Financing

Tim Hortons hopes Breakfast Anytime can lift its sales

The company is also working to improve relations with operators in a bid to lift its sales in Canada.
Tim Hortons

Tim Hortons hopes that consumers eating breakfast sandwiches in the afternoon will lift its lagging sales in Canada.

The 4,800-unit chain last week kicked off its Breakfast Anytime program, offering most of its breakfast menu past noon, when it would typically offer only its lunch and dinner items.

The idea, similar to what chains such as McDonald’s have done in recent years, is to take advantage of a public that increasingly prefers having access to breakfast items all day long, rather than just in the morning.

Daniel Schwartz, CEO of Tim Hortons parent company Restaurant Brands International (RBI), said Wednesday that he was “encouraged” by the initial results of all-day breakfast.

“It makes a lot of sense for our business,” he said on the company’s second quarter earnings call. “Guests are asking for it. Breakfast is the fastest-growing market segment. There’s a natural connection with coffee.”

Breakfast Anytime is part of a broader effort to generate sales at the chain, which have struggled amid franchisee discontent both in Canada and the U.S. Same-store sales rose just 0.3% in Canada and were flat globally, including a decline in the U.S.

The company is working on a kids menu for the first time and is testing a loyalty program in a bid to generate stronger sales.

It is also working to improve the chain’s image in its home market, where it operates the vast majority of its restaurants and is considered something of an institution. The company has faced lawsuits from angry operators who formed their own franchisee association, the Great White North Franchisee Association.

Alex Macedo, president of Tim Hortons, has done media interviews, visited restaurants and is holding biweekly phone calls with operators on the chain’s initiatives, to “further bolster support within the Tim Hortons system.”

One of those key initiatives is a redesign of the chain’s restaurants. Executives said on Wednesday that a third of the company’s Canadian franchisees have signed on to complete the remodel by 2019. Schwartz said the company expects that “the majority of restaurants in Canada” will be under the new image by 2021.

In July, RBI hired Duncan Fulton to be the company’s chief corporate officer. He will oversee communications and franchisee relations, among other things.

The efforts, executives said, were not in place early enough to lift Tims’ second quarter sales, but they expect those sales to improve soon, especially with breakfast being served all day.

McDonald’s received a substantial sales boost when it started offering breakfast all day in 2015.

Schwartz said on the earnings call that three-quarters of Tim Hortons customers said that all-day breakfast appealed to them, and 60% said they were likely to buy a breakfast sandwich after noon.

That’s a “sizable incremental ticket opportunity,” Schwartz said, that could “increase frequency to Tim Hortons overall.”

“We expect improved comp results,” Schwartz added. “We are listening to and working closely with our franchisees.”

Same-store sales rose 1.8% at RBI’s Burger King brand, including 1.8% in the U.S., its largest market. Burger King now has more than 17,000 global locations.

Same-store sales rose 2.9% at Popeyes Louisiana Kitchen, including 1.8% in the U.S.

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