Dpc Dash Ltd

Ladies and gentlemen, welcome to DPC-Limited Full Year 2025 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, IR 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, and Helen will go a bit deeper into the 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 investor 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 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, thank you for joining us today as we reveal the BC Dash Limits results for the full year of 2025. Domino's Pizza Inc. stands as one of the world's largest pizza companies, operating more than 22,100 stores in over 90 markets as of December 31, 2025. As their exclusive master franchisee in mainland China, Hong Kong SAR and Macau SAR, We continue to capitalize on China's underpenetrated pizza market through our proven 4D strategy, development, delicious pizza value, delivery, and digital. In 2025, we continue our strong growth trajectory, generating total revenue of RMB 5.38 billion, a 24.8% increase compared with 2024, fueled by 307 net new store openings and expanding our store base to 1,315 across 60 cities. We have consistently delivered revenue growth above 20% since 2020, reflecting both the effective execution of our growth strategy and the compelling potential of Chinese KSR market. As of December 31, 2025, we stood as the third-largest international market in Domino's global system by number of stores. Our profitability remains strong at both the group and store levels. Store-level EBITDA increased 20.4% year-on-year to RMB1 billion, with a margin of 18.6% compared to 19.3% in 2024. Store-level operating profit grew 18.5% to RMB739.7 million, with a margin of 13.7%. compared with 14.5% a year earlier. The modest margin compression at the store level was largely driven by incremental investments to support our ongoing network and market share expansion and temporary increased delivery-related costs due to aggregator platform dynamics. These incremental store-level investments were more than offset by sustained corporate efficiency gains. At the group level, adjacent EBITDA rose 28.2% to RMB 634.6 million, with margin expanding to 11.8%. from 11.5%, adjusted net profit grew 43.3% to RMB 187.9 million, with margin improving to 3.5% from 3.0% in 2024, and the reported profit attributable to owners of the company more than doubled to RMB 141.5%. Together, these results underscore the operating leverage in our model and our ability to enhance profitability while scaling rapidly across mainland China. Let me now walk through the key drivers of the performance along our 4D pillars. On development, we continue to follow a disciplined expansion strategy, strategically deepening our penetration in existing cities and broadening our reach into new markets. During 2025, we added a net 307 stores and entered 21 new cities. bringing our total city coverage to 60, further extending our presence into high potential regions across China. As of year end of 2025, we operated 517 stores in Tianwen cities and 798 stores in Nan Tianwen cities, compared with 509 and 499 respectively at the end of 2024. Our evolving revenue mix reflects this disciplined execution of the strategy. In our two-room city markets, including Beijing, Shanghai, Shenzhen, and Guangzhou, revenue grew 5.2% year-over-year, from RMB 2.11 billion in 2024 to RMB 2.22 billion in 2025, driven primarily by positive same-store sales growth and slightly helped by incremental store openings in 2025. This performance reflects strong customer loyalty and the sustained strength of the brand. Tailwind Cities contributed 41.2% of total revenue in 2025 compared with 48.8% in 2024. In non-tier city markets, revenue grew 43.4% year-over-year from RMB 2.21 billion to RMB 3.17 billion, mainly due to 299 net new stores and strong performance in newly entered markets. As a result, non-tier one markets contributed 58.8% of total revenue, up from 51.2% in 2024. This mixed shift underlies how non-T1 cities have become our main growth engine, while T1 cities provide a resilient, high-quality base with proven unit economics. We also continue to observe strong performance in our new stores in new gross markets, particularly those entered since the 2024 December holiday season. In December 2024, we opened 6 new cities. During 2025, we entered another 21 new cities, and in total opened 111 stores across these 27 markets during the year. These 111 stores delivered average daily sales of RMB 26,849 during the period, with an actual or expected average cash payback period of about 12 months. This is ahead of our historical averages and clearly demonstrates the attractive unit economics and capital efficiency of our development model. Our momentum also further accelerated in Domino's global sales rankings. As of January 31, 2026, our company held all of the top 50 positions for the first 30-day sales across Domino's global network. In addition to the global request set by our first store in Shenyang in the first half of 2025, several new stores opened in the second half, including our first stores in Xuzhou, Handan, and Wuhan Haotei. also entered the global top 50 for the first 30-day sales, demonstrating strong brand momentum and demand in newly entered markets. Both group same-store sales growth and average daily sales per store moved in the same direction in 2025, reflecting the same underlying evolution in our post-December 2022 markets. Group SSG was an extra 1.5% for the year, in line with the modest 5.3% year-over-year decrease in average daily sales per store to RMB 12,428 in 2025. Such evolution in the post-December 2022 markets was a result of our sales record-setting stores gradually spreading sales to other stores, amid increasing store counts in these cities as we look to capture more market share. This has significantly raised the prior year comparison base and created near-term pressure on both same-store sales and average daily sales per store. Importantly, our fundamentals behind these metrics remain strong. Average daily sales in the post-December 2022 markets continue to be at a solid level and above our overall average, contributing positively to profitability and reinforcing the scalability of our model. If we exclude the stores opened in these post-December 2022 markets, group same-store sales remain positive for the full year. Our T1 markets delivered positive simple sales for the year and also for the first half and second half of 2025, and our pre-December 2022 markets taken together also delivered positive simple sales in 2025 and in each half-year period, despite the elevated sales space built over the past few years. This resilience underscores the strengths of our core business and reinforces our confidence in our long-term growth trajectory. Turning to delicious pizza at value, we further enhanced our menu and value propositions through new product launches and upgrades, which supported healthy traffic in both Tier 1 and Tier 1 markets. In 2025, we launched many popular new products, such as Sicilian-inspired beef and bamboo shoot pizza, the Tuscany-inspired cheese salmon pizza, the Madrid-inspired beef and shrimp pizza, and the cocoa volcano crust. These localized and globally-inspired offerings resonated strongly with consumers across regions and supported positive seemso sales in arterial markets and pre-December 2022 markets, even within a soft-to-consumption environment and highly competitive landscape. We also continue to pair product innovation with compelling value-for-money campaigns and smart promotions tailored to local preferences and locations. This combination of innovation and value helped us attract 15.4 million new customers over the past 12 months and deepen relationships with existing consumers, underpinning both our revenue growth and resilience of our sales performance in older markets. On delivery, we maintain our high service standards and continue to uphold our well-known 30-minute delivery promise. For the full year, our overall delivery on time rate remained above 93% of all delivery orders. In tier 1 cities, delivery penetration increased meaningfully from 70.7% of sales in 2024 to 76.2% in 2025. This meaningful increase was supported by the ongoing consumer adoption of food delivery, amplified by the near-term competitive dynamics among aggregated platforms. while our reliable 30-minute service further strengthens consumer preference for our efficient delivery proposition. We believe the aggregated platform activities bring in high volume of new customers, and we, as a delivery expert, will benefit from the increased delivery penetration in the longer term. We're still in the early stage of realizing our full delivery potential in then-Tierman markets. As our footprint increases in these cities, we're rolling out delivery services in a targeted, systematic way, balancing service quality with capacity and cost efficiency. As of December 2025, delivery services are available across nearly 76% of our existing city footprint, and we're excited to provide our delivery expert service to the customers in more markets as we expand the market share. Digital remains a key competitive advantage for us. Our loyalty program reached 35.6 million members as of December 31, 2025, up from 24.5 million a year earlier. Rapid store network expansion coupled with strong digital adoption has enabled us to broaden our consumer base significantly while deepening our understanding of consumer preferences. During the year, we demonstrated resilient profitability at the store level. Store level EBITDA increased by 20.4% year-over-year, with the store level EBITDA margin moderating slightly from 19.3% to 18.6%. Store-level operating profit increased by 18.5% year-over-year, with the cost-bounding margin at 13.7% compared with 14.5% in 2024. These movements reflect our strategic decision to invest in network and market share expansion and temporary delivery-related cost increase amid the aggregator platform dynamics. At the same time, we continue to drive efficiencies. Take one example. Cash-based compensation for the corporate-level staff decreased from 5.7% to 5.1% of revenue as we improved operating efficiency and benefited from scale at headquarters, while share-based compensation expenses declined from RMB 76 million to RMB 46 million and from 1.8% to 0.9% of revenue. We received quite some awards within the Domino's global system and externally in 2025. Among them, on December 19, 2025, we were named a 2025 Best Employer by Mercer for the fourth consecutive year and received the Star Employee Award for the first time. This recognition reflects our focus on the people culture. Looking ahead, we will continue to expand with discipline and confidence. In 2026, we plan to open 350 stores. On January 1, 2026, we open 62 stores in 46 cities on a single day. the highest daily opening record in our history. As of March 20, 2026, we have opened 140 new stores with 14 stores under construction and 65 sites signed, putting us well on track to deliver our full-year target. With further strength in brand equity and rising brand momentum, we will continue to execute our go deeper and go broader network expansion strategy entering more new cities while further penetrating existing markets. At the same time, we look to further improve cost efficiency as we continue to scale. Our strong execution track record, attractive store economics, and operation efficiency enable us to deliver robust performances in a dynamic and competitive environment. We're confident in our ability to further enhance our market leadership and drive sustainable long-term value creation for our shareholders. With that, I'll hand the call over to Helen Wu, our CFO, to discuss the financial details.

Thank you, Eileen. Hello, everyone. Thank you again for attending the earnings call tonight. To start, I will walk you through our financial highlights for the full year of 2025. Please note that all the numbers we are presenting today are in RMB terms, and all presentations are on a year-over-year basis, unless otherwise stated. 2025 was a year defined by disciplined execution and purposeful growth in a dynamic market environment. We refined our operations and scaled efficiently, while making strategic investment in markets and capabilities that will drive our next phase of expansion. By capturing meaningful efficiency gains and leveraging the advantage of scale, we strengthen profitability and build a solid foundation for long-term sustainable success. In 2025, our revenue increased by 24.8% to $5.38 billion from $4.31 billion in 2024. Breaking down our revenue performance by market segments, our Tier 1 city markets generated $2.22 billion in revenue, representing 41.2% of total revenue and a 5.2% year-over-year growth. This was driven by positive same-show sales growth in these highly competitive markets, which we believe is a true reflection of our resilient performance, and brand recognition. Our non-tier-one city markets delivered exceptional growth of 43.4% year-over-year, reaching $3.17 billion and representing 58.8% of total revenue. up from 51.2% in 2024. This growth was fueled by the addition of 299 net new stores in these markets and bolstered by the healthy sales generated in stores opened in newly entered markets. Our average daily sales per store declined by 5.3% year-over-year to 12,428 in 2025 from 13,126 in 2024. This decrease was mainly attributable to the decrease in the average daily sales in those post-December 2022 high-performing stores as they gradually normalized sales over time. This normalizing trend is a natural part of our unique business evolution for the new markets we are entering, and it will remain focused on optimizing our store portfolio in maximized long-term sustainable growth and profitability. The overall average data sales per store in these post-December 2022 stores were still maintained at a solid level and higher than the group's overall average, and they continue to contribute positively to the group's profitability. A few notes before we get into the specifics of our top costs. First, our raw materials and consumables costs include the COGS costs related to both our stores and the Central Kitchen. Staff compensation expenses comprises store-level cash-based salaries, which includes labor costs at our Central Kitchen, corporate level, cash-based salaries, and share-based compensation. The vast majority of rental costs are incurred at the store level, as are the majority of plant and equipment depreciation, utility expenses, and advertising promotion expenses. Meanwhile, the majority of the amortization of intangible assets is incurred at the corporate level, as is the majority of our other expenses. Please refer to our income statement and the financial statement footnote for more context on both store and corporate level cost components. With that, let's look at costs and margins at both the store and corporate level. Our raw materials and consumables costs in 2025 amounted to $1.47 billion, representing an increase of 25.6%. In line with our revenue growth, as a percentage of revenue, our raw materials and consumable costs remained relatively stable for the 2024 and 2025 financial years, respectively. Advertising and promotion expenses as a percentage of revenue remained at 5% for both 24 and 25 financial years. This was mainly because our brand marketing activities became more targeted and cost-effective as we strengthened our brand through store network growth and remarkable performance in newly entered markets. The total staff compensation expenses as a percentage of revenue decreased to 34% in 2025 from 35% in 2024 as we continue to optimize the cost base at our group corporate level with the benefits slightly offset by the increase at the store level. The store-level cash-based staff compensation expenses as a percentage of revenue increased to 28% in 2025 from 27.5% a year ago. The increase was primarily attributable to relatively higher staffing for new markets expansion and accelerated delivery sales from third-party aggregator platforms, ensuring high service standards, which captured the delivery growth opportunities as the competition intensified during the second half of 2025. Cash-based compensation expenses for corporate-level staff as a percentage of revenue decreased to 5.1% in 2025 from 5.7% in 2024. This was primarily due to our ongoing efforts to improve the efficiency of our operation at the corporate level as the benefit of our economy scale continued to unfold at the group level. Our rental or lease related expenses are reflected in three lines on our income statement under the RFRS 16 accounting rule. First is depreciation of right of use assets. Second is durable lease rental payments, short-term rental and other related expenses. The aggregate amount of these two lines were $539.9 million in 2025. compared to $428.2 million in the prior year, representing a 26.1% increase year over year. As a percentage of revenue, the charge rate was 10%. The third line is lease liability in the finance cost category recorded under the RFRS 16 accounting rule. The aggregate amount of the three lines as a percentage of revenue was 11.4% in 2025 compared with 11.5% in 2024. The charge rate for amortization of intangible utility expenses, store operation maintenance expenses, and other expenses experienced a slightly decrease, respectively, with an aggregate decrease of 0.6% relative to our growing revenue. The charge rate for depreciation of climate equipment remained relatively stable during the same period. By splitting the cost between store activities and corporate activities, let's look at the profitability performance at both the store level and the group level. In 2025, our store-level operating profit reached $739.7 million, representing an 18.5% year-over-year increase from $624 million in 2024. Our store-level operating profit margin was 13.7% compared to 14.5% in 2024. Despite the store-level operating profit margin decrease, overall profitability improved steadily at the group level, which reflects our continued focus on operational efficiency and disciplined cost management. Building on our robust revenue growth, consistent cost controls at the store level, and the increasing benefit of scale and efficiency at the corporate level, our group adjusted EBITDA grew to $634.6 million. EBITDA growth outpaced our revenue growth by a notable margin, rising 28.2% year-over-year from $495.2 million in 2024, a sign of our strong operating leverage. Our group-adjusted EBITDA margin also saw positive growth, rising to 11.8% this year from 11.5% in 2024. As a result, our adjusted net profit, which reflects our core recurring business, reached $187.9 million compared to an adjusted net profit of $131.2 million in 2024. Our reported net profit after tax reached $141.9 million in 2025 compared to $55.2 million in 2024. You can find out more details on cost items at both store and corporate level in our result presentation, which is posted on our IR website. Finally, some updates on liquidity. Our cash position remained strong throughout the whole year. As of December 31st of 2025, we held $1 billion in cash and cash equivalent, which includes restricted cash. Additionally, we have an interesting bearing bank loan of $199.8 million, which the final maturity is set for 2028. Looking forward, as our brand strengthens and the momentum grows, we will continue to execute our Go Deeper and Go Broader network expansion strategy, entering more new cities while further penetrating our existing markets. We will also look to further improve operational efficiency as we continue to scale our presence and ramp up our stores. This concludes my prepared remarks for today's call. Operator, we are now ready to take some questions.

Yes, thank you. At this time, we will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Today's first question comes from Sharon at Macquarie. Please go ahead.

Thank you, management. Congratulations for the stellar results. This is Sharon from Macquarie. So my question is, could you please roughly break down the SAMHSA sales figures of the mature stores in first-year cities and newly entered cities based on traffic and ASPs? Thank you.

Thank you for your question. I'll take this question. So first, our Tier 1 cities, they actually achieved the positive SAMHSA sales in 2025. and then within the traffic versus the ASP. So we actually saw a strong momentum on the PC side, but then the ASP actually went down, mainly because of the aggregator price work. And then for the newly entered markets, the new markets, so we actually saw sort of the decline in the traffic side. It's mainly because we're continuing to open new stores in the same, open a new market. And then that actually dilutes sort of the average gift count per store. And then at the same time, the ASP went down slightly. It's driven by two things. One thing is that we gradually opened the value program, the Crazy Tuesday and Wednesday, for those new markets. And then also at the same time, we gradually opened the deliveries. And then some of them actually went on aggregators and then also faced the same aggregator price fall. Okay, very clear. Thank you. Because the traffic count, the transaction count is actually coming from a very high level because for a lot of the stores that we open in the market, so they start very high and they're still solid. But then it is a very common, normal process for all these stores. of the traffic to get normalized over the period.

Thank you. Very clear.

Thank you. And our next question today comes from Viola Yang with UBS.

Please go ahead. Hi. Thank you for taking my question. My question is also on the . Could you, like, share more on the latest trend? We heard from some companies talking about demand recovery, while others saying pressure continues. So what's your observation? Thank you.

Thank you. So for us, the same-store sales, the main factor is due to new market high base impact. Like Helen mentioned, when we opened, we broke all those global records and then creating very high sales And then as we continue to open stores in the same new market, so this original set of the store sales gradually spread to the other stores. And when these stores entered the same store sales cycle, they actually had this impact of, you know, counting against a very high base before. Now, that said, we also saw when the aggregator cut down the subsidy, we also saw some impact. But during the CLI, we also had a very strong CLI. So I would say so far, the sales is meeting our expectation.

Sure. Thank you so much.

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

Please go ahead. Hi, Elaine, Helen, Michael. Good evening. So thanks for taking my question. I have two questions from my side. So the first is about the aggregator subsidies. So since we are actually expecting aggregator subsidies may gradually mitigate this year, how do we see this influence for us? And basically, how do we evaluate our consumers' retention rate from these third-party aggregators to our own mini program? And my second question is about the delivery mix. You had mentioned that we will roll out the delivery services to more new cities in the future. What is the current delivery mix for these non-tier one cities, and what will be our future plans to roll out to more cities? Thank you.

Thank you. Okay, so the first question, so how do we see the influence of the aggregator subsidy going down? And last year, we actually benefited from sort of the aggregator dynamics, right? This year, as they cut down the subsidies, we did see some impact. That said, we've been doing several things. The first thing is that we are consistently having sort of the mechanism to convert the traffic from aggregator platform to our own online channel. We've been consistently doing that. We have targeted program for that. And then second is that overall, we still sort of launch innovative products, you know, good-priced products. We always honor the similar promise. We have the very good value proposition. We have the brand campaign, et cetera, to continue to improve the repeat. Over the longer term, I do think that the aggregator has been attracting a lot of new customers who probably would not be on the delivery platform before. And then as the delivery experts, Over the long term, we will definitely benefit from this. Yeah, so I just want to add a few more points here, because I think if you'd be following us, or a lot of the analysts or investors, we have always been very strong in delivery. And then, we have always been acquiring new customers from either our own online platform, our own program, or our third party aggregator which is a much larger nationwide platform so we have always been attracting the new customers try to convert them onto our own platform now last year uh there is the uh uh you know third party aggregate campaigns on that one of course you know we have been seeing investors but not investors shareholders you know not shareholders are our customers coming either on our own platform or There will be some shift in and shift out. So this is quite natural when, you know, the pricing is very dynamic. But we have always been using that as a platform to attract new customers. So we have all the programs in, so we would just continue to enhance that to make our own online platform differentiated from the services or product we're offering on the sole project aggregators and win them back when the time is right. And it may take some time, you know, because, you know, for our customers to shift from our own line when they see more value on the third party, but they're still eating pizza, and then they're coming over, but then for them to come back also takes some time to have evolved. Yeah. Yeah, in terms of the second question, the current delivery mix of the non-Tibetan cities, so we currently already expanded the delivery services to about 76% of our footprint. And then for the new market, the 91 city, the delivery mix is about 30%. So at the beginning, when we actually had the open the new market, our business was, our sales were very strong, so we didn't have capacity to open delivery. Over the time, whenever we see there's, you know, opportunity for us to expand the service to deliver, we would do that. And then recently, because we saw the opportunity, on the aggregator dynamics. We do think that this is a very good opportunity to leverage the traffic and the media sort of to open delivery in a new market so we jump on the opportunity. And we did see that the percentage of delivery actually increased quite quickly in markets higher than what we saw in the past when we continued to penetrate the open market. Now in terms of our plan to open more cities in the future, This year, so far, we opened around 10 new cities, and then we probably plan to open another 15 new cities. And in terms of when to open delivery for the new cities, it will depend on several things. One is the capacity. We still want to roll out the service in a way that our customers will be satisfied with the service, and then we can continue to honor the 7-minute promise. And then the other thing we'll consider is sort of the do we actually have the efficiency, and also do we actually need the brand momentum to continue, and that's the time we open the delivery for the new market.

Got it. Very clear.

Thank you so much. Thank you. And our next question today comes from Jiwei Liu with Cinex. Please go ahead.

Good evening. Hello, Michael. I'm Jiwei from Citrix. I have one question about cost. In the case of rising absolute raw material prices, what is our outlook for the profit margin this year? Thank you.

I'll take this question. Thank you very much for this. I think if you look at our cost of goods sold as a percentage of revenue, we've been managing that pretty well over the past few years, you know, And then I think this year, so far, we haven't seen a lot of pressure in terms of, you know, on the cuffs, on the back of the rising oil prices or energy prices that you observe in the market. And then, you know, I think in addition to that, you know, we actually still have quite a few levers to continue to actually manage our cost of goods sold or the raw materials side. For instance, as we are increasing our scale, more stores, more procurement, so the scale plays a role in terms of bargaining or, you know, negotiation with our suppliers. That's one thing. Second is that we are trying more to actually procure from the origin of the suppliers rather than, you know, and removing to the extent possible the minimum in the chain, right, which will actually help us to save some of the cost. And the second, and then the other thing is that we're actually increasing most of the local procurement, which will also help us. And then, and also we are actually elevating our supplies and do better management of that. For instance, you know, we were actually including more supplier bidding process in terms of, you know, the procurement or purchasing. So all of these things will play a role, continue to contribute to help us to manage the raw material and the costs as a potential revenue going forward.

Got it. Thank you, Helen.

Thank you. And our next question today comes from Qi Liu with CICC. Please go ahead.

Okay, thank you. Thank you, management and operator, and thanks for this opportunity. I am Shili from CICC. First of all, congratulations on the company's performance, and I would like to ask one question regarding staff costs. We observed that the store-level staff costs as a percentage of revenue increased in 2025, and I wonder how does management plan to optimize labor costs moving forward? Thank you.

First of all, I think the two reasons actually caused this. One is, of course, you know, you see that actually last year, especially, I mean, starting from maybe May or, you know, picked in the second half, is that, you know, there is a third-party aggregate wall, and then we have more and more delivery orders, and then the rider cost will actually automatically fall out. So that actually has one of the contributing reasons to our labor costs as a potential rally going up. Second is that because we're adding more new stores in the cities, and there will be having some dilution, dilutive impact on the personal sales, and especially for these new stores which are in the normalization period. So this will also have some impact on that one. But if you look at this one, and also secondly, the other reason is that we are still in an expansion mode, and we are entering so many new more markets. And then we want to actually make sure that we think that the investment is needed on the labor side is that to ensure that the service quality will not be compromised for our customers. So adding all these together, you will see that actually the labor cost as a percentage to the revenue increases slightly for 2025. But we also think that actually there is still room for improvement. For instance, as we continue to scale up and also more orders, and we will get some efficiency on the delivery side. And also, we will have the technology improvement on our smart dispatch system, which has been trained and then optimized, you know, constantly. So I think all these factors will continue to help us to actually, you know, manage the labor costs at the store level while not compromising the service level that we're giving to our customers.

Got it. Very pleased. Thank you very much.

Thank you. And our next question comes from Miao Zhang with CNBI. Please go ahead.

Thank you, management. I'm from CNBI, and my question is about our new stores. I noted that the plans to open 315 new stores in 2026, and so equipment management broke down the layout of the 315 new stores, and including the split between the first tier and non-first tier cities. And also based on our go deeper and go broader strategy, what is the proportion in existing 60 cities and what is the proportion in the new market? Thank you. Got it.

So the store allocation. So we have this go deeper and go broader development strategy now. So basically we allocate about 25%. of the 2026 opening target to the pre-2022 December markets, probably 50% will be allocated to the sort of already opened new markets. And then the remaining 25 to 30% will be allocated to the new, new markets, meaning the markets, the cities we just entered this year in 2026.

Thank you. And that concludes our question and answer session. I'd like to turn the conference back over to the company for closing remarks.

Thank you for coming to our call. We look forward to continuing the conversation with you. Thank you.

Thank you. The conference has now concluded. Thank you for attending today's presentation. If you have additional questions or did not get a chance to ask during the call, please feel free to reach out at ir.dominoes.com.tn or visit the website at www.dpc-.com. The team would like the chance to connect with you. You may now disconnect your lines.