A Tim Hortons employee hands out coffee from a drive-through window to a customer in Mississauga, Ont., on March 17, 2020.Nathan Denette/The Canadian Press
Restaurant closings due to the COVID-19 pandemic have dragged down earnings for Restaurant Brands International Inc.
The Toronto-based parent company of Tim Hortons, Burger King and Popeyes Louisiana Kitchen reported a 36-per-cent decline in net income in its second quarter to US$164-million, or 35 cents a share.
The company’s total revenue was US$1-billion in the three months ended June 30, compared with US$1.4-billion in the same period last year. Declines were driven by the company’s two largest franchise brands, Burger King and Tim Hortons. Systemwide sales declined by 25.2 per cent at Burger King and 33.4 per cent at Tim Hortons. Popeyes, meanwhile, recorded sales growth of 24 per cent.
Over all, the restaurants’ comparable sales – an important metric that tracks sales not affected by store openings or shutdowns – fell by 29.3 per cent. Canada lagged global results slightly, with comparable sales declines of 29.9 per cent. When the pandemic first began affecting sales in the last two weeks of March, Tim Hortons’ comparable sales in Canada fell by a percentage in the mid-40s. At the end of July, Tim Hortons’ comparable sales were down in the “negative-mid-teens,” the company reported.
High-frequency purchases that are spurred by visits for coffee tend to lead Tim Hortons’ sales – as shutdowns have affected the wider Canadian economy and fewer people are commuting to offices during the week, those visits have been affected. A more gradual reopening in Canada compared with the United States has also meant a slower recovery in sales here.
RBI’s restaurants around the world have mostly reopened, although many are operating with limited service through delivery, takeout and drive-throughs. Dining rooms have reopened in approximately one-third of the company’s restaurants.
RBI has been working to ramp up delivery through its Uber Eats and Skip the Dishes partnerships in Canada. Over all, roughly 3,000 of the company’s restaurants have recently signed up for delivery that did not previously offer it, and now approximately two-thirds of its locations in the U.S. and Canada offer delivery. At Tim Hortons, delivery sales are now nine times higher than they were before the crisis.
Tim Hortons has also been working on more personalized digital offers through its mobile app – an effort that was already in the works but has gained more importance as habits have changed during the pandemic.
“The pandemic compelled us to speed up our digital efforts that honestly we should have sped up on our own in the last couple of years anyway,” chief corporate officer Duncan Fulton said in an interview Thursday. “… Between drive-through and delivery, it’s extremely important to driving sales in this environment, especially if there’s going to be any kind of second wave.”
The company expects traffic patterns and routines to return to normal to a certain extent, but behaviour will continue to change in the long term. Digital sales in the quarter grew by more than 120 per cent compared with last year.
Here in Canada, however, Tim Hortons has been under fire for its use of customer data through the app. In June, the Office of the Privacy Commissioner of Canada announced an investigation into the app, after the National Post published an article detailing how it logged the movement’s of a user’s location, even when the app was not in use.
The company has since made changes to the app.
“We’re working closely with the authorities to make sure that we are doing things the right way. We feel really confident that we are,” chief executive officer Jose Cil said in an interview Thursday. “… We’re investing in the personalization side of things to make sure we’re able to communicate with consumers the way they want to, on their terms and with the incentives and the offers that they’re looking for. That relationship is going to be more and more important, and going to form a bigger part of our business in Canada for the long term.”
“It was encouraging to see our investments in digital channels drive meaningful incremental sales in the quarter and we’re excited that in our home markets, digital sales across brands grew over 120 per cent year-over-year and more than 30 per cent quarter-over-quarter,” chief executive officer Jose Cil said in a statement on Thursday.
By the end of July, “substantially all” restaurants in North America and the Asia Pacific region were open. At the same time, 90 per cent of locations were open in Europe, the Middle East and Africa, and 80 per cent in Latin America. The company said on Thursday that COVID-19 will continue to affect its results in the third quarter as well.
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