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

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

Trevor Davis, base manager of the Western Canada Marine Response Corporation in Sidney, stands in front of the Hecate Sentinal, an oil skimming vessel based at Sidney’s Van Isle Marina. (Wolf Depner/News Staff)
Oil spill response base taking shape on Saanich Peninsula

Enhanced base with elements in North Saanich and Sidney to be fully operational in fall 2022

The O’Meara family – (left to right) Mari, Max, Adam and Rei – spent Saturday afternoon picking out the perfect tree. (Devon Bidal/News Staff)
Santa’s Forest tree sale in Saanich implements one-way perusing, curbside pick up

Christmas tree, wreath sales in Braefoot Park through Dec. 24

Environment Canada has issued a special weather statement forecasting windy weather Sunday and Monday. (News Bulletin file photo)
More windy weather on the way for Vancouver Island

Environment Canada issues special weather statement for Victoria, east coast of Island, north Island

(Black Press Media file)
Webinars help Greater Victoria residents affected by dementia prepare for the holidays

COVID-19 pandemic, restrictions can add additional challenges for people living with dementia

Mary Cox and Jack Plant dance in their pyjamas and slippers at the morning pyjama dance during the Rhythm Reelers’ 25 Annual Rally in the Valley Square Dance Festival in Chilliwack on June 4, 2011. Sunday, Nov. 29, 2020 is Square Dancing Day. (Jenna Hauck/ Chilliwack Progress file)
Unofficial holidays: Here’s what people are celebrating for the week of Nov. 29 to Dec. 5

Square Dancing Day, Disability Day and International Ninja Day are all coming up this week

Black Press Media and BraveFace have come together to support children facing life-threatening conditions. Net proceeds from these washable, reusable, three-layer masks go to Make-A-Wish Foundation BC & Yukon.
Put on a BraveFace: Help make children’s wishes come true

Black Press Media, BraveFace host mask fundraiser for Make-A-Wish Foundation

Kevin Bieksa during his days playing with the Vancouver Canucks. (Photo: commons.wikimedia.org)
Bieksa to guest on free Canucks Alumni ‘Hot Stove’ on Zoom app

Former NHL player has become a game analyst on Sportsnet

A small crash in the water south of Courtenay Saturday afternoon. Two men had to be rescued, but reports indicate there were no serious injuries. Photo by Mike Chouinard
Small plane crash in Comox Valley waters Saturday afternoon

Two rescued from plane that had flipped in water; no serious injuries reported

A photo from 2017, of Nuchatlaht First Nation members outside court after filing a land title case in B.C. ( Submitted photo/Nuchatlaht First Nation).
Vancouver Island First Nation calls on B.C. to honour UNDRIP in historic title case

Nuchatlaht First Nation says Crown counsel continues to stall the case using the ‘distasteful’ argument that the Nation ‘abandoned’ their land

West Vancouver Island’s Ehattesaht First Nation continues lock down after 9 active cases were reported today after a visitor tested positive last week. (Ehattesaht First Nation/Facebook)
Ehattesaht First Nation’s COVID-19 nightmare: nine active cases, a storm and a power outage

The Vancouver Island First Nation in a lockdown since the first case was reported last week

114 Canadians were appointed Nov. 27 to the Order of Canada. (Governor General of Canada photo)
Indigenous actor, author, elder, leaders appointed to Order of Canada

Outstanding achievement, community dedication and service recognized

The Ahousaht First Nation confirmed its first case of COVID-19 on Nov. 26, 2020. (Westerly file photo)
Ahousaht First Nation on lockdown over COVID-19

“Emotions are high. The anxiety is high. We want our community to pull through.”

Most Read