RBI earnings: Tim Hortons sales fall 15.7 per cent in 2020

Alicja Siekierska
·3-min read

Sales at Tim Hortons in 2020 fell to the lowest level since the company merged with Burger King, as the COVID-19 pandemic continued to disrupt morning routines and lockdowns kept customers at home.

Comparable sales, a key metric in the retail industry, fell 15.7 per cent at Tim Hortons in 2020, according to financial results reported by parent company Restaurant Brands International (QSR)(QSR.TO) on Thursday. The drop marks the biggest among RBI’s three chains, a trend that has persisted through 2020. Burger King saw comparable sales fall 7.9 per cent in 2020, while Popeyes grew 13.8 per cent. System-wide sales at the coffee and doughnut chain also fell, from US$6.7 billion in 2019 to $5.5 billion, in the 12-month period ending Dec. 31.

RBI’s stock was down nearly 3 per cent as of 2 p.m. ET.

Duncan Fulton, RBI’s chief corporate officer, attributes the sales decline to the COVID-19 pandemic’s disruption of morning routines – a critical segment for Tim Hortons – as well as the lockdown restrictions put in place throughout the year.

“Our traffic is highly tied to daily routines,” he said in an interview. “As those routines come back to normal, we’re going to recapture that traffic and we believe capture a new generation of guests because of the investments we’ve been making.”

Tim Hortons embarked on a back-to-basics approach focused on coffee, doughnuts and breakfast in 2020 after comparable sales had fallen 1.5 per cent in 2019. Over the last year, the chain has installed fresh brewer technology that is intended to improve the consistency of its coffee, relaunched its dark roast coffee blend, and recently changed its breakfast sandwiches to feature freshly cracked eggs. In 2021, Fulton said customers should expect more innovations focused on sandwiches and cold beverages.

While sales are still down, they did appear to improve near the end of the year. RBI chief executive Jose Cil said on a conference call with analysts Thursday that there were “encouraging signs” for Tim Hortons in December, as comparable sales declined to high negative single digits – the best figure at the brand since March 2020.

“Obviously we’re not doing cartwheels on that, but we’re encouraged by the performance and the improvements sequentially that we’ve seen,” Cil said, adding that the company “still has lots of work to do.”

“We can’t control the virus, we can’t control the lockdown, but we certainly can control the experience that our franchisees, teams and guests are having in the business everyday and we feel confident that the investments we’re making… are resonating and having an impact.”

Tim Hortons’ drive-thru service – which is at 2,700 of its 4,000 locations across the country – has been a relative bright spot for the company through the pandemic. Drive-thru sales have increased by double digit figures when compared to last year, while comparable sales at the drive-thru were flat in the fourth quarter.

The improvements come as RBI continues to upgrade its drive-thrus, swapping out paper menu boards for new digital ones. Josh Kobza, RBI’s chief operating officer, said the changes have sped up drive-thru service and increased guest satisfaction.

RBI, which reports its financial results in U.S. dollars, said revenue in 2020 amounted to nearly $5 billion, a decline from $5.6 billion a year earlier. Adjusted net income was $948 million in 2020, or $2.03 per diluted share, compared to nearly $1.3 billion, or $2.72 per diluted share, in 2019.

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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