Yahoo Finance Tim Hortons 'moving towards growth' with focus on dinner category
The chief executive of Tim Hortons' parent company says the coffee and doughnut chain's turnaround plan is behind it as it looks to expand its offerings in categories such as dinner.
"We're moving beyond turnaround now at Tim Hortons and we're moving towards growth," Restaurant Brands International (QSR)(QSR.TO) CEO Jose Cil said at RBC Capital Markets retail conference on Thursday.
"There's marketing initiatives, product initiatives, operations initiatives, investments in format innovations as well as digital investments that we've seen take hold and we believe will allow us to drive consistent growth for the Tim's business in Canada for many years to come."
Tim Hortons launched its back-to-basics strategy in 2020 after a year that saw the company's comparable sales fall 1.5 per cent. The plan was highly focused on improving the brand's core offerings, including coffee, baked goods and breakfast items. For example, the company installed new technology to improve the consistency of Tim Hortons coffee, introduced fresh-cracked eggs in its breakfast sandwiches and relaunched its lineup of espresso drinks.
That strategy appears to be paying off. Tim Hortons sales in Canada surged 10 per cent in its most recent financial quarter, something Cil says was driven in part by the product improvements made over the last two years.
Now, the company is shifting its focus to growing the business, including in categories like dinner, a strategy that was first unveiled at Tim Hortons' first annual investor day last month.
"We're working on quite a few exciting projects and initiatives around P.M. food, which is a category that we think we should at least have our fair share of – which we don't," Cil said on Thursday, pointing to the company's launch of "loaded wraps and bowls," two new items aimed at attracting the dinner crowd.
"(It's) the beginning of the next phase of investment and evolution on the food side of our business for lunch and dinner."
The lunch and dinner category is the fastest growing in the fast food industry in Canada, according to Tim Hortons, representing an $8.5 billion market that is growing at an annual rate of 5 per cent. Tim Hortons' market share in that category is just 4 per cent.
But extending the Tim Hortons brand into dinner may be a challenge for a company known for its coffee and breakfast sandwiches. The year before Tim Hortons embarked on its back-to-basics strategy, the company launched 60 limited-time offers that Cil previously said had "strayed too far from our core categories that we've always been famous for" and contributed to a decline in sales.
Tim Hortons' chief marketing officer Hope Bagozzi said in an interview with Yahoo Finance Canada last month that the company is taking a "long and thoughtful approach" to any new product launches, conducting market research to understand what will resonate with the loyal Tim's customer.
"Anything new we'll take a bit more time with it and really make sure it has longevity," she said.
"Is it the right opportunity? Will it make sense for guests? ...What flavours would make sense? Everything is really thought out carefully before we go into the final recipe creation. Anything we do going forward, we are going to take that kind of rigor and care and make sure we get it right."
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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