Activist investor Bill Ackman called out Restaurant Brands International Inc.’s (QSR.TO) Tim Hortons brand for its “muted” second-quarter performance, notably in its baked goods and brewed coffee offerings, in a letter to Pershing Square Holdings investors late Thursday.

The U.S. hedge fund manager said Tim Hortons’ same-store sales were flat but that the company’s management was working on several initiatives that could turn things around at the coffee-and-doughnut chain, including all-day breakfast, a kids’ menu and a loyalty program that is expected to be introduced to customers within the next few quarters.

“The [EBITDA] decline at Tim Hortons resulted from lapping the prior year’s sales of new equipment related to the launch of the espresso-based drinks platform, which will no longer be a headwind in future quarters,” Ackman wrote in his letter.

Ackman owns 9.9 per cent of RBI that is valued at about US$2 billion. He sold almost 13 million shares of it in the third quarter of 2017 that reduced Pershing’s shares in the restaurant operator by 32 per cent.

Tim Hortons has been under pressure in recent years amid tensions between franchisees and parent company RBI since the coffee-and-doughnuts maker was taken over by 3G, a Brazilian private equity firm that merged it with Burger King to form the larger company. The company’s expansion in the U.S. has also slowed with Tim Hortons shutting stores in some of its biggest markets amid crowded competition in the fast-food space and tense relations with franchisees.

Tim Hortons’ overall U.S. outlet store count has declined by 14 per cent over the past three years, according to a recent analysis by BNN Bloomberg; while most of the U.S. states it operates in, including its bigger markets of New York and Ohio, reported falling average gross sales. The company said it closed four more American locations in Cincinnati, Ohio earlier this month.

In June, after BNN Bloomberg reported RBI was scaling back on its U.S. expansion plans, Tim Hortons president Alex Macedo said in a statement that the company has seen softer comparable sales growth in the U.S. in more recent quarters amid a very competitive environment.

The company had 685 American locations at the end of 2017, up from 649 stores at the end of 2014, he said.

Tim Hortons spokesperson Jane Almeida said the coffee chain expects its new initiatives will improve sales later this year. 

"Our second quarter results do not yet reflect the benefits of the ‘Winning Together’ plan that we developed with our franchisees and which we expect will improve our sales through the balance of the year," Almeida said in an emailed response to BNN Bloomberg. 

Despite Ackman’s view on Tim Hortons’ weak quarter, some analysts have been bullish on the company’s future prospects. RBC Capital Markets analyst David Palmer wrote in a report to clients last week that he expects Tims’ sales growth will ramp up heading into next year following the company’s move to launch stores in China and introduce all-day breakfast.

“While Tim Hortons ’ international unit growth has been slow to materialize, we suspect there will be additional wins on the heels of the recent China development,” Palmer said, who has an Outperform rating on Restaurant Brands’ stock and a $72 price target.