Tim Hortons’ surprise slump in drink and lunch sales drags down RBI earnings

Tim Hortons is blaming a decline in same-store sales on sluggish results in its cold drink, hot drink and lunch segments, marring an otherwise solid third quarter for parent company Restaurant Brands International Inc.

Jose Cil, chief executive of RBI, told investors on a conference call Monday that the “challenging quarter” saw Tims struggle with “softness” in lunch and a weaker contribution from cold beverages — echoing two issues he also listed during the call for the previous quarter. The new issue was a coinciding decline in hot drinks sales. But Cil said an ongoing overhaul to the Tim Hortons brewing equipment should counteract the decline.

Tim Hortons sales dropped to $1.77 billion in the quarter ending Sept. 30., compared to $1.79 billion a year previous. Sales declined 0.1 per cent, while same-store sales — a main gauge on performance in retail — fell 1.4 per cent, compared to a rise of 0.6 per cent a year ago.

The Tims results clouded an otherwise strong quarter for RBI, which saw major success with the Burger King and Popeyes Louisiana Kitchen chains. Popeyes’ new chicken sandwich set off an international frenzy after some outlets ranked it among the world’s best, causing a “chicken war” with competitors and generating millions of dollars in “free media,” by Cil’s estimation. RBI said the quarter was one of Popeyes best quarters in nearly two decades, with 9.7 per cent same-store sales growth. On Monday, Popeyes announced the sandwich will return to the U.S., after selling out two weeks after its launch in August.

Burger King’s 4.7 per cent same-store sales growth — its best since 2015 — was due in part to its success with the plant-based Impossible Burger.

Tim Hortons launched its own versions of a plant-based hamburger and a chicken sandwich but didn’t gain the same traction as its sister chains. On Monday, Cil said Tim Hortons was ready to start rolling out a series of new doughnuts, all born in its new, experimental cafe at the base of its downtown Toronto office tower.

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