A Cold Mug of Coffee
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Let’s talk about our personal favourite drug of choice, Caffeine. Specifically our preferred caffeine plug, Tim Hortons coffee. Here in Canada you can’t walk a block without seeing 3 Tim Hortons; and if that’s not enough for you can buy Tim’s coffee and make it a home put it in your sweet ebitbrah mug.
It seems like Tim Hortons is everywhere in Canada and everyone is in a Tim Hortons all the time, so it would make sense that Tim Hortons has reported good sales this quarter. Except, that isn’t the case.
Tim Hortons was merged with Burger King, and Popeyes back in 2014. This new organization was named Restaurant Brands International. Bill Ackman’s Pershing Square Capital currently owns 9.9% of RBI, a stake worth about 2 billion.
Not so fresh sales
RBI’s most recent earnings report has disappoint pershing square, while performance from Burger King and Popeyes remains strong Tim Hortons has begun to lag behind. Same sales growth for Tim’s store remained unchanged while Burger King and Popeyes same sales grew 2% and 3% respectively. Baked goods and coffee of all things are to blame from the non-existent sales growth. However Tims has plans to re-invigorate sales by offering all day breakfast and a introducing a kids menu.
Tim Horton’s unfavourable performance this quarter was certainly unaided by the significant underperformance and decline US Tim Hortons franchises. US franchisee count has declined 14% over the past 3 years and still existing store are reporting falling average gross sales. (source: BNNBloomberg)
Putting the ‘I’ in RBI
There is a light at the end of the tunnel however, and its China. Tim Hortons is planning to open 1,500 franchises in China by 2030. This move “should accelerate the brand’s long-term unit growth” says Pershing Square Capital.
Here’s to hoping the China expansion goes better than the US one. In the meantime we’ll keep enjoying our Tims coffee out of our cool new Ebitbrah mugs.