Same-store sales slip at Tim Hortons

As trou­bles brew in Canada, RBI plans to ex­pand fran­chise to Spain

The Hamilton Spectator - - BUSINESS - 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, the par­ent com­pany of the cof­fee-and-dough­nut chain, said Wed­nes­day it has signed a deal with a joint ven­ture part­ner to set up shop in one of the largest café 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.

But the Great White North Fran­chisee As­so­ci­a­tion, a rogue as­so­ci­a­tion of frus­trated fran­chisees, said the re­sults are proof that RBI’s ap­proach isn’t work­ing.

“The lack­lus­tre quar­terly earn­ings they an­nounced this morn­ing are just one more in­di­ca­tion that RBI needs to ad­just the meth­ods they em­ploy in man­ag­ing the var­i­ous or­ga­ni­za­tions un­der their um­brella,” as­so­ci­a­tion pres­i­dent David Hughes said in a state­ment.

Tim Hortons also raised prices Wed­nes­day for some break­fast items and hot bev­er­ages in select mar­kets. In a state­ment, it de­clined to say what prompted the hike but added that it al­ways re­views its prices.

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

DOUG IVES, THE CANA­DIAN PRESS

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.

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