Tim Hortons earnings top RBI brands as sales bounce back from pandemic lows

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Tim Hortons boosted sales by nearly 13 per cent in the first quarter, a significant improvement that suggests the two-year plan to revive the flagging coffee chain is working.

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Sales grew to US$1.56 billion in the quarter ended March 31, from US$1.38 billion this time last year, according to a May 2 earnings update from Tim Hortons’ parent company Restaurant Brands International Inc (RBI). The jump in sales slightly surpassed pre-pandemic sales levels in 2019, when Tim Hortons’ first-quarter sales were US$1.55 billion.

But even before the pandemic, Tim Hortons was struggling with declining sales and unhappy franchisees who worried that the future of the brand was in jeopardy. RBI’s attempts at improving sales with flashy “on-trend” menu items, including a Beyond Meat burger, only complicated Tim Hortons’ kitchens, slowed down drive-thrus and frustrated restaurant operators.

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In early 2020, RBI acknowledged its menu experiments weren’t working and vowed to go back to basics instead, refocusing the brand on coffee and doughnuts. In two years since, the plan has produced several wins for Tim Hortons — most notably the Timbiebs line of Timbits in partnership with Justin Bieber.

Same-store sales — a common metric in retail that ignores recent store openings to give a clearer picture of year-over-year performance – grew by 8.4 per cent in the quarter, shy of forecasts of 9.6 per cent, according to Bank of Nova Scotia analyst Patricia Baker. Same-store sales in Canada grew by 10.1 per cent, compared to a decline of 3.3 per cent last year.

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RBI chief executive José Cil called it a “standout” sales performance in a news release.

The improvement was likely due to the fact that pandemic-related restrictions in the first quarter of 2022 were much less severe compared with the same period last year, Baker said in an April 29 preview note on the RBI earnings. But she suggested the new product innovations and improvements to food quality were also driving sales growth.

Tim Hortons’ adjusted EBITDA was US$231 million in the quarter — the highest earnings of all RBI restaurant brands, including Burger King and Popeyes Louisiana Kitchen.

RBI booked adjusted net income of US$295 million on revenues of US$1.5 billion in the quarter, compared to profits of US$257 million in the first quarter of 2021. RBI’s adjusted earnings per share increased almost 10 cents, to 64 cents.

• Email: jedmiston@nationalpost.com | Twitter: jakeedmiston