Tim Hortons forecasts another year of Canadian same-store sales growth

Tim Hortons is anticipating Canadian same-store sales growth in the mid-to-high single digits in 2022 as the coffee chain’s turnaround takes hold in its home market.

The Restaurant Brands International chain also said Tuesday during an investor presentation that it set a long-term goal for same-store sales growth of 2% to 3% annually. Tims reported Canadian same-store sales growth of 10.8% in 2021 and same-store sales declines of 16.5% in 2020.

Because of its large Canadian footprint, Tim Hortons typically accounts for more than half of Restaurant Brands’ revenue, but recent sluggish sales have weighed on the restaurant company’s overall results.

Over the last few years, Tims has reshuffled its executive team, updated its coffee and breakfast offerings, and revamped its loyalty program in the hopes of once again driving sales growth in its home market. Even before the pandemic, sales and traffic were stagnating as Canadians chose Starbucks or McDonald’s for their coffee instead.

“In Canada, it’s gotten more competitive over the last 10, 15 years than it was 30 years ago,” Restaurant Brands President Jose Cil said.

The pandemic served as another roadblock to its comeback as outbreaks in Canada led to more restrictions, although Tim Hortons President Axel Schwan said mobility is now returning.

“Canada had some of the longest lockdowns, really, in the world,” Schwan said. “Coming out of [the first quarter], we see a lot of momentum, traffic picking up, people getting out again.”

Earlier on Tuesday, the coffee chain reported same-store sales growth of 8.4%, falling short of StreetAccount estimates of 9.6%. Canadian same-store sales rose by double digits during the first quarter.

Executives laid out their strategy to go “back to basics” to draw in customers during the presentation. The approach focuses on its food and beverage offerings, digital engagement and the in-restaurant experience.

“Over the next few years, we will remain focused on expanding into high-growth dayparts and products, enhancing our leading digital ecosystem and maintaining our leading operations and optimizing our restaurant performance,” Schwan told investors.

Technology plays a key role in those plans, like rolling out digital menus nationwide for drive-thru lanes. In addition to being able to suggest menu items based on weather and other factors, those menu boards will display digital versions of Tims’ bakery cases. Executives noted that drive-thru customers typically buy fewer baked goods than customers who order inside, where pastries and other baked goods are showcased.

Shares of Restaurant Brands fell 2% in afternoon trading, despite the company topping Wall Street’s estimates for its first-quarter earnings and revenue.