Yahoo Finance Tim Hortons sees more menu opportunity after pizza launch, thanks to high-speed ovens
The CEO of Tim Hortons' parent company says its flatbread pizza market test was “the largest and most successful in recent history” and that it sees more opportunity to expand its menu, thanks to its high-speed convection ovens.
Tim Hortons rolled out flatbread pizzas nationwide earlier this month, as the coffee and doughnut chain looks to bring more customers in for lunch and dinner. The pizza debut came after a two-year pilot project in markets including Winnipeg, Calgary and Mississauga.
Restaurant Brands International (QSR)(QSR.TO) chief executive Joshua Kobza said on a conference call with analysts on Tuesday that the pizza launch is part of an effort in "dialling up the credibility of our P.M. food even more." He says the group expects to grow Tim Hortons' market share in the lunch and dinner food category – known in the industry as the P.M. daypart – to double digits within the next year.
"To bring these delicious products from market test – our largest and most successful in recent history – to national launch, we invested approximately $20 million alongside our franchisees to roll out high-speed convection ovens across the system," Kobza said.
"Our marketing and culinary teams, and restaurant owners, are really excited about the future menu opportunities this new equipment unlocks, and we see a clear path to achieve double-digit P.M. food market share in the next year or so."
After a turnaround plan that was focused on a back-to-basics strategy, Tim Hortons is looking to grow in P.M. daypart, which it says is the fastest-growing one in the fast food industry in Canada.
Tim Hortons is a strong performer for RBI, which reported first-quarter results on Tuesday that surpassed analyst expectations. RBI's system-wide sales growth increased 8.1 per cent in the quarter, with Tim Hortons sales climbing 7.8 per cent. Comparable sales, a key metric in the retail industry that excludes recently opened locations, were up 6.9 per cent at Tim Hortons, the highest figure among RBI's four brands. Burger King saw comparable sales up 3.8 per cent, Popeyes was up 5.7 per cent, and Firehouse Subs rose 0.3 per cent.
"We have a lot more to do still at Tims," Kobza told analysts, pointing to the P.M. food market and the company's cold beverage offerings. He also notes that the new high-speed convection ovens at Tim Hortons – which can bake the flatbread pizzas in less than 90 seconds – "create more options in the innovation pipeline for us over time."
"They're going to allow us to continue to build on top of an amazing breakfast business, a great lunch and later in the day... so I'm pretty pleased with what (the team) is doing," Kobza said.
"We're confident with where we are going."
Shares of RBI were up more than four per cent in midday trading on the Toronto Stock Exchange on Tuesday following the release of quarterly results. The company, which reports results in U.S. dollars, says total sales reached $1.74 billion, up from $1.59 billion last year. RBI's net income was $328 million, or 72 cents per diluted share, up from $277 million last year, or 61 cents per diluted share.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
Download the Yahoo Finance app, available for Apple and Android.
