Home delivery has Tim Hortons moving in the right direction
TORONTO A major expansion of home delivery is helping Tim Hortons slowly inch its way out of a months-long sales slump.
Tim Hortons’ parent Restaurant Brands International Inc. on Thursday reported that the coffee chain’s comparable sales are now showing declines of around 25 per cent, an improvement on the early days of the pandemic.
The focus on “comparable sales” is common for major retail chains since the metric excludes newly opened stores to make for a clearer year-over-year comparison. Tim Hortons’ comparable sales were already in decline in recent, pre-pandemic quarters, but they sank even further in late March, hovering around “the negative mid-forties.”
In April, comparable sales dropped in the 30-per-cent range, and Thursday’s update from RBI showed more progress, with declines now “trending negative mid-twenties” as of the third week in May.
RBI chief executive José Cil said the improvement was due, in part, to home delivery, which is now offered by 1,100 of the 4,000 Tim Hortons locations in Canada, up from 250 locations at the beginning of March.
Speaking to the Bernstein Strategic Decisions Conference on Thursday, Cil boasted that the growth has made Tim Hortons one of the most widely available restaurant chains for home delivery in Canada. Tim Hortons’ delivery partners, Uber Eats and Skip the Dishes, were not immediately available to verify that claim on Thursday.
Bernstein senior analyst Sara Senatore, who moderated Cil’s talk at the conference, noted that orders on delivery apps tend to occur mostly around dinnertime. Traditionally, though, Tims does best in the morning, with more than 40 per cent of its in-store and drive-thru sales coming at breakfast.
The breakfast category has also had the biggest declines in the fastfood sector during the pandemic. But Cil said Tim Hortons’ delivery appears to be gaining traction in the morning and at lunch.
“Given how frequently people are using delivery now and the fact that they’re staying home more often, you’re seeing a bit more at lunch, a bit more at snacking, some at breakfast as well,” he said. “The business for delivery is expanding ... beyond dinner.”
But this new uptick in morning deliveries raises a natural question: How do food couriers, often on bicycles, manage to deliver coffee without spilling and scalding themselves?
Skip the Dishes in a statement on Thursday said it has implemented a new system to deal with coffee, as well as alcoholic beverages, which are now allowed to be delivered with meals in certain provinces.
“Skipthedishes has procured new delivery bags that have builtin cup holders to ensure safe transportation while maintaining optimal temperatures,” the company said.
“Our couriers deliver these types of items with the utmost care within additional Skip delivery bags, and to ensure our customer satisfaction, if a drink is spilled we offer a full refund to the customer.”
Tim Hortons on Thursday said the improvement in sales is also coming from increases in drive-thru and larger orders.
“Normally, I’d be at work, maybe picking up lunch for myself,” Duncan Fulton, RBI’S chief corporate officer, said in an interview on Thursday. “But since everyone’s working from home, people are ordering for the whole family or for groups.
RBI’S performance update on Thursday was released ahead of Cil’s presentation to the Bernstein conference.
In a quarterly report on May 1, RBI said Tim Hortons’ sales in Canada dropped to US$1.19 billion in the first quarter of 2020, which ended on March 31, a decrease of US$152 million compared to the same period a year ago.
Earlier this month, Tim Hortons announced that it has plans in place to reopen its dining rooms across the country as soon as regional authorities allow it. Fulton said only “a very small number” of locations have opened so far.