Tim Hortons restaurants in Canada kicked off the year with a double-digit increase in sales, fuelled by higher customer traffic and faster service at the coffee and doughnut chain, its parent company said on Tuesday.
Restaurant Brands International Inc. reported a first-quarter profit of US$277 million, up from US$270 million a year earlier, as its revenue also climbed higher.
The company, which includes Burger King, Popeyes Louisiana Kitchen and Firehouse Subs, posted a 10.3 per cent increase in comparable sales across its brands and a 4.2 per cent net increase in restaurants.
Results for Tim Hortons in Canada were even stronger, with comparable sales up 15.5 per cent compared with the same quarter last year and net restaurant growth of 5.6 per cent.
"Tims is 40 per cent of our earnings," Restaurant Brands executive chairman Patrick Doyle said during a call with analysts.
"There's still a tailwind from increased mobility year-over-year in Canada ... that business generating really nice traffic growth we feel pretty optimistic about because you're continuing to have more mobility."
Restaurant Brands said part of the higher revenue at its coffee and doughnut chain was due to "commodity prices passed on to franchisees and an increase in sales to retailers."
Josh Kobza, appointed Restaurant Brands' chief executive in March after serving as chief operating officer since 2019, attributed the growth at Tim Hortons to improving mobility, a stronger menu, better restaurant operations and pricing.
The restaurant also continued its menu expansion beyond coffee and doughnuts, which now includes more cold beverages and items like wraps and bowls with salad, rice and chicken.
"Our new and improved food offerings, including loaded bowls and wraps, also are helping us to strengthen our position for growth in the $10 billion Canadian dollar p.m. food market," he said during the call.
"This quarter we extended our loaded platform to include Chipotle steak bowls and wraps, which attracted younger guests and drove trade-up from lower ticket lunch foods resulting in a higher cheque compared to the system average."
Meanwhile, Tim Hortons now has the No. 1 food and beverage app in Canada and No. 2 e-commerce app, behind only Amazon.
"During the quarter we saw our 4.8 million monthly active users visit our app an average of eight times per month, helping us to sustain over 33 per cent of sales through digital channels," Kobza said.
Tim Hortons' Roll Up To Win contest, which took place in April during the company's second quarter, pushed up the number of customers using its app to 5.8 million, he said.
The restaurant, which features drive-thru windows at most locations, also sped up its service in the first quarter, Restaurant Brands chief corporate officer Duncan Fulton said during an interview.
"Our franchisees have really, really focused on improving speed of service," he said. "As a customer driving up to a drive-thru, if you see a line you want to know you're not going to get stuck in line when you're on your way somewhere."
Faster service has helped improve customer satisfaction by more than 15 per cent year-over-year, Fulton said.
Restaurant Brands said its revenue for the quarter ended March 31 was US$1.59 billion, up from US$1.45 billion in the first three months of 2022.
On an adjusted basis, Restaurant Brands said it earned 75 cents per diluted share in its latest quarter, up from an adjusted profit of 64 cents per diluted share in the same quarter last year.
Analysts on average had expected an adjusted profit of 64 cents per share, according to estimates compiled by financial markets data firm Refinitiv.
This report by The Canadian Press was first published May 2, 2023.
Companies in this story: (TSX:QSR)
Brett Bundale, The Canadian Press
