Virus chomps on breakfast business of Tim Hortons
TORONTO Tim Hortons is struggling in a world without morning commuters, with daily sales during the coronavirus crisis down nearly 40 per cent compared to this time last year, according to a first-quarter earnings report from the coffee chain’s parent company, Restaurant Brands International Inc.
The outbreak hit Canada in March just as Tim Hortons was in the midst of a companywide “backto-basics” push to ratchet down its confusing menu experiments for lunch and dinner and refocus the chain on coffee, doughnuts and breakfast. But those routine early day offerings have been hit the hardest by the shift to working from home, RBI said.
“Everyone has been impacted heavily in that breakfast business,” RBI chief executive Jose Cil said during a Friday conference call with analysts, adding that Tim
Hortons is now seeing more interest at lunch and dinner.
As local governments consider easing lockdown orders, the chain is working on ways to nudge people back into their old coffee-buying habits upon their return to office living.
“It may take a little bit longer to open up completely, but we’re going to be there every step of the way, trying to drive that behaviour back to where it was PRECOVID-19,” Cil said.
The plan to bring customers back revolves around putting them at ease by being clear about new safety measures in stores. Tim Hortons has been testing a number of new tactics on top of its current regime of sneeze shields, temperature tests for employees and floor markings for social distancing.
“You need to do more than just switch on the lights and say, ‘We’re back,’” said Duncan Fulton, RBI’S chief corporate officer.
The new measures include a pole so employees at drive-thrus can pass customers a credit-card machine without touching hands, as well as a new device to put a lid on a coffee cup without staff ever touching it.
“Think of a hollowed-out hockey puck,” Fulton said. “It’s the right diameter, so it will pick up the lid and then you use it to push down on the cup.”
The pandemic also complicated the already delicate process of overhauling the chain’s signature promotion, Roll Up the Rim, in March. Tim Hortons was planning to introduce a digital version of the contest in an attempt to push more customers to its mobile app while still offering the classic roll-up promotion on cups. But in an effort to prevent the spread of the virus, the chain threw out 81 million Roll Up the Rim-branded cups and made the contest entirely digital.
(Fulton declined to say what the extra costs were to ditch the cups.)
RBI said it was hard to determine the contest’s impact on sales, since it ramped up just as the lockdowns started across Canada. The digital-only contest did lead to 1.5 million new app downloads.
In the first quarter of 2020, which ended March 31, Tim Hortons’s sales in Canada dropped to US$1.19 billion, a decrease of US$152 million compared to the same period a year ago. In Canada, the chain had a 10.8-per-cent decline in comparable sales — a common retail metric that gives a clearer view of year-over-year sales growth by ignoring sales from recently opened stores.
Tims was already struggling with comparable sales declines before the crisis, but Cil said the chain was starting to see improvements in January and February.
The outbreak in March forced the chain to close its dining rooms and focus entirely on drive-thru and takeout.
To reduce franchisee costs, the chain has also put major improvement plans on hold.
RBI said the toughest part of the crisis seems to be subsiding.
The worst impact appears to have come in the final two weeks of March, when daily comparable sales fell “on average by a percentage in the mid-forties,” the company said. The decline in daily sales has since improved, hovering in the “high thirties” at the end of April.