Tim Hortons has 4,987 restaurants as of March 31. Nonetheless, the Canadian iconic chain owned by Restaurants Brands International reported a drop in system-wide sales to $1.379 billion (U.S.) in the first quarter of 2021 compared to $1.382 billion in 2020.

By Chen LiuSpecial to the Star

Sat., July 24, 20213 min. read

Tim Hortons has 4,987 restaurants as of March 31

I remember a time when Tim Hortons was synonymous with coffee. Of course, this was during a period when McDonald’s coffee tasted like burnt water and Starbucks was charging an arm and a leg for a morning jolt, although the latter statement is still true.

What made Tim Hortons coffee special, aside from its reasonable price, was its Canadian identity. Tim Hortons had a reputation for being the coffee enjoyed by soccer moms and hockey dads, Bay Street investment bankers and Finch Avenue lawyers. Ever since Burger King’s acquisition of Tim Hortons in 2014, the beloved brand has lost some of its Canadian flare, save for the name.

Tim Hortons is owned by Restaurant Brands International (RBI) which also owns Popeyes Louisiana Kitchen and Burger King. After the acquisition in 2014, Brazilian investment firm 3G Capital held a majority stake in RBI which it has gradually reduced over the years.

In its first quarter 2021 results, RBI reported consolidated system-wide sales growth driven by Popeyes and Burger King but limited by Tim Hortons which reported negative sales growth of 4.9 per cent for the quarter.

Tim Hortons was also the only division of the three to report a drop in system-wide sales to $1.379 billion (U.S.) in the first quarter of 2021 compared to $1.382 billion in 2020.

David Soberman, a professor of marketing at the Rotman School of Management at the University of Toronto, said that Tim Hortons acquisition by Burger King had negative short-term implications.

“In the short-term, (the acquisition) is less positive because the people that own RBI were very concerned with the bottom line so they did some things to increase the efficiency of Tim Hortons (that impacted) the quality and experience,” although he notes that Tim Hortons has improved in the last couple of years by “(limiting) the menu (to) make sure the things they offer are better quality.”

As for Tim Hortons carefully crafted Canadian identity, Soberman said the acquisition has made it harder for it to “wrap itself in the Canadian flag,” but acknowledges that “the average person is not that concerned about who owns what and why. Given that the (acquisition) is not in the news, Tim Hortons for them still means Canada.”

KFC opens 409 restaurants in 50 countries

While KFC has its roots in Kentucky, it has expanded to more than145 countries and territories. As of fiscal year-end 2020, China accounted for 27 per cent of KFC system sales with the United States at 18 per cent. Canada barely makes the list, at just two per cent of system sales.

KFC is owned by Yum! Brands which also owns Pizza Hut, Taco Bell and Habit Burger Grill. KFC reported strong results in the first quarter with a four per cent growth in restaurant count (compared to a year ago) to 25,292 locations which consists of 409 new restaurants and 117 closures during the first quarter.

KFC was its best performing division, contributing $7.3 billion (U.S.) to the top line with Pizza Hut at $3.1 billion and Taco Bell at $2.9 billion.

In a news release with highlights from the first quarter, CEO David Gibbs touched on the performance of its segments while emphasizing the company’s focus on technology.

“First-quarter results reflect encouraging momentum across our business, including solid two-year same-store sales growth and a meaningful uplift in unit development, underpinned by the focus and collaboration of our franchise partners and restaurant teams around the world,” he said.

“During the quarter we took important steps to further boost our digital and marketing capabilities through the acquisitions of two technology-focused companies that will enhance our ability to grow our sales overnight and our brands over time,” Gibbs said.

The bottom line

What do you get when you combine a coffee house, a burger joint, and a fried chicken chain? The answer is Restaurant Brands International. By having a portfolio with different offerings, RBI can cater to a variety of consumer preferences. This benefits the company as it allows it to compete in the breakfast, lunch, and dinner segments. Yum! Brands, on the other hand, seems to focus on lunch and dinner, although I would be lying if I admitted to never having pizza for breakfast. While this focus allows it to have a strong presence during the lunch and dinner rushes, Yum! misses out on morning sales from a breakfast-oriented fast food chain. For reasons of diversification, RBI gets the thumbs up.

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