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In bid to win market share, Tim Hortons modernizing drive thrus, upgrading menu items

Tim Hortons is modernizing its drive-thru experience and improving its core menu items in a bid to win over customers as the economy starts to reopen, executives with the restaurant’s parent company say.

The focus on positioning the coffee chain to grow during the post-pandemic recovery comes as the ongoing disruption to daily routines caused by COVID-19 restrictions continues to hurt sales.

Restaurant Brands International Inc., which operates Tim Hortons, Burger King and Popeyes, reported weaker fourth-quarter profits and revenues compared with a year ago, with sales across the three brands down 8.6%.

Tim Hortons saw same-store sales slip even further, down 11%, as everyday habits like stopping for a coffee and bagel before work or a hot chocolate after hockey practice continued to be curtailed by lockdowns and curfews.

“Routines remain on hold for many of our guests,” Restaurant Brands CEO Jose Cil told analysts during a conference call. “Breakfast remains significantly impacted at Tims Canada.”

But the company has invested heavily in upgrading the core offerings at Tim Hortons as part of its “back to basics” plan.

The coffee chain has introduced fresh coffee brewers, new water filters, a new dark roast coffee, fresh eggs, new lunch sandwiches and dairy alternatives.

Restaurant Brands is also rolling out more digital drive-thru menu boards, currently installed in about half the Tim Hortons locations in Canada that have a drive-thru.

“We can’t control the virus and we can’t control the lockdown but we certainly can control the experience that our franchisees or teams and our guests are having in the business every day,” Cil said.

“We feel that we’re well positioned when things begin to open up to be able to capture more share and continue to grow the business in Canada for the long term.”

The digital menu boards open up new ways the coffee chain can improve customer service as they use customer information to determine what to display, Restaurant Brands chief corporate officer Duncan Fulton said.

The menus can integrate the chain’s loyalty program and add payment capabilities, which make drive-thru service more personalized and faster, he said.

“It’s giving us a really powerful marketing tool to be able to better tailor offers for our guests,” Fulton said in an interview, noting that one-third of adult Canadians use the Tim Hortons loyalty program.

“We’ve also learned a lot in terms of how we can simplify those digital menu boards to really target and tailor the messages that you see based on your previous shopping habits.”

Restaurant Brands chief operating officer Josh Kobza told analysts that digital sales at Tim Hortons represented 23% of total sales in Canada during the quarter _ more than double what it was a year ago.

In addition, Tim Hortons delivery sales are up about 14 times, he said.

“This continued momentum reinforces our belief that the wave of digital adoption we’ve seen in the wake of the pandemic has represented a step change in terms of how our guests interact with our brands and how we serve them going forward,” he said during the call.

Indeed, the coffee chain is banking on its modernized drive-thru menus and improvements to its classic food and beverage items to help it win market share once the economy reopens.

“We know that billions of dollars will move back to the restaurant sector as all the stay at home orders lift and as we get into vaccination,” Fulton said.

“We strongly believe that there is no restaurant in the country that is better positioned to come out of COVID than Tim Hortons.”

Yet even as sales declined in the three months that ended Dec. 31, Cil said there were early signs of recovery.

“Our December exit rate was high single-digit negative, which is the best performance we’ve seen since the onset of COVID,” he told analysts.

“Obviously we’re not doing cartwheels on that but we are encouraged by the performance and the improvements.”

The coffee chain’s drive-thru business has also performed better throughout the quarter, he said, with sales roughly flat compared to the same quarter last year.

RBI raised its quarterly dividend by a penny to 53 cents US per share.

The increased payment to shareholders came as Restaurant Brands, which keeps its books in U.S. dollars, reported net income attributable to common shareholders and non-controlling interests of US$138 million or 30 cents per diluted share for the quarter ended Dec. 31.

The result compared with a profit of US$255 million or 54 cents per share a year earlier.

Revenue totalled US$1.36 billion, down from US$1.48 billion.

On an adjusted basis, Restaurant Brands said it earned U$247 million or 53 cents per share for the quarter, down from an adjusted profit of US$351 million or 75 cents per share a year earlier.

This report by The Canadian Press was first published Feb. 11, 2021.

 


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Second Cup to close more stores and pilot gas station drive thrus

The Second Cup Ltd. plans to close more stores, sell more of its product in grocery stores and open gas station drive-thrus as it looks to recover from the deep hit absorbed during the COVID-19 pandemic.

images-1The e Mississauga, Ont.-based beverage company says a pilot program will see it open at three Petro-Canada locations in Ontario this year.

Second Cup says the retail sales will supplement its own e-commerce platform that launched in April as much of its coffee house network was forced to close.

It is also moving into “non-traditional” cafe locations such as hospitals, airports, train stations and other transportation venues, with 14 locations scheduled to open across Canada in the next 18 months.

Second Cup says its net loss surged to $1.93 million in the second quarter, from a loss of $783,000 a year earlier.

Net revenue fell nearly 46% to $3.5 million from $6.5 million in the prior year as system network sales decreased 68% to $10.9 million from $34.4 million.

“With an increasing number of Canadians working from home, we know that the daily coffee experience is changing,” says Steven Pelton, CEO of Aegis, the new corporate name for Second Cup.

“People want to be able to have a premium Second Cup coffee experience in their own kitchens, and we are going to make that easier for them, with the return of Second Cup coffee products to retail banners across Canada.”

Same-store sales plunged 52.6% compared with an 8.6% decrease in the first quarter as all 19 Bridgehead coffeehouses in Ottawa and 130 of the 244 Second Cup locations across Canada closed in mid-March.


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Tims Hortons moves to drive-thru and take-out only

Tim Hortons parent company Restaurant Brands International Inc. says it is asking Canadian restaurant owners to provide take-out, drive-thru and delivery only in an effort to reduce the spread of COVID-19.

The company said Monday it is closing all dining room seating at Tim Hortons effective Tuesday, March 17 and will continue the closures until further notice.

The change comes as governments across the country urge Canadians to engage in social distancing to slow the spread of the virus.

Restaurant Brands acknowledged that Tim Hortons restaurants are gathering places for communities, but said the change was being made to contribute to social distancing that has been called for by public health officials.

“As Canada’s leading restaurant brand, we have a responsibility not only to serve guests – but to protect them during this uncertain time,” the company said in a statement.

It said if there are further instructions from public health officials it will take any necessary extra steps.

Following the lead of public health agencies, businesses have been moving to reduce contact among both staff and customers, and limiting non-essential travel.

Earlier Monday, clothing retailer Aritzia Inc. announced that it was closing all of its stores until further notice as businesses across the country move to help reduce the spread of COVID-19, though customers could continue to shopping through the company’s website for the time being.

Aritzia also said it was increasing precautionary measures to ensure the well-being of its concierge and distribution centre employees as well as shifting all support office employees to flexible working arrangements.

Aritzia has more than 95 stores.


Alcona Esso Gas and Variety meets the needs of commuters and the community 

Screen Shot 2019-09-26 at 7.17.01 PMCommuters making the daily trek to Toronto from communities as far away as Barrie, 113 km north of Canada’s largest city, can count on two things when they pull in to Alcona Esso Gas and Variety: a steaming cup of coffee and a beaming smile. 

Alcona Esso is located about 103 km north of Toronto in Innisfil, a commuter town, and during peak drive times the store is a hub of activity. Mornings are particularly hectic, says owner Scott Knack. “Customers are getting their coffee and their smokes en route to starting their day. Convenience is important.”

Screen Shot 2019-09-26 at 7.17.13 PMTo enhance the ease with which customers can make a purchase, Alcona Esso has a drive-through. In fact, the store was the first in the community of roughly 37,000 people to offer this type of service. That was in 1995. “Customers can get anything they want at the drive-through,” says Knack. “Some people even purchase a car wash at the window.” 

Meeting the demands of harried and tech-savvy commuters requires being service focused and innovative. Knack, for example, launched a car wash app earlier this year to make purchases easier. He also offers users a monthly pass for this service. 

The partnership with Esso, on the other hand, signals the store is affiliated with a well-known and well-regarded national company. “It’s a big brand. There is name recognition,” says Knack.  

Then there is quality. Alcona offers customers their own brand of coffee, Rod’s Coffee, named after Knack’s father, who started the business 24 years ago. “Coffee is an important draw. It has to be fresh,” stresses Knack. It also has to stand apart from other vendors, so the coffee cups are exclusive to Alcona with their own design and logo.

Many customers also buy a homemade sandwich to go with their coffee. Each day, the staff prepare egg salad, tuna, turkey and ham sandwiches fresh for the buying. “We’re always trying to do something different, something that Tim Hortons doesn’t do,” says Knack. Although like the giant fast food chain, Alcona does offer customers the option to buy fresh doughnuts, at least for part of the year.

Regardless of what customers purchase, they’re met with a friendly smile and a heartfelt greeting. “We have a warm and happy atmosphere here,” says Knack. “We want people to feel welcome. Our employees are chatty. They ask about our customers’ day. That’s how I was raised.”

Screen Shot 2019-09-26 at 7.17.28 PMKnack also uses social media to engage with customers. “This helps keep people aware of us and what we have to offer.” On Sunday nights, for example, the employees will often post a reminder that garbage bag tags are available at Alcona: Monday is garbage day in the town.

That’s marketing savvy—it’s also thoughtful. Knack ensures similar consideration is given to staff. He often takes his 19 part-time and full-time employees out for a night of bowling or paintball. As well, he tries to accommodate requests for shifts and time off. “I try to schedule according to people’s needs,” Knack says. “We have staff who stay for a long time.”

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