Latest Videos

{{ currentStream.Name }}

Related Video

Continuous Play:
ON OFF

The information you requested is not available at this time, please check back again soon.

More Video

Nov 1, 2019

'Choice of last resort': Why Tim Hortons' sales are lagging and what it can do to change that

Tim Hortons’ sales growth cools in third quarter

VIDEO SIGN OUT

Security Not Found

The stock symbol {{StockChart.Ric}} does not exist

See Full Stock Page »

Tim Hortons has its work cut out for it.

The coffee-and-doughnut chain was a drag on the latest quarterly earnings of parent company Restaurant Brands International Inc. (RBI). Tim Hortons’ same-store sales declined 1.4 per cent year-over-year, which RBI CEO Jose Cil blamed on weakness in its lunch and cold beverage offerings.

Meanwhile, at other Restaurant Brands banners, Popeyes’ comparable sales rose 10 per cent, fuelled by the popularity of its fried chicken sandwich, while Burger King’s rose five per cent with the help of its Impossible Whopper.

In contrast, Tim Hortons’ limited trial of its Beyond Meat plant-based protein offerings failed to generate the same sort momentum. The company began phasing out the items in September in provinces other than B.C. and Ontario.

If it hopes to stay relevant in its domestic market amid an increasingly competitive quick-service landscape, Tim Hortons will have to prioritize the quality of its core products and expand its market appeal, according to some industry experts.

“It’s really become a choice of last resort,” Robert Levy, president at brand research and consulting firm BrandSpark International, told BNN Bloomberg in an email.

“The food is largely empty calories. They have gone to the lowest common denominator — their bagels come in frozen, their breakfast eggs sit in a warming tray for who knows how long, their sandwiches are mediocre and their coffee is just okay. How could they even let McDonald’s take coffee superiority away from them?”

Levy said Tim Hortons was once “the undisputed favourite coffee in Canada,” according to BrandSpark’s research, but that more recent studies like “Maclean’s Coffee Ranker” suggest McDonald’s Corp. has come out ahead as the “King of Coffee.”

Levy said Tim Hortons needs to follow its competitor’s lead, pointing to McDonald’s spree of store renovations and focus on improving the quality of its products.

But even if McDonald’s coffee is more preferred, Tim Hortons’ brew is still dominant in terms of sales. The company said it sells more than seven out of 10 cups of coffee consumed in Canada.

Still, Tim Hortons risks losing this point of pride if it doesn’t innovate, according to one food industry expert.

“Slowly but surely that market dominance will erode over time,” Sylvain Charlebois, professor in food distribution and policy at Dalhousie University, told BNN Bloomberg in a phone interview.

“If you were to use coffee as that anchor product, it’s still not great. They have to really dig in and see how exactly they can perfect that, because everyone else has picked up their game.”

On this front, RBI’s Cil said in the company’s latest earnings call that Tim Hortons recently launched its “fresh brewer implementation” to “improve the consistency, quality and efficiency of our coffee experience all across Canada.”

However, Charlebois said Tim Hortons still needs to do more to attract younger customers.

“There are many, many different chains that are doing a much better job attracting millennials and Generation Z. And don’t forget, the oldest millennials are 40 years old. They’re not that young anymore. They’re having kids, they’re economically influential.”

Charlebois added changes to the menu is key to swaying this demographic.

“I’ve never once heard Tim Hortons say that they intend to use natural ingredients. Kraft Heinz, Unilever, McDonald’s — you name it — they’ve been on the natural ingredients bandwagon for quite some time. If you don’t do that, you’re undermining a very important piece of the market.”

RBI CEO Cil told BNN Bloomberg in an interview Thursday Tim Hortons is working on broadening its appeal to "guests of all ages."

“It’s one of the big opportunities, I think. We’ve invested quite a bit in building an amazing team of digital and technical experts,” Cil said.

“Obviously the younger generation is using technology to experience the brand their way. We think we need to be upfront and directly engaged with them with great tech and digital offerings on a regular basis.”