Tim Hortons sales have almost bounced back from pandemic lows

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Tim Hortons is clawing its way back to 2019, as annual sales in the last year begin to close in on pre-pandemic levels despite a prolonged shift to working from home, according to a Tuesday earnings update from parent company Restaurant Brands International Inc. ( RBI).

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Revenues at the coffee chain have historically depended on morning commuters, and Canada’s rush hours still aren’t what they once were. The shift has forced fast-food companies to get better at online ordering and delivery, a channel that grew 65 per cent in 2021 and now represents about a third of all sales at RBI restaurants.

Tim Hortons’ annual sales of US$6.5 billion in 2021 beat last year by roughly 19 per cent and came just shy of 2019’s US$6.7 billion.

“The back-to-basics plan is working,” RBI chief corporate officer Duncan Fulton said on Tuesday.

RBI’s plan to revive Tim Hortons started in 2020, when the company admitted that its relentless menu experiments had started to unnerve Tims loyalists — the most infamous being 2019’s Beyond Meat burger. RBI said it would be more thoughtful with new menu items while re-focusing the brand on its coffee and breakfast roots. That appears to have produced a string of successful gambits, including the switch to fresh-cracked eggs in breakfast sandwiches and the Timbiebs collaboration with Justin Bieber that rolled out last fall.

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RBI chief executive José Cil said the runaway success of the promotion blew past internal expectations and boosted the chain’s appeal with younger consumers. He hinted to analysts that “you can expect to see more” from the partnership with Bieber in the coming year.

But in an interview, Fulton wouldn’t divulge what’s coming next in the partnership with Bieber, nor would he provide figures on how Timbiebs impacted sales in the fourth quarter. “Frankly, it’s been a very good, competitive program for us. So obviously I wouldn’t want to signal what may or may not be next, just to maintain the competitive advantage there,” he said.

Tim Hortons sales reached US$1.74 billion in the quarter ended Dec. 31, up $258 million over the same period in 2020, and outdoing Q4 2019 by $57 million. But it’s worth noting that Tim Hortons also has 359 more stores now than it did in 2019, for a total of 5,291.

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Same-store sales — a metric that gives a clearer look at year-over-year performance in retail by ignoring the impact of new stores — grew by 10.3 per cent at Tim Hortons in the quarter ended Dec. 31. In the same period last year, same-store sales declined by 11 per cent, and in 2019, they declined 4.3 per cent.

Scotiabank analyst Patricia Baker expected the “quality enhancements” at breakfast to help drive same-store sales growth in the quarter. Tim Hortons’ same-store sales growth was just below forecasts of 10.6 per cent, according to Baker’s preview note to investors.

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RBI, which also owns Burger King, Popeyes Louisiana Kitchen and the newly acquired Firehouse Subs brand, said COVID-19 still hurt its businesses in 2021, just not to the same extent as 2020. The service industry continues to struggle with labour shortages and supply chain complications, pushing some RBI restaurants to reduce operating hours and look at increasing menu prices.

“Our brand has not been immune to these challenges,” Cil told analysts. “Given the level of commodity cost and labour inflation we’re seeing, we expect additional price increases in 2022 and are working closely with franchisees to make the best decisions for guests and our franchisees’ (profit and loss).”

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