FILE – A Tim Hortons coffee shop in downtown Toronto, on Wednesday, June 29, 2016. THE CANADIAN PRESS/Eduardo Lima.

Tim Hortons to offer non-dairy milk this spring, CEO says

Sales fell by 2.9 per cent last quarter

Sales and franchisee profits at Tim Hortons fell in its most recent quarter, prompting parent company Restaurant Brands International Inc. to launch a back-to-basics approach to regain momentum.

“There is clearly a sizable gap between what this brand is capable of and the performance we’ve delivered,” said CEO Jose Cil during a conference call with analysts Monday after the company released its fourth-quarter and full-year financial results.

Comparable sales, a key retail metric, at Tim Hortons fell 4.3 per cent for the quarter ended Dec. 31, including by 4.6 per cent in Canada.

Investment in the company’s rewards program geared at attracting members dragged down comparable sales by three per cent in Canada, the company said, while softness in lunch food added another one per cent of negative performance.

System-wide sales for the quarter fell 2.9 per cent at Tim Hortons, whose parent company keeps its books in U.S. dollars, at US$1.679 billion.

Franchisee profitability also fell compared to last year, said Cil, though the company did not provide a figure. He attributed the drop to lower sales, as well as pressure from labour costs in parts of Canada.

RBI plans to fix the coffee-and-doughnut chain’s performance by elevating the quality of its core categories through innovation and investments in modernizing the brand.

It plans to accelerate a roll out of fresh coffee brewers for better-tasting and more consistent coffee quality, said Cil.

The chain also plans to start offering more than one type of milk for customers, including skim milk and a dairy alternative, almond, starting this spring.

“These adjustments may seem basic, but that’s the point: being the absolute best at the basics that we’re already famous for,” said Cil.

On the breakfast front, Tim Hortons is working to improve the quality of bacon in its sandwiches.

The company will transform nearly all its drive-through boards to digital from paper, he said, which will allow it to tailor offerings based on location, time, weather and other factors.

Tim Hortons is also shaking up its loyalty program, which it says has more than 7.5 million active members but only about a quarter who shared contact information. The new program will be based on points rather than visits and make most of the menu items available for redemption.

When the company starts the Roll-up-the-rim contest in the coming weeks, it will have been updated to tie into its digital focus, and will help drive digital adoption and loyalty registration.

The rewards program is expected to continue to drag down sales for several quarters.

READ MORE: Leave the resolutions behind, Tim Hortons releases Timbit cereal

The company did not say whether Tim Hortons, which has about 30 stores in China mostly in the Shanghai region, has seen any impact from the ongoing novel coronavirus outbreak.

RBI’s principal focus is on the health and safety of its employees in the country, said Cil in an interview following the conference call, and RBI is working closely with its master franchisee partner and the local authorities to take any measures necessary.

“Several of the restaurants have been temporarily closed,” he said.

“We don’t typically share an outlook,” Cil said, but the company doesn’t believe the outbreak has changed any of its long-term objectives or goals in China. RBI announced in 2018 that it plans to open more than 1,500 Tim Hortons locations in the country over a decade.

READ MORE: Tim Hortons pulls Beyond Meat breakfast sandwiches from B.C., Ontario menus

On the call, Cil noted the impact of coronavirus when speaking about Burger King’s performance. Burger King China accounts for about two per cent of the chain’s consolidated system-wide sales, he said.

“While it’s too early to say how long the impact on our business there will last, we’re monitoring the situation very closely.”

The poor Tim Hortons performance came as RBI sales grew, boosted by its new chicken sandwich at Popeyes, and the company raised its dividend.

The parent company of Tim Hortons, Burger King and Popeyes will pay a quarterly dividend of 52 cents per share, up from an earlier payment of 50 cents.

RBI reported net income of US$257 million or 54 cents per diluted share for the quarter, down from US$301 million or 64 cents per diluted share in the last three months of 2018.

On an adjusted basis, Restaurant Brands earned US$351 million or 75 cents per share for the quarter, up from an adjusted profit of US$318 million or 68 cents per share in the same quarter a year earlier.

Revenue totalled nearly US$1.48 billion, up from nearly US$1.39 billion. Burger King comparable sales grew 2.8 per cent and Popeyes rose 34.4 per cent, fuelled by the chicken sandwich.

The company was expected to post 73 cents per share in adjusted profits on US$1.46 billion in revenues, according to financial markets data firm Refinitiv.

For the full year, net earnings were US$1.11 billion on US$5.6 billion of revenues, compared with US$1.2 billion on $5.59 billion of revenues in 2018. Adjusted profits equalled $2.72 per share, one cent better than estimates.

Aleksandra Sagan, The Canadian Press


Like us on Facebook and follow us on Twitter.

Tim Hortons

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

COVID-19: SD67 approves budget reductions

Staff positions will be cut to balance budget

COVID-19: Pre-recorded graduation events planned for students in School District 67

Graduates from Penticton Secondary have created petition to urge postponement of grad ceremonies

COVID-19: SD67 plans restart program for Penticton, Summerland students

District following provincial guidelines as students return to classrooms on June 1

Petition seeks to clean up Okanagan forests ‘carpeted’ with shotgun shells

Penticton man says making shot-gun shells refundable would create cleaner forests

Eco-friendly bus service seeks to add Kelowna to Osoyoos route

Bus would stop in Kelowna, West Kelowna, Peachland, Summerland, Penticton, Kaledan, Oliver, Osoyoos

Video: Okanagan mayors encourage water conservation this summer

Water conservation this summer could be more important than ever, experts say

Enderby’s drive-in not safe from top doc’s 50-car limit

Starlight Drive-In opened with reduced capacity, COVID-19 safety measures in place

Parking lot patios a go in Vernon

Council votes in favour of allowing businesses to expand commercial space into on-street parking spots

Shuswap cabin owner disputes request to stay home in Alberta

Alberta resident redrafts response to CSRD request to stay home

Kelowna’s main drag will be closed to vehicles this summer

Kelowna’s Bernard Avenue will be a pedestrian-only roadway from June 29 through the Labour Day long weekend

Vernon gym knocked out by COVID-19

9Round Fitness in Vernon Square Mall owners announce permanent closure of facility

Snapshot: Distanced dancing in Salmon Arm

Friends use picnic shelter at Blackburn Park for safe practice

Kelowna’s Homebase Baseball Tournament cancelled

A live auction will still take place to raise funds for Joeanna’s House

Kelowna General Hospital Foundation launches fundraising initiative to support local health care

The initiative also highlights workers at Kelowna General Hospital

Most Read