We don't make any decision on price increases without careful consideration: Restaurant Brands CEO
Restaurant Brands International Inc. Chief Executive Officer Jose Cil said its Tim Hortons brand faces a number of headwinds.
Restaurant Brands International reported its third-quarter results Thursday with profit hitting US$530 million in the quarter, up from US$329 million the previous year. Additionally, Tim Hortons Canada saw an 11 per cent growth in sales, according to a release from the company.
Despite improvements in profit and Canadian sales, Cil said he sees a number of macroeconomic challenges for the Tim Hortons business.
“It's definitely challenging today in Canada, the volatility and with inflation on commodities and [the] wage inflation that we've seen. [The] interest rate environment [and] the macro environment is making it very difficult and putting a lot of pressure on margins,” Cil said.
Increases in inflation and interest rates could adversely impact the company if it and its franchises are not able to increase prices, according to the earnings release.
“We don't make any decisions related to price increases without very careful consideration,” Cil said.
Cil said the company looks at figures from the Canadian consumer price index when determining price points, which he said has hovered just under seven per cent for several quarters. As such, he said the company’s prices have had to rise in proportion to the input cost it faces.
“Now we also look at inflation for food at home versus food away from home. Meaning that whatever customers are paying for groceries at retail, which is their food at home, and how does that compare to food away from home,” Cil said.
There has been a “divergence,” between retail grocery prices and restaurants Cil said, with grocery store price increases outpacing restaurants.
“We've been able to maintain a very competitive price relative to food at home, relative to our competitors, relative to other segments of the restaurant space,” said Cil.