Tim Hortons sales surged in its most recent financial quarter, surpassing pre-pandemic levels as the coffee and doughnut chain continues to expand its product offerings in the dinner category.
Restaurant Brands International (QSR)(QSR.TO) – the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs – says system-wide sales at the chain hit US$1.95 billion in the three-month period ending Sept. 30, up from the US$1.78 billion reported last year and in 2019. Comparable sales, a key metric in the retail industry that excludes recently opened locations, jumped 11 per cent compared to last year, and increased 5 per cent compared to 2019.
"These results were driven by continued strength from our core offerings and strong calendar initiatives to extend Tim Hortons into high-growth dayparts and products aided by strategic price increases," RBI chief executive Jose Cil said on a conference call with analysts on Thursday.
"We're pleased to see that our core food offerings – breakfast and baked goods – helped drive our year-over-year comparable sales uplift during the quarter, with added benefit from our cold beverage and P.M. food initiatives."
Tim Hortons is in the midst of the second phase of a turnaround plan that is focused on expanding into the high-growth lunch and dinner category, known in the fast food industry as the "P.M. daypart." The category is the fastest-growing one in the fast food industry in Canada, according to Tim Hortons, representing an $8.5 billion market that is growing at an annual rate of 5 per cent.
Tim Hortons has been expanding its menu offering for the lunch and dinner crowd in recent months, launching a new lineup of wraps and bowls that Cil says has helped drive sales growth. The company's lunch and dinner food accounted for 10 per cent of all items sold in the third quarter.
"We're seeing Canadians respond really well to the food and beverage innovation that we've been rolling out of Tim Hortons," Duncan Fulton, RBI's chief corporate officer, said in an interview with Yahoo Finance Canada.
"With 10 per cent of all tickets now including a P.M. food item, that's exciting for us because there's a pretty big runway of growth still ahead of us to become a destination for lunch and dinner, as well as breakfast... There's a lot of room to grow."
As part of the push into lunch and dinner, Fulton says the company will be rolling out new savoury baked goods in two flavours – jalapeño and herb and garlic. Tim Hortons also recently tested out flatbread pizzas at 20 locations across the Greater Toronto Area and will be expanding the test to different locations.
"Before we make a nationwide commitment, we still have further testing to do, but the reaction from our guests has been very positive," Fulton said.
RBI, which reports its earnings in U.S. dollars, saw system-wide sales grow 14 per cent in the third quarter, with total revenue reaching $1.73 billion, up from $1.50 billion during the same quarter last year. The company reported a third-quarter profit of $530 million, or $1.17 per diluted share, up from $329 million last year, or 70 cents per diluted share.
Analysts on average had expected a profit of 80 cents per share and $1.66 billion in revenue, according to estimates compiled by financial markets data firm Refinitiv.
Shares of RBI were up around 2 per cent as at 12:30 p.m. ET, trading at $81.04 on the Toronto Stock Exchange.
With files from The Canadian Press
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.