On Thursday, Restaurant Brands International said that same-store sales at Tim Hortons in Canada rose 14% last quarter. Maybe more important, those sales are 2% above where they were before the pandemic—the first time the brand has been able to say that.
It was a notable milestone for Tims, which has been working to recover sales in its home market, a comeback started in early 2020 and disrupted by the pandemic and Canada’s slow economic reopening.
But it also serves as an example for its U.S.-based sister chain Burger King, which is having struggles of its own in its home market and is about to embark on a revitalization strategy of its own.
“The blueprint is there, if you will, for what we’ve done at Tims,” RBI CEO Jose Cil said in an interview on Thursday. “It gives us confidence that if we do the same sort of things at Burger King U.S. that it can work.”
To be sure, he said, “the plan is different,” and Burger King U.S. is a “very different business” than Tim Hortons Canada. Burger King U.S. is an irreverent “challenger brand” to dominant McDonald’s, while Tim Hortons in Canada is McDonald’s, basically.
Burger King specializes in burgers and fries while Tims is a coffee and baked goods concept. And RBI has had problems in the past when it tried to operate the chains similarly.
At the same time, however, Tims may provide some general lessons in how Burger King can fix its domestic business.
Tims, the dominant restaurant brand in Canada, saw its sales turn increasingly sluggish there in the years after the brand’s merger with Burger King in 2014, which created RBI. But they’d decelerated in 2019 even before the pandemic. Big ideas, such as plant-based burgers, didn’t do well.
Cil in 2019 said the company had been focused too much on “short-term opportunities” over long-term success. He later said the brand strayed away from its “founding values.” Tims overhauled management, naming Axel Schwan president.
It then focused on improvements it believed would help the brand over the long-term, such as implementing a new brewing system to improve the quality and consistency of its coffee. It began using freshly cracked eggs and increased innovation, particularly on cold beverages.
It also worked furiously to inject the brand with technology, adding a loyalty program that quickly proved popular with Canadians, along with mobile order and pay. And RBI invested $64 million in the brand, including investments in marketing. The company currently has a deal with notable Canadian pop musician Justin Bieber that once prompted Cil to declare himself a “Belieber.”
The pandemic has slowed that recovery. “There are a lot of good things that are happening,” Cil said. “It was just hard to see during the lockdowns.”
“People in the U.S. didn’t understand that the pandemic was significantly different in Canada,” he added. “The lockdowns, mobility restrictions all lasted longer.”
Burger King will not necessarily follow this exact blueprint. As noted, the brands are different. Burger King’s franchisees are much larger and theoretically more independent.
Yet its sales have also struggled for some time, largely underperforming its primary rivals since 2018. Some of its biggest ideas, particularly its hand-breaded chicken sandwich last year, did not perform as well as expected. It discounted too heavily at a time when customers weren’t focused on value.
That has badly eaten into profits at its largest operators—the biggest, Carrols Restaurant Group, is furiously working to control costs and just had its credit rating downgraded. Burger King has since fallen behind both Wendy’s and Dunkin’ among the country’s largest restaurant chains, according to Restaurant Business sister company Technomic.
The chain has already started working to improve operations. The company overhauled management last year. It pulled the Whopper off its value menu, which helped with profits. It has also focused innovation on core products and simplified its menu to improve throughput.
Full details of its broader fix-it plan won’t be made available until next month, after it presents its idea to the brand’s franchisees. The plan is likely to include a combination of remodels, technology and investments in marketing that could, over time, get the company back to where it needs to be. And for some hope, it needs only to take a look at what Tim Hortons just did.