Tim Hortons is struggling with major revenue declines, with daily sales during the coronavirus crisis dropping nearly 40 per cent compared to this time last year, according to an earnings report from the coffee chain’s parent company Restaurant Brands International Inc.
The outbreak hit Canada in March just as Tim Hortons was in the midst of a company-wide “back-to-basics” push to ratchet down a flurry of confusing menu experiments and refocus the chain on coffee, doughnuts and breakfast. But those routine morning offerings have been hit the hardest by the shift to working from home, RBI said on Friday.
“Everyone has been impacted heavily in that breakfast business,” RBI chief executive Jose Cil said on a conference call with analysts.
85% of Tim Hortons in Canada are still open but only for drive-thru and takeout
The pandemic also complicated the already delicate process of overhauling the chain’s signature promotion, Roll Up the Rim, in March.
Tim Hortons was planning to introduce a digital version of the contest, in an attempt to push more customers onto its mobile app while still offering the classic roll-up promotion on cups. But in an effort to prevent the spread of the virus, the chain threw out 81 million Roll Up the Rim-branded cups and made the contest entirely digital.
“It’s hard to quantify the final impact of the program on sales, given it coincided exactly with lockdowns beginning in Canada,” Cil said, adding that the digital-only contest led to 1.5 million new app downloads.
The outbreak in March forced Tim Hortons to close its dining rooms and focus entirely on drive-thru and takeout. Of the 4,002 Tims locations in Canada, 85 per cent are still open.
In RBI’s first quarter in 2020, which ended on March 31, Tim Hortons sales in Canada dropped to US$1.19 billion, a decrease of US$152 million compared to last year. In Canada, the chain had a 10.8 per cent decline in comparable sales — a common retail that gives a clearer view of year-over-year sales growth by ignoring sales from recently opened stores.
Tims was already struggling with comparable sales declines before the crisis, but Cil said the chain was starting to see improvements in January and February.
The outbreak in March forced the chain to close its dining rooms and focus entirely on drive-thru and takeout. Of the 4,002 Tims locations in Canada, 85 per cent are still open, Cil said.
To reduce franchisee costs, the chain has also put major improvement plans on hold, including ongoing efforts to upgrade coffee brewing and drive-thru equipment.
RBI, which also owns Burger King and Popeyes Louisiana Kitchen, said the toughest part of the crisis appears to be subsiding.
The worst impact appears to have come in the final two weeks of March, when daily comparable sales fell “on average by a percentage in the mid-forties,” the company said. The decline in daily sales has since improved, hovering in the “high thirties” at the end of April.
“As we look forward, and we go into the next phase, we’re going to be working closely in each of our markets around connecting with folks as they get back to their routines, going back to the office,” Cil said. “It may take a little bit longer to open up completely, but we’re going to be there every step of the way, trying to drive that behaviour back to where it was pre-COVID-19.”
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