Ex­pan­sion brew­ing

As trou­bles per­co­late in Canada, RBI plans to take Tim Hortons to Spain

The Guardian (Charlottetown) - - BUSINESS - BY ALEK­SAN­DRA SA­GAN

Tim Hortons plans to ex­pand to Spain, its fourth ven­ture abroad in re­cent months, as it tries to over­come lag­ging sales and an in­ter­nal re­volt from dis­grun­tled fran­chisees in Canada.

Restau­rant Brands In­ter­na­tional (TSX:QSR), the par­ent com­pany of the cof­fee-and­dough­nut chain, said Wed­nes­day it has signed a deal with a joint ven­ture part­ner to set up shop in one of the largest cafe mar­kets in Europe.

Chief fi­nan­cial of­fi­cer Josh Kobza said Spain pro­vides an in­trigu­ing op­por­tu­nity for RBI in its quest to be a dom­i­nant player in the global cof­fee in­dus­try fol­low­ing for­ays into Mex­ico, Bri­tain and the Philip­pines.

“We’re build­ing a lot of mo­men­tum in the in­ter­na­tional business,” Kobza said in an in­ter­view.

“Some of our other po­ten­tial part­ners are start­ing to see how well the Tims brand is res­onat­ing in other coun­tries out­side of Canada around the world.”

The an­nounce­ment co­in­cided with RBI’s re­sults that showed same-store sales at Tim Hortons, an im­por­tant met­ric in re­tail mea­sur­ing sales at lo­ca­tions open for at least a year, fell for the sec­ond con­sec­u­tive quar­ter.

They were down 0.8 per cent from a year ago, driven by fall­ing sales in Canada of baked goods and lunch items, a sign that the Tim Hortons brand may be los­ing its ap­peal in the coun­try where it was made fa­mous.

Dur­ing RBI’s earn­ings con­fer­ence call, an an­a­lyst asked whether the de­cline had any­thing to do with the com­pany’s fes­ter­ing dis­pute with its Cana­dian and U.S. fran­chisees. Some fran­chisees have ac­cused RBI’s head of­fice of penny pinch­ing, driv­ing up their ex­penses and over­all mis­man­age­ment - al­le­ga­tions the com­pany has de­nied.

CEO Daniel Schwartz said he didn’t want to spec­u­late on what if any im­pact the fran­chisee dis­pute may be hav­ing on sales.

For its sec­ond quar­ter end­ing June 30, RBI, which keeps its books in U.S. dol­lars, said it earned a profit at­trib­ut­able to com­mon share­hold­ers of US$89.5 mil­lion or 37 cents per di­luted share. That’s down slightly from a profit of $90.9 mil­lion or 38 cents per di­luted share a year ago.

On an ad­justed ba­sis, the com­pany earned $241.7 mil­lion or 51 cents per share, up from $192.4 mil­lion or 41 cents per share in the same quar­ter last year. Rev­enue to­talled $1.13 bil­lion, up from $1.04 bil­lion a year ago, boosted by the ac­qui­si­tion of Popeyes.

Head­quar­tered in Oakville, Ont., RBI, which also owns Burger King, has more than 23,000 restau­rants around the world.

“We’re build­ing a lot of mo­men­tum in the in­ter­na­tional business. Some of our other po­ten­tial part­ners are start­ing to see how well the Tims brand is res­onat­ing in other coun­tries out­side of Canada around the world.” Josh Kobza, RBI

CP PHOTO

A woman walks pass a Tim Hortons in Toronto on Wed­nes­day. Restau­rant Brands In­ter­na­tional Inc. says it has signed a deal with joint ven­ture part­ner to take Tim Hortons to Spain.

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