Restaurant A brand of international restaurants Tim Hortons and Popeyes.
Randy Riesling | Toronto Star | Getty Images
Tim Hortons expects same-store sales growth in Canada to be in the mid-to-high single digits in 2022 as coffee chain changes take hold in its home market.
Restaurant Brands International also said during an investor presentation on Tuesday that it has set a long-term goal of 2-3% per annum growth in same-store sales. Tims reported a 10.8% increase in same-store sales in Canada in 2021 and a 16.5% decline in same-store sales in 2020.
Due to its large presence in Canada, Tim Hortons typically accounts for more than half of Restaurant Brands’ revenue, but recent sluggish sales have weighed on the restaurant company’s overall results.
Over the past few years, Tims has reshuffled its executive team, revamped its coffee and breakfast range, and revamped its loyalty program in hopes of once again spurring domestic sales growth. Even before the Covid pandemic, sales and traffic were stagnant as Canadians opted for Starbucks or McDonald’s for their coffee instead.
“Over the past 10 to 15 years, competition in Canada has become more intense than it was 30 years ago,” said Restaurant Brands CEO Jose Seal.
The pandemic served as another hurdle to his return as outbreaks in Canada led to new restrictions, although Tim Horton President Axel Schwan said mobility is now returning.
“Canada has had some of the longest lockdowns in the world,” Schwan said. “Get out of [the first quarter]we’re seeing a lot of momentum, traffic is picking up, people are coming out again.”
Earlier Tuesday, the coffee chain reported an 8.4% increase in same-store sales, below StreetAccount estimates of 9.6%. In the first quarter, sales in Canadian stores rose by double digits.
During the presentation, the executives laid out their strategy to “get back to basics” to win over customers. The approach focuses on food and drink offerings, digital interaction, and the restaurant experience.
“Over the next few years, we will continue to focus on expanding with fast-growing parts of the day and products, improving our leading digital ecosystem, maintaining our leading operations, and optimizing our restaurants,” Schwan told investors.
Technology plays a key role in these plans, such as the rollout of digital menus across the country for highways. In addition to being able to suggest menu items based on weather and other factors, these menu boards will display digital versions of Tims’ bakeries. Executives noted that drive-by customers typically buy fewer baked goods than customers who order inside, where baked goods and other baked goods are on display.
Shares of Restaurant Brands fell 2% in afternoon trading, despite the company outperforming Wall Street estimates on first-quarter earnings and revenue.
Correction: Jose Seal is the CEO of Restaurant Brands. In an earlier version, its name was distorted.