Tim Hortons sales in Canada surged 10 per cent in its most recent financial quarter, as traffic returned following an easing of COVID-19 restrictions around the country and inflation-related price increases boosted revenue.
Restaurant Brands International (QSR)(QSR.TO) – the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs – says system-wide sales at the coffee and doughnut chain increased 10.1 per cent in Canada in the three-month period ending March 31. Comparable sales at the chain, a key metric in the industry that excludes recently opened locations, increased by 8.4 per cent in the quarter. In the same quarter last year, comparable sales at Tim Hortons fell 2.3 per cent.
The strong performance at Tim Hortons helped drive RBI's total sales, measured in U.S. dollars, to $1.45 billion, up from $1.26 billion in the same period last year.
"These positive results (at Tim Hortons) were driven by strength in our underlying core business that we've worked so hard to reinforce and improve over the past years, continued traction from our digital initiatives, strong promotional performance and measured pricing tied to inflation," RBI chief executive Jose Cil said on a conference call with analysts on Tuesday.
Cil added that traffic has increased amid an easing of restrictions in Canada, with comparable sales at "super urban" restaurants – locations that saw sales plummet through the COVID-19 pandemic – jumping 30 per cent year-over-year.
"We were encouraged to see especially strong results in March, with comparable sales improving weekly," he said.
While sales at Tim Hortons have risen, so have costs for the chain. RBl signalled last quarter that it would increase prices at its restaurant chains, as it dealt with volatile supply chains, labour inflation and rising commodity costs. While the company did not disclose details of the price increases, Cil says the company has taken "a thoughtful approach" that will stay "relatively in line with inflation." Canada's Consumer Price Index climbed 6.7 per cent year-over-year in March, the largest gain since 1991.
"We're facing, as everyone knows, pretty meaningful pressure from a commodity standpoint," Cil said.
"Our focus is always on the franchisee and on our guests and making sure we keep in line and understand what's happening with the competition. We're going to take a balanced approach throughout and be long-term in our view on how to address the immediate pressures that the consumer is feeling."
RBI's adjusted net income for the quarter was $295 million, or 64 cents per diluted share, up from $257 million last year, or 55 cents per diluted share.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.