By, Momal Khan
The time has come for Tim Hortons to put on a fresh pot of coffee. After a disappointing 2019, the restaurant chain is seeking a return to its roots as a coffee-and-doughnuts chain. This comes after a flurry of franchise disputes, slumping sales, and a loyalty program that backfired onto the business.
This shift in Tim Hortons’ focus has come about after its parent company, Restaurant Brands International (RBI), saw a drop in its 2019 fourth-quarter sales that held back its overall performance.
“We’ve tried to do too many things, things that were on the fringes of what is important to our guests here in Canada,” says Jose Cil, CEO of RBI, “Now we’re really putting all of our energy and resources behind things that are fundamental to the brand”. From changes in coffee cup design and menu offerings, to branching out into cereals and Beyond Meat products, Tim Hortons aims to scale back its recent overhaul in experimentation.
For all of 2019, RBI saw company-wide sales grow by 8.3%, buoyed by stronger performances by its two other restaurant chains, Popeyes and Burger King. At Tim Hortons, however, sales were shown to have fallen 2.1%. In its fourth quarter, which ended on December 31, Tim Hortons’ system-wide sales were down by 2.8% compared to last year.
Speaking to some of the worries among franchisees following increasing costs and frequent menu changes: “I want to make sure that we understand the concerns that they have, which is what we’re doing, and why we’ve spent many hours … having an open and transparent dialogue with our owners,” says Jose Cil.
Coupled with increased competition from similar chains and media coverage that has been less-than helpful to its image, Tim Hortons’ strategizing for this year has embraced a new approach, one that is centred more around evolution and less around revolution. The company plans to re-simplify Tim Hortons’ menu, streamline operations in its drive-thrus, and improve upon the quality of its “root” products: coffee, breakfast items and baked goods.
The year of 2019 saw the chain launching numerous offers and initiatives, among which included the new Tims Rewards program, which allows users to redeem a free coffee or baked good after every seventh purchase. The chain also launched more than 60 special-offers, making store operations significantly more complicated and driving up costs for its franchisees.
Research suggests Tim Hortons’ competitors seem to be faring well with sales of cold beverages, which is an indicator to the chain to improve upon its own selection. In 2020, Time Hortons will invest in introducing more flavourful iced coffees and installation of new brewers in store that are able to make better, fresher beverages.
The upcoming year will see some changes being made to the loyalty program, where members will be able to accumulate points that are redeemable for more menu items instead. RBI hopes a revamp to the loyalty program will allow them to track consumer habits and gather data in order to create more targeted promotions.
By adapting to changing consumer tastes at a steady pace while staying loyal to its roots as a simple coffee-and-doughnuts chain, Tim Hortons is hoping to recapture its brand’s since-lost charm; one that Canadians have come to know and love since its establishment in 1964.