Company: CCHH
Filing Date: 2025-06-26
Form Type: DRS
Source: 0001213900-25-058036
Chunk: 62

Company: CCH Holdings Ltd
Filing Date: 2025-06-26
Form: DRS
Chunk 62
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 conditions and the performance of existing restaurants to further expand our restaurant network in these markets. Our expanding network of restaurant outlets will enhance our brand image, which we believe will help attract more consumers and franchise partners, reduce consumer acquisition costs, promote brand loyalty, and in turn increase sales. A growing scale will also enable us to gain more bargaining power over suppliers, which we believe will further lower our costs and expenses as a percentage of our net revenues. On the other hand, as we continue to expand our network of restaurant outlets, we will continue to encounter challenges in implementing our managerial, operating and financial strategies to sustain business growth, or achieve any growth at all. Cost-effective Supply Chain Management Our success depends on reliable and consistent sources of food ingredients such as meat, seafood, vegetables, beverages and condiments at stable competitive prices delivered to us in a timely manner. High quality, cost -efficientand integrated supply chain management provides a solid foundation for our operational efficiency and is an important factor in our financial performance. Historically, our costs have consisted primarily of material costs, payroll costs, and other operation costs. Among these, material costs related to the purchase of food, beverages, condiments and consumables packaging is the most significant component of our cost structure, representing 32.7% and 32.6% of 43

our revenues for the years ended December 31, 2023 and 2024, respectively. We have established strong business relationships with a broad network of suppliers and streamlined our supply chain management practice in relation to food preparation at our central kitchen and each restaurant outlets. We are dedicated to continuously improving our negotiating powers with suppliers and reducing procurement costs through bulk purchasing of ingredients and supplies, with the aim to lower overall food costs and enhanced profitability through competitive pricing. With established stringent supplier selection procedures, inspection procedures, and a performance evaluation system, we are also able to assess the performance of each of our suppliers on a regular basis. In addition, we are continuing to strengthen our supply chain management to improve operational efficiency. For example, we have established a three -tierinventory system achieve higher efficiency and lower costs in storage and logistics. Operational Efficiency with Central Kitchen Management High quality and integrated central kitchen management provides a solid foundation for us to main consistency and operational efficiency across our hotpot restaurant chain and is an important factor in our financial performance. We have achieved standardization at various stages of our business operations to ensure that our food offerings and catering services are delivered consistently. By consolidating part of our food production in a central kitchen, we