Tim Horton’s owner RBI sees 37% profit decline due to COVID-19

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Canaccord Genuity Wealth Management's Rob Tétrault discusses the UK considering negative interest rates and the latest earnings for Tim Hortons' parent company. – Aug 6, 2020

Restaurant Brands International, the owner of Burger King and Tim Hortons saw the novel coronavirus pandemic take a big bite out of earnings last quarter, with sales down 31 per cent year over year despite a rebound during the past month as commuters return to the roads.

The absence of morning coffee consumers and afternoon snack seekers for much of the second quarter pushed down profits by 37 per cent compared with a year earlier, the company said.

READ MORE: Montreal man arrested for disobeying mandatory mask rule in Tim Hortons

“The pandemic has had an especially pronounced impact on routine-based visits, including on the morning commute and afternoon snack occasions, which each represent a significant part of our business,” RBI chief executive Jose Cil said on a conference call with analysts Thursday.

Nonetheless, system-wide sales have climbed back to 90 per cent of their pre-COVID-19 levels, he said.

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Most RBI locations in Canada and the U.S. remained open during the outbreak, but the company shifted heavily toward drive-thru and delivery as patrons shied away from bricks-and-mortar locations and dining areas became no-go zones.

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Drive-thru sales – some 12,000 of RBI’s roughly 15,000 storefronts in Canada and the U.S. sport drive-thru windows – rose at least 10 per cent at Tim Hortons by June, 20 per cent at Burger King, 100 per cent at Popeyes, mitigating the larger revenue plunge.

The company has added nearly 3,000 more restaurants to its delivery network in Canada and the U.S. since February, bringing the total to nearly 10,000.

READ MORE: How an Ontario statistician cracked Tim Hortons’ digital Roll Up the Rim contest

In spite of the boost in off-premise service, the pandemic drove a steep revenue decline at RBI’s two biggest brands, with sales at Tim Hortons and Burger King shrinking by one-third and one-quarter, respectively.

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Tim Hortons has been especially hard hit due to the country’s slower pace of reopening, said Chief Executive Officer Jose Cil.

“Canada has generally followed a measured pace of reopening, which has helped effectively contain the virus, but has led to a slower pickup in activity and re-establishment of routines,” Cil told analysts.

Restaurant Brands expects to end 2020 with roughly the same number of outlets as last year – a little over 27,000 – as the company continues to open new restaurants as part of its annual plan. It had net restaurant growth of over 5 per cent in each of the last three years.

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Still, growth at Popeyes has been surging, with the company cashing-in on its massively popular fried chicken sandwiches to expand into markets such as China.

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Comparable sales at Cajun-inspired chain rose nearly 25 per cent in the second quarter and come at a time when McDonald’s Corp , Starbucks Corp and Dunkin Brands have all seen a drop.

On an adjusted basis, the company earned 33 cents per share in the second quarter ended June 30, beating Wall Street expectations of 31 cents, according to IBES data from Refinitiv.

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