Skip to main content
Open this photo in gallery:

A Tim Hortons restaurant is seen in Toronto, on Dec., 16, 2019. The company plans to simplify its menu, increase drive-through efficiency and improve the quality of its 'core' products: coffee, breakfast foods and baked goods.Christopher Katsarov/The Globe and Mail

Restaurant Brands International Inc. is launching an effort to revamp and streamline its Tim Hortons business, after the coffee-and-doughnuts chain posted a drop in fourth-quarter sales that held back the overall performance of the parent company.

RBI executives have spent months analyzing how to return Tim Hortons to growth, and chief executive officer Jose Cil on Monday outlined the blueprint for 2020. The company plans to simplify Tim Hortons’ menu, increase drive-through efficiency and improve the quality of its “core” products: coffee, breakfast foods and baked goods.

But Tim Hortons has taken steps to revitalize its business before, and continues to face slow sales. The latest plan comes less than two years after Tim Hortons launched its “Winning Together” initiative, which was supposed to increase profitability by improving the quality of products, refreshing the look of the restaurants and doing a better job of building the brand through marketing – all strategies that the company touched on again on Monday.

“What’s different is that we’re taking stuff off the plate, if you will, and we’re really putting all of our energy and resources behind things that are fundamental to the brand,” Mr. Cil said in an interview. “We’ve tried to do too many things, things that were on the fringes of what is important to our guests here in Canada.”

In the past year, the chain launched more than 60 limited-time offers, significantly more than usual, which complicated store operations and drove up costs for franchisees. It will scale back that experimentation, investing instead on initiatives such as introducing a more flavourful ice coffee and installing new brewers that are already in more than 2,000 locations, which executives say make better coffee. The chain will also offer more options including skim milk and dairy alternatives. And it will continue to install digital signs at Tim Hortons drive-throughs, which will save money on regularly replacing paper signs and enable restaurants to advertise targeted offers based on the weather.

RBI raised its dividend on Monday after reporting revenues of US$1.48-billion in the three months ended Dec. 31, up from US$1.39-billion in the same period the previous year. The company’s 2019 performance was boosted by growth in Burger King and Popeyes Louisiana Kitchen, where full-year comparable sales grew 3.4 per cent and 12.1 per cent respectively. However, Tim Hortons’ comparable sales were down 1.5 per cent in the 12 months ended Dec. 31, and fell 4.3 per cent in the fourth quarter alone because of softer sales at lunch, as well as investments in the chain’s new loyalty program. (Comparable sales are counted at restaurants open more than a year, an important measure to show growth that is attained not just through opening new restaurants.)

The company is making changes to the Tims Rewards program, which has more than 7.5 million active members. Members will be able to accumulate points they can redeem for more menu items rather than just receiving a free coffee or baked good after every seventh purchase. RBI wants to encourage users to register so that it can gather customer data, track buying habits and offer more targeted promotions.

A group representing Tim Hortons franchisees in Canada has recently raised questions about the direction of the business. The Great White North Franchisee Association, which was formed in 2017 to represent restaurant owners’ perspectives to management, has launched a recruiting drive under a new name. During meetings that executives held across Canada in the past two weeks, the new Alliance of Canadian Franchisees encouraged owners to raise concerns such as low sales volume at some locations, glitches in the payment system and frequent changes to the menu that complicated operations, slowed down service and added to stores’ costs.

For example, in the summer Tim Hortons began serving Beyond Meat imitation meat products in burgers and breakfast sandwiches. The burgers were offered for just three months, while the breakfast sandwiches stayed on the menu in B.C. and Ontario until late last month, when the company confirmed they would be phased out.

Tim Hortons has an advisory board made up of franchisees elected by other restaurant owners, which consults on business strategy and communicates issues raised by franchisee to management.

“I want to make sure that we understand the concerns that they have, which is what we’re doing, and why we’ve spent many hours … having an open and transparent dialogue with our owners,” Mr. Cil said.

RBI’s net income for the three months ended Dec. 31 was US$257-million, or 55 cents a share, compared with US$301-million, or 65 cents a share, in the same period in 2018. Its 2019 net income was US$1.1-billion, roughly flat compared with the previous year.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Report an editorial error

Report a technical issue

Editorial code of conduct

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 24/05/24 10:00am EDT.

SymbolName% changeLast
Restaurant Brands International Inc

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe