"Has 'trading price for volume' come to an end? Profit margin recovery for Titan International in the first quarter"

```

Hai Di Lao’s overseas business listed company, T Special International, has released its first quarterly financial report since the management change.

In the first quarter, T Special International reported revenue of $226 million, a year-on-year increase of 14.2%; operating profit was $14 million, up 70.7% year-on-year; operating profit margin rebounded to 6.2%, an increase of 2.1 percentage points compared to the same period in 2025.

However, improvements in operations have not fully translated to net profit.

During the period, profit was $4.1 million, a decrease of about 65.9% compared to $11.9 million in the same period last year, mainly due to a net foreign exchange loss of $11.7 million more than last year, primarily affected by currency fluctuations, especially local currency depreciation against the US dollar.

However, the profit pressure caused by T Special International’s earlier “trading price for volume” strategy appears to be undergoing a phase change.

In 2025, facing pressure on customer flow in overseas dining markets, T Special International adopted a more proactive pricing strategy to maintain table turnover and foot traffic. Meanwhile, operating profit margin at the restaurant level declined, as intentional price concessions narrowed the profit margins.

In the first three quarters of 2025, average customer spending was $24.2, $24.3, and $24.6, respectively; in the fourth quarter, it rebounded to $25.4.

Entering the first quarter of 2026, this trend continued, with the average spend per customer at T Special International restaurants reaching $25.3, up $1.1 year-on-year.

Volume also maintained growth. In the first quarter, the average overall table turnover was 4.0 times/day, higher than 3.9 times/day in the same period last year; same-store sales reached $184 million, up 4% year-on-year.

Strictly speaking, “trading price for volume” has not entirely ended.

Of the $1.1 increase in average spend per customer compared to last year, about $0.8 is attributed to exchange rate fluctuations; excluding this, the endogenous price increase contribution is about $0.3.

In other words, T Special International has not obviously switched to an aggressive price increase strategy, but is more cautiously revising the previous price concessions.

Management continued this narrative in the conference call: the company will continue to advance work on “quality-price ratio,” including adjustments to menu structure and product combinations, reasonable checks on portion sizes and prices, so that customers more easily perceive the value.

This also aligns more with the current changes in the overseas consumption environment.

Management stated that the overseas consumer market has not significantly worsened so far this year, but customers are becoming more rational, and market performance is diverging: North American customers are more focused on value for money, Southeast Asia shows lively overall demand, Japanese and Korean customers are more sensitive to efficiency and social sharing, while Australia, UK, Middle East, and other markets have their own consumption habits and pressure points.

Regionally, Southeast Asia remains the company’s largest main base. In the first quarter, the average table turnover in Southeast Asia rose from 3.7 times/day last year to 3.8 times/day, and same-store sales were up about 6.4% year-on-year.

East Asian markets performed even better, with average table turnover at 5.1 times/day, up from 5.0 times/day last year, and clearly above the company’s overall level.

North America and other markets still face pressure. In North America, the average table turnover fell from 4.0 times/day last year to 3.6 times/day, average daily income per restaurant dropped from $22,200 to $21,000; in other markets, average table turnover similarly decreased from 4.0 times/day to 3.6 times/day.

Given the higher labor, rent, and operating costs in markets such as North America, Australia, UK, and UAE, fluctuations in table turnover have a more sensitive impact on profit margins.

Cost side also shows positive signals.

In the first quarter, the proportion of costs for raw materials and consumables fell slightly from 34% last year to 33.9%, while employee costs decreased from 35.3% to 34%. The decline in these two core costs is an important reason for the operating profit margin rebounding from 4.1% to 6.2%.

For hotpot operators, table turnover directly relates to efficiency per square meter, per person, food supply rotation, and allocation of fixed costs. The operational leverage brought by revenue growth also helps to dilute relatively rigid costs such as labor and rent.

But it is certain that T Special International will not significantly accelerate expansion in the short term.

In early April this year, the company clarified its annual plan, maintaining a “very cautious” attitude toward store expansion. In the first quarter, T Special International only opened one new Hai Di Lao restaurant in Southeast Asia, bringing the global total to 127 stores.

Risk Warning and DisclaimerThe market has risks, investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their specific situation. If you invest accordingly, you are responsible for the outcome. ```