Tims enters new stage in turnaround as it sees gains

Tim Hortons' parent company is charting a new phase in its campaign to revive the coffee chain, looking to push into lunch, dinner and cold drinks after spending two years rehabilitating the brand's reputation for coffee and breakfast.

For years, Restaurant Brands International Inc. struggled with frustrated franchisees and flagging sales at Tim Hortons. It tried boosting the brand with flashy menu add-ons that only further complicated kitchens.

Just before the pandemic, RBI acknowledged its menu experiments weren't working and vowed to go back to basics instead. The plan was to improve on what Tim Hortons was known for — mainly coffee, doughnuts and breakfast — while also modernizing the chain's digital operations and loyalty program. But within months, pandemic lockdowns started, morning commuters disappeared and sales at Tim Hortons plummeted. Between April and June of 2020, samestore sales growth — a retail metric that gives a clear picture of year-over-year performance by ignoring results from recently opened stores — shrunk by almost 30 per cent.

Despite the pandemic challenges, RBI is now claiming victory in “Phase 1” of its backto-basics plan. At a conference for investors on Tuesday, Tim Hortons executives boasted that the chain grew its market share in hot brewed coffee in Canada to 72 per cent last year from 70 per cent in 2019. Tim Hortons' share in the fast-food breakfast category increased to 59 per cent in 2021 from 57 per cent in 2019, “the highest it has been in over five years,” according to Axel Schwan, president of Tim Hortons' North American operations.

Schwan said the chain was able to grab market because of changes to its menu and product quality.

Phase 2 of the plan is focused on “accelerating growth,” partly through branching out from the chain's coffee-and-doughnut roots, he said. He forecast annual same-store sales growth in the “mid to high” single digits for 2022.

On Tuesday, RBI reported gains in both sales and profit at Tims for the first quarter of 2022, ended March 31. Samestore sales grew by 8.4 per cent, shy of forecasts of 9.6 per cent, according to Bank of Nova Scotia analyst Patricia Baker. Samestore sales in Canada grew by 10.1 per cent, compared to a decline of 3.3 per cent last year.