Exteriors of the Tim Hortons coffee shop on King St. East, near Yonge St., is pictured on Dec 6 2017. (Fred Lum/The Globe and Mail)Fred Lum/the Globe and Mail
Tim Hortons' owner Restaurant Brands International Inc. has appointed a new chief executive as the company revives growth at its coffee chain and readies to open the first Tims in China.
José Cil is the new CEO of RBI, which owns Tim Hortons, Burger King and Popeyes Louisiana Kitchen. Mr. Cil had been president of Burger King since 2014. He replaces Daniel Schwartz, the 38-year-old who led the founding of RBI in 2014 and will continue to oversee the company as executive chairman.
RBI announced the changes on Wednesday as it also published some early fourth-quarter results, which were better than analysts expected. The numbers in particular showed a turnaround at Tim Hortons, which has struggled in part because of frayed relations between RBI and some of the coffee chain’s franchisees. Tim Hortons' same-store sales rose 0.6 per cent in 2018 – including a 1.9-per-cent gain in the fourth quarter – compared with a 0.1-per-cent decline in 2017.
Last spring, Mr. Schwartz said RBI would take “urgent actions” to improve Tim Hortons. On Wednesday, he credited factors such as a new all-day breakfast, renovated restaurants and an overhauled advertising strategy. RBI also slowed expansion of Tim Hortons in Canada and worked to quell discord within the coffee chain.
“Relations with our franchisees are much better than they were this time a year ago,” Mr. Schwartz said on a conference call.
The Great White North Franchisee Association, a group of unhappy Tim Hortons' operators, declined comment on Wednesday.
Investors welcomed news of improved growth at Tim Hortons, continued growth at Burger King as well as a reversal of declines at Popeyes. Stock of RBI jumped $7.34 or 10 per cent to $83.51 in Toronto on Wednesday, its highest close since last summer. RBI’s full fourth-quarter results are out Feb. 11.
Analyst Mark Petrie of CIBC World Markets called the initial RBI results “solid” and said there is “building momentum” at Tim Hortons. Mr. Petrie, in a report to clients, pointed to 2.2-per-cent same-store sales growth in Canada in the fourth quarter, the best in more than two years.
Mr. Petrie added that Mr. Cil did “excellent” work at Burger King that included strong relations with the burger chain’s franchisees.
In announcing Mr. Cil as the new CEO, Mr. Schwartz said the Burger King boss was “the driving force” in growth at the hamburger chain.
An immediate challenge for Mr. Cil as head of RBI will be getting Tim Hortons off to a good start in China, where relations with Canada have worsened since December after Canada arrested Meng Wanzhou, a Huawei executive that the United States wants to extradite.
RBI announced the expansion of Tim Hortons to China last summer and wants to open 1,500 stores there over the next decade, a key pillar in RBI’s overall growth strategy. The first Tims opens in China at the end of February. RBI on Wednesday would not say where it is located. The company previously said it would initially focus on Beijing and Shanghai. RBI plans to market Tim Hortons in China and other countries as “Canada’s favourite coffee.”
Asked if diplomatic tension has changed RBI’s approach for Tim Hortons in China, Mr. Cil said in an interview with The Globe and Mail: “It hasn’t.” Asked again whether the distinctly Canadian brand could struggle right now in China, Mr. Cil said: “Our focus is building the brand long-term in each of the markets in which we go into.” He said he would rely on his experience opening Burger Kings in many countries during his 18 years with the company.
As Mr. Schwartz takes a step back at RBI, he is set to become more active in his role as a partner at 3G, the Brazilian private equity firm he joined in New York in the mid-2000s. It was in 2010 that Mr. Schwartz led 3G’s buyout of Burger King, followed by the takeover of Tim Hortons and the creation of RBI in 2014, and the 2017 purchase of Popeyes.
The name of pizza chain Papa John’s International Inc. was floated again by analysts and investors on Wednesday. RBI has been cited as a potential buyer for the past year and Papa John’s has been looking for a potential buyer since last summer. Stock of Papa John’s rose 8 per cent in New York on Wednesday, back to where the shares had been a month ago.
Mr. Schwartz parried questions from analysts and reporters about RBI’s goals to expand its holdings, saying the company is focused on its three well-known brands.
“We don’t have anything in mind,” Mr. Schwartz said in an interview with The Globe.