Fake-meat menu items are boosting Tim Hortons sales, RBI says

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Fake meat is the food trend of the moment. For Tim Hortons, plant-based, meatless proteins are part of a larger-scale attempt to revamp its menus and offer customers some novelty that the chain has been missing.

“In the past, we had our way of doing things, and we kept doing the same thing,” Tim Hortons president Alex Macedo said in an interview Friday following the release of parent company Restaurant Brands International Inc.'s (RBI) quarterly earnings. Roughly one year ago, Tim’s began surveying customers to find out what it needed to do to become a more “contemporary brand."

“We have to focus on the long term, improve the quality of our food offerings, improve the way our restaurants work and become digitally focused,” he said.

The feedback that the coffee-and-doughnuts chain heard has led to initiatives such as remodelling more than 400 of its restaurants, improving how it produces coffee and following food trends more closely. Those trends included the demand for protein-rich snacks: in response, Tim Hortons launched omelette bites, which have performed well. To cater to customers looking for more meat alternatives, it launched a Beyond Meat breakfast sandwich, and has also advertised a limited-time Beyond Meat burger – although RBI’s chief executive Jose Cil cautioned on a call with analysts on Friday that Tim Hortons is fundamentally “a coffee and baked-goods business" that will continue to focus on items such as sandwiches and soup at lunch, not burgers.

RBI, which also owns Burger King and Popeyes Louisiana Kitchen, saw the biggest boost from meat alternatives at Burger King, where the plant-based Impossible Whopper, which launched in April and is rolling out across the United States, has exceeded expectations.

The benefit of the meatless burger, Mr. Cil said, is that it is not just existing customers changing their orders – new, younger guests have also been drawn to Burger King, expanding the fast-food restaurants’ customer demographics.

RBI has also seen results from its international expansion. The company currently has more than 26,000 restaurants worldwide and wants to grow to more than 40,000 across its three chains over the next decade. Burger King has seen particularly strong results in China, India, Brazil and Spain.

Popeyes has recently announced new franchisee partnerships in China and Spain. Tim Hortons has been growing in Asia recently, with its 15th store just opened in China, and recently announced plans to expand in Thailand.

On the home front, sales of cold beverages were impacted by colder spring weather and underperformance of the Oreo Iced Capp. And Tim Hortons is focusing on improving sagging lunch sales, which failed to get a boost from the launch of an inexpensive chicken sandwich.

The chain has also been working on improving the consistency of the coffee it sells, Mr. Macedo said, which has been well received. It has been developing new equipment, such as an oven for hot sandwiches and coffee machines that heat the pots from all sides – rather than a higher-heat bottom burner that can affect flavour.

“It’s the biggest thing we’re doing,” Mr. Macedo said of the coffee adjustments.

Tim Hortons’ new loyalty program has reached more than seven-million users in its first few months, and loyalty members now account for half of the chain’s daily orders. So far, loyalty is not impacting sales, but the company expects it will help them with more personalized marketing.

“It’s been shocking to us, the amount of information we’ve been able to get from our guests,” Mr. Macedo said. Knowing customers’ habits can allow the chain to have orders ready for frequent visitors at their usual time, and to offer them incentives to visit at different times of day. Currently most members use a loyalty card, but Tim Hortons is working on converting users to its mobile app to make it easier to offer those personalized promotions.

Restaurant Brands revenue rose 4.2 per cent in the second quarter, to US$1.4-billion, driven by expansion in the number of its restaurants. Same-store sales grew 3.6 per cent at Burger King, 3 per cent at Popeyes, and 0.5 per cent at Tim Hortons.

RBI’s net income fell 18 per cent in the three months ended June 30, to US$257-million.

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