still contribute the biggest portion of the sales. Over the time, we will try to expand to new day parts. Like you mentioned, last year we expanded to the late night day part, and they contributed to sales. Over the time, we will check the opportunity to actually work and accept the consumers through new day parts. And other than the day parts, we also have other levers working to help on the sales. For example, the brand. As we continue to open stores, the brand is getting stronger, and that will contribute to sales. And then at the same time, we have the manual strategy, the value strategy, the digital channel strategy, operational excellence, et cetera. They all contribute to the sales. So that's on the first question. The second question on the competition. So last year, we've been opening a lot more restaurants, going to a lot more new cities, right? And then at the same time, we've been able to maintain the positive same-store sales. And then we've been taking market share and became number two in terms of the market share in China pizza market. So overall, I think it's fair to say that we're still growing quite strongly in the China pizza market. We've been consistently trying to focus on the consumer. We believe that when consumers choose what to eat, they care about the product, they care about the service, they care about the value. So we've been focusing on those levers to try to provide the best product and service to the consumers at the good value. And then this helped us in the past, and we believe they will help us in the future too.

Thank you. Thanks for the answering. Very helpful.

Thank you.

Thank you. And our next question is from Sharon E. at Macquarie. Please go ahead.

Hello, Benjamin. Thank you for taking my questions. So congratulations on the strong profit turnaround. So my question is about the store operating margin, especially for those newly entered market stores. Could you please share some details about the average BEMPA pays for those newly entered market stores, especially since last year? Thank you.

Thank you, Sharon. As you know, I think everybody's seen a lot of the news on the exceptionally high sales that actually our new stores opened a new market that actually has achieved because of the things that we have been consistently doing, like the quality, taste, and value. And so people have a very good perception of the brand itself and then the pizza experts. So this actually contributed to you know, the popularity of the new stores and generally exceptionally high. So obviously the unit economic profitability of these stores are pretty good and pretty strong, exceptionally strong, right? But as we add in more new stores in these markets, you know, obviously the average data sales will actually be diluted gradually. But then having said that, In terms of profitability, these stores in these markets are still pretty healthy and strong, and I think that they are doing better than the cities like Beijing and Shanghai.

Just one more detail. If we think about the time, what is the time spent for those stores that achieve a stable profit margin level usually for those newly entered markets?

This is also a very good question because we're still fast growing. So we're just entering these new markets. Every city is different. So there's no standard answer to your question. But I think one thing I can say is actually even though as we add more new stores, the sales will come down on the store basis for the stores. But then in terms of economic or store margin, they're still pretty healthy and above 20%.

Okay, thank you. That's very helpful.

Thank you. And our next question today comes from Shengwei Lei with CICC. Please go ahead.

Hi, management. Thank you for taking that question, and congratulations on a very strong result. So I have one question. Could you give us more details about future opportunities in store-level margin and company-level margin expansion? and especially for the store-level employee cost ratio, because the upward trend in 2024 will continue in 2025. Thank you.

The labor cost? Okay. Thanks for the question. Let me put it this way. If you look at our cost breakdown, right, which is actually, you know, laid out in our management presentation, which gives a better understanding of the cost component, there are fixed parts and there are variable parts, right? So, overall, we think every part of it will have the opportunity to further improvement. And then as we actually grow bigger, we're only 1,000, and we're only in 39 cities as of the end of last year. So there is so much white space. Obviously, we can grow bigger. So scale and also the related brand penetration in China would definitely help, which you have already observed in the past few years. But we believe that actually there's still a lot of opportunity there, we do believe, at the corporate level. sorry, at the store level. Now, as we scale up, and then there will always be the benefit of a scaled economy, at the corporate level, which you have seen that actually our corporate level, for instance, the corporate level labor cost that has been coming down gradually every year. So for the full year of last year, it was actually 5.7, right? So we do believe that as we become bigger, the efficiency or the benefit from the scale of the economy will continue to unfold. And this is the trend that actually we can see, yeah.

Thank you, very helpful. Thank you.

Thank you. And due to time constraints, we do have time for one more question. And then it comes from Yeru Wang with CIT ICS. Please go ahead.

Hi, management team. Thanks for the question opportunity and congratulations on company's strong performance. My question is that what is the current average proportion of delivery sales in Beijing and Shanghai market and also in the new growth market? and is the average selling price of delivery order higher than that of buying order? And my second question is that as the proportion of new gross markets in the overall store market further increase in the future, will the average selling price continue to be lowered and decline? Thanks for answering.

Thank you for the question. So the question is on the delivery sales percentage for mature market. It's quite stable, still above 70%. And for the new growth market, it's slightly under 30%. So typically, the average ticket for delivery order is actually higher than dying and carry out, right? I think the group size is slightly different, and also the surcharge is, you know, only with delivery. That said... In the future, the evolution of the average ticket actually depends on several things. In mature market, the delivery percentage is actually still quite stable and high. And then for those new markets who are still building the delivery share, I think the delivery portion will go up, right? some existing markets like Hangzhou and Nanjing, where they already got some delivery sales percentage, but then they're going to increase that. And also the new markets who used to suspend the delivery service, now they're opening delivery, right? And then finally, you have this new market, which we just opened, well, we'll open in 2025. And then at the beginning, I think it will be, quite similar to before because we get high demand for die-in and carry-out, so we probably have to suspend the delivery service temporarily. So I really think the end result depends on sort of the mix of the three kinds of markets.

Thank you. And this concludes our question and answer session. I'd like to return the floor to the company for closing remarks.

Thank you for joining today's call and thank you for your continued support. We look forward to keeping you updated on our progress moving forward.

Thank you. This concludes our meeting. If you have additional questions or did not get a chance to ask during the call, please feel free to reach out to us at ir.dominoes.com.cn and dpc-ir at irsicr.com. or visit our website at www.dpc-.com. We would like the chance to connect with you. You may now hang up and have a wonderful day.