TIM HORTONS GETS PUSH
Set for big U.S. expansion
After a strong 2015, Restaurant Brands International says it is ready to grow Tim Hortons aggressively in the United States this year, something the company has been planning to do since its inception.
“The (U.S.) is the world’s largest quick-service restaurant market and we have only 600 Tim Hortons, and we are really excited about the pace of future growth in the U.S.,” chief executive officer Daniel Schwartz said in an interview Tuesday as the company released full year and fourth-quarter results that topped analysts’ expectations.
It marked the first full year of financial results since the $12.5-billion merger of Burger King and Tim Hortons formed Restaurant Brands International in late 2014. At the time, Tim Hortons’ potential to expand in the U.S. and globally was cited as a key factor behind the merger by Restaurant Brands’ majority owner, Brazilian private equity firm 3G Capital.
“Store expansion is a key priority if Tim Hortons is to grow its business in the U.S. over the year ahead,” Neil Saunders, chief executive of New York-based research firm Conlumino, said Tuesday.
But in fiscal 2015, Restaurant Brands opened just 13 net new Tim Hortons stores in the U.S.
While guest traffic and overall return on investment grew for U.S. Tim’s franchisees in 2015, the network still had some laggards to weed out, a legacy of middling expansion efforts under the company’s prior ownership. Restaurant brands closed 27 underperforming Tim Hortons in Portland and Syracuse in the fourth quarter.
Restaurant Brands executives remained mum on how many U.S. outlets they want to open this year. But they say they are on very solid footing with their latest U.S. development deals, featuring local partners who contribute more capital than Tim Hortons’ U.S. franchisee partners did in the past.
Since October, the company has signed development deals for Tim Hortons in Cincinnati and Columbus, Ohio, and on Tuesday announced a partnership deal with Luke Family of Brands to open Tim Hortons restaurants in the greater Indianapolis area.
Tim Hortons in the U.S. will be promoted in the same way it is in Canada, focusing on value and accessibility for customers. “Our goal really is to scale up and build more restaurants to create that convenience factor that Tim’s offers our Canadian guests,” said Schwartz. “From a marketing perspective, there are no major differences.”
On Tuesday, Restaurant Brands reported net income of US$51.7 million, or US25 cents per share, compared with a loss of US$510.8 million, (US$2.50), a year earlier.
Adjusted profit was US35 cents per share, beating analysts’ average estimate of US29 cents, according to Thomson Reuters. Overall revenue was US$1.06 billion, topping analysts’ US$1.03 billion estimate.