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Sales at Tim Hortons grew 33 per cent in the second quarter of the year as traffic increased amid reopenings, helping parent company Restaurant Brands International (RBI) report a rise in profit of 132 per cent.
Tim Hortons system-wide sales topped $1.64 billion in the three-month period ending June 30, compared to $1.1 billion during the same time last year, when the company was forced to limit operations amid widespread lockdowns prompted by the COVID-19 pandemic. System-wide sales growth hit 33.4 per cent, up from a decline of 33 per cent in 2020.
Comparable sales at Tim Hortons – a key metric in retail that measures sales growth without accounting for new store openings – increased 27.6 per cent, compared to a decline of 29.3 per cent last year.
"We're making progress on brand perception and guest experience, our food-quality ratings are improving as well year-over-year, and we're focused on the back-to-basics plan with quality improvements."
Throughout the pandemic, sales at Tim Hortons have lagged behind RBI's other two brands, Burger King and Popeyes. But the results changed in the second quarter, with both Tim Hortons and Burger King reporting sales growth of 33 per cent and 37.9 per cent respectively, while Popeyes sales growth was a more moderate 10.5 per cent.
RBI revenue hit $1.44 billion, a 37 per cent increase from $1 billion in 2020. Adjusted net income was $358 million, or 77 cents per diluted share, compared to $154 million, or 33 cents per diluted share, last year.
The company credits the improvement to its back-to-basics strategy, one that was launched last year and focused on coffee, doughnuts and breakfast. Over the last year, the chain has installed fresh brewer technology intended to improve the consistency of its coffee, relaunched its dark roast coffee blend, and changed its breakfast sandwiches to feature freshly cracked eggs.
Duncan Fulton, RBI's chief corporate officer, says the strategy has helped Tim Hortons increase its market share across the breakfast, lunch and coffee categories.
"The plan that we've laid out is working," Fulton said in an interview.
"If you look at our second-quarter results, Canadians are loving the menu items that we're putting out in front of them and loving the digital experience with our loyalty program."
Still, Fulton doesn't see this quarter as a turning point for the company. He expects that to come when there is a more significant reopening across the country.
"I still think that there's a substantial return-to-normal routines that have yet to come," he said. In fact, the company plans on spending the bulk of the $80 million it committed towards additional marketing for Tim Hortons in Canada for that return-to-normal period.
"The plan is to target that increase in marketing to when Canadians start heading back to work, heading back to school, jumping in their cars, driving downtown and stopping in our drive-thrus along the way," Fulton said.
"That's when we really want to target our marketing fire to have Canadians try all these new products that we've launched through the pandemic."
Labour issues persist
While the company prepares for a more fulsome reopening, it is also dealing with a labour shortage that has gripped many industries coming out of the pandemic. Cil told analysts on Friday that the company is working with franchisee owners "to provide tools and share best practices" when it comes to recruiting, hiring and employee retention.
The company is also piloting a process where franchisees can receive job applications via text, which Cil says has led to an increase in applications, interviews and hires.
For Tim Hortons, the company plans on rolling out a nationwide advertising campaign encouraging people to come work at the coffee chain.
"It's a very competitive marketplace right now for labour and there's a lot of demand as markets are opening up again," Fulton said.
"We have the resources and we're well-positioned to be competitive on the labour front. This is always a highly competitive industry for labour, even more so now, but we're working with our franchisees to get through it."
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.