RBI Stresses Confidence in Tim Hortons’ Strategy Despite Challenging Quarter

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TORONTO — Restaurant Brands International Inc. (RBI) has reported financial results for the third quarter ended September 30, highlighting strong comparable sales growth from both Burger King and Popeyes, while Tim Hortons’ comparable sales saw declines both in Canada and globally (down 1.2 per cent and 1.4 per cent respectively).

“Our results at Tim Hortons were not where we want them to be, with global comparable sales dipping into negative territory,” says Jose Cil, CEO, RBI. “However, we remain confident in our focus on the most important fundamentals of the business through our Winning Together Plan, which is designed to reinforce the strength of our Tim Hortons brand and create a strong foundation to drive sales growth over the long run through important improvements in image, technology, product quality, drive thru and overall customer experience.”

Cil attributed these declines to continued softness in the brand’s lunch offerings and weaker contributions from its cold-beverage lineup. “Specifically, we saw a decline in performance from the Iced Capp line due to weaker than expected performance from some of the LTOs we ran in the quarter, including our Oreo and Chocolate Chip Iced Capps,” he explains.

However, Cil noted RBI remains confident in Tim Hortons’ long-term strategies, pointing to key initiatives already in place that have received positive reception, including the brand’s new lids (rolled out in Q2), updated coffee-brewing systems and the launch of its innovation-café concept in downtown Toronto. He also highlights the success of the innovation café’s Dream Donut and nitro-bar lineups, noting plans to roll out a selection of Dream Donuts across Canada, as well as test the nitro-beverage line in some of the band’s “newer urban locations” in early 2020.

“We’ve been delighted with the positive feedback we’ve gotten so far from thousands of guests — particularly the millennials,” says Cil. “Going forward, we’ll use the innovation café as a lab for exciting new products and technology, some of which will make it into our stores all over the country.”

Additional plans for the brand include continued store renovations — many of which will include double drive thrus — and a renewed focus on engagement with local communities across Canada. “Next year, we’re also very excited to be opening our first ‘super-urban’ location in the fourth quarter and believe we have significant runway to grow the concept and fill in gaps in our coverage in downtown and urban areas,” Cil adds. “We recognize we have somewhat taken this important brand attribute for granted. And heading into next year, you’ll see an increase in community orientation in our brand marketing.”

The performance of Tims Rewards remains a bright spot for Tim Hortons, with more than 50 per cent of transactions featuring rewards engagement. The next phase of the program will include personalized promotions “to better influence their behaviours through frequency or check growth, including add-ons [and] mix shift,” Cil explains. “We’re also advancing our efforts to convert guests onto the digital loyalty platform, where we can best deliver these personalized offers.”

Looking at Burger King, the brand’s plant-based offering — the Impossible Whopper — was identified as a key success for Q3. “At Burger King, we continue to see exciting growth around the world, with our system-wide sales increasing approximately 15 per cent internationally for the quarter and the successful launch of our Impossible Whopper driving five-per-cent comparable sales growth in the U.S. — our strongest level since 2015,” says Cil. “The Impossible Whopper is a huge hit with our guests, and has quickly become one of the most successful product launches in Burger King’s history. What’s especially exciting is that sales of the Impossible Whopper have been highly incremental, and have attracted new types of guests into our restaurants.”

“We’re already working to expand our platform outside the U.S. as we don’t believe the impact of the plant-based trend is unique to the U.S.,” he adds.

Popeyes also had a key menu item contribute to its strong performance in Q3 with the launch of its chicken sandwich. “Popeyes had one of its best quarters in nearly two decades, achieving comparable sales growth of more than 10 per cent in the U.S.,” says Cil. “While the chicken sandwich was an important component of overall sales growth in Q3, it’s important to remember that it was only in stores nationally for about two weeks. The demand was so overwhelming that the supply we secured to support an aggressive sales forecast over several months ran out in approximately 14 days.” It’s also been announced that the sandwich, which generated significant social media attention, will return to the Popeyes menu starting November 3.

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