There’s a very good reason why Tim Hortons brought in new boss Marc Caira last year to establish a sense of urgency: sales are in a rut.
Based on the number of transactions taking place across Canadian locations, sales have been falling for two years, in fact, according to experts who watch Tim Hortons closely.
The source of the decline is where Tims has historically been strongest, in breakfast. Consumers, it appears, are taking their morning business elsewhere.
Chief rival McDonald’s has experienced double-digit sales gains in breakfast menu items over the past 24 months, its Canadian president said recently.
Starbucks, meanwhile, is in the midst of its biggest Canadian expansion since venturing north from Seattle in 1988 (thanks to Target’s launch here).
“The environment remains more challenging than we have witnessed in the past,” Derek Dley, an analyst at Canaccord Genuity said in a May 8 note.
“Same-store transactions fell for the eighth consecutive quarter in Canada, which we believe continues to point to a highly competitive environment and slowing growth opportunities for Tim Hortons,” Dley said.
Get weekly money news
Less spending more (but not much more)
To be sure, sales in total dollar terms continue to rise across the 3,500 odd Tim Hortons locations across Canada. Experts said prices are roughly one per cent higher than a year ago, while new menu items are helping.
But even there, sales in total dollar terms were up a sluggish 1.6 per cent in the first three months of the year, missing expectations among some.
Sales growth (in dollar terms) has also largely been flat for the past year – and is trending along its weakest levels in at least six years (see chart).
The trend line is why Caira is moving quickly to implement changes to win new business from customers, such as in the lunch category.
READ MORE: Tims to put stronger focus on lunch
A new chicken sandwich has been introduced, which Tims is hoping customers will buy in a combo with kettle chips, also a new menu item.
Double lane drive-thrus and other efforts to squeeze higher productivity out of individual locations are also on the way. More detail can be found here.
Comments