Tim Hortons comparable sales increased in third quarter

After a sales slowdown at Tim Hortons in the spring, the coffee chain is perking up as new beverage launches are drawing younger customers to its stores.

Toronto-based fast-food giant Restaurant Brands International Inc. QSR-T reported on Thursday that comparable sales at Tims grew by 1.8 per cent in Canada in the third quarter – an improvement from roughly flat performance in the previous quarter. (Comparable sales are an important metric in the industry, tracking performance at locations open more than a year, and excluding the sales impact of new store openings.)

Tim Hortons has been working on improving the speed of service in the restaurants and has “greater visibility into restaurant cleanliness,” Restaurant Brands chief executive officer Josh Kobza said on a conference call to discuss the quarterly results.

The chain has also benefitted from the launch of new cold beverages, including matcha and a collaborations with Monster energy drinks, both of which are attracting a new generation of visitors outside of the chain’s usual demographic. Those items are also selling briskly during the afternoons and on weekends, traditionally slower periods for the stores.

Fast-food chains are working hard to draw in inflation-weary customers, who have been cutting back on restaurant spending.

“Tims is performing well and delivering solid results in a tough consumer environment,” Mr. Kobza said.

Still, restaurant owners have noticed an impact on sales in drive-throughs, and in more rural markets where customers have to drive further to a location, as rising gas prices have squeezed Canadians’ household budgets, he added.

In the U.S., continued progress on refreshing the Burger King brand yielded strong results in the quarter ended Sept. 30. Burger King reported an 8.4-per-cent jump in U.S. comparable sales, compared to the same period last year.

The chain is four years into a turnaround plan that has earmarked up to US$700-million in investment through 2028 to improve sales and profitability. The plan includes spending on restaurant remodels, menu improvements, and advertising to change perceptions of the brand.

Value deals such as its “2 for $5” and “3 for $7” are drawing value-seeking customers into the restaurants, even as tough consumer trends are negatively affecting competitors such as McDonald’s and Wendy’s.

Record-high inflation in beef prices has affected Burger King’s profitability, as it has for other burger chains. As prices come down, franchisees will likely be willing to invest more, which could help the pace of restaurant remodels to pick up next year, executives said on Thursday’s call.

At the company’s other chains, comparable sales grew by 1.5 per cent for Firehouse Subs and fell by 1.8 per cent at Popeyes Louisiana Kitchen.

Restaurant Brands reported net income attributable to common shareholders of US$542-million or US$1.54 per diluted share in third quarter, compared to US315-million or 96 cents per share in the same period last year.

Total revenues grew by 3.1 per cent year over year, to US$2.5-billion in the quarter.