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Leases

12 Months Ended

Dec. 31, 2024

15.

Leases

The Company leased over 500 company-owned stores and office space as of December 31, 2024. Most leases provide for fixed monthly payment and certain leases also include provisions for contingent rent, determined as a percentage of sales.

Generally, the Company does not have renewal options for leases. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of rental expense were summarized as follows:

	For the year ended December 31,
	2024		2023
Operating lease cost		229,718,169		279,526,257
Variable lease cost		20,286,865		22,664,025
Short-term lease cost		-		200,917
Total rental expense		250,005,034		302,391,199

The Company was granted nil and RMB2,971,616 in lease concessions from landlords related to the effects of the COVID-19 pandemic for the years ended December 31, 2024 and 2023. The lease concessions were primarily in the form of rent reduction over the period when the Company’s business was adversely impacted. The Company applied the interpretive guidance in a FASB staff question-and-answer document issued in April 2020 and elected not to evaluate whether a concession received in response to the COVID-19 pandemic is a lease modification and to assume such concession was contemplated as part of the existing lease contract. Such concession was recognized as negative variable lease cost in the period the concession was granted.

Amounts reported in the consolidated balance sheet as of December 31, 2024 and 2023 were as follows:

	As of December 31,
	2024		2023
Assets
Operating lease right-of-use assets		493,308,393		785,437,497

Liabilities
Current
Current operating lease liabilities		178,115,199		189,834,647
Non-current
Non-current operating lease liabilities		380,075,128		653,658,810
Total operating lease liabilities		558,190,327		843,493,457

Other information related to operating leases for the years ended December 31, 2024 and 2023 were as follows:

	For the year ended December 31,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities		204,719,215		256,087,221
Right-of-use assets obtained in exchange for new lease liabilities		16,855,171		151,906,824

	As of December 31,
	2024			2024
Weighted-average remaining lease term (years)		3.45			4.33
Weighted-average discount rate		6.01	%		6.23	%

Maturities of operating lease liabilities under non-cancellable leases as of December 31, 2024 are as follows:

	Operating lease commitments
2025		221,893,350
2026		171,661,494
2027		127,871,950
2028		84,508,746
2029		40,062,445
Thereafter		29,047,903

Total undiscounted lease payments		675,045,888

Less: imputed interest		(116,855,561	)

Total lease liabilities		558,190,327