Tim Hortons says '2021 will be all about back to basics'

Tim Hortons says '2021 will be all about back to basics'

The president of Tim Hortons Canada says customers should expect the company will focus on its core items – coffee, doughnuts and breakfast – in 2021.

“Our priorities are very clear. It’s really about getting the basics right, but serving Canada as good as we possibly can and improving our core offering as much as we can,” Axel Schwan, Tim Hortons Canada’s president, said in an interview with Yahoo Finance Canada.

“(We’re) elevating the core, making the products as good as they can be, and then embracing technology and digital wholeheartedly, especially with the focus on our drive-thru, which is where a majority of our business is today.”

The back-to-basics approach began at Tim Hortons in 2020, after a year that saw the company introduce three times as many limited-time offers as it normally does, including a Beyond Meat plant-based burger. The shift is one many customers have been urging the company to do for years.

The focus will not waver through 2021, says Schwan. “2021 will be all about that back-to-basics and executing on our priorities,” Schwan said. For example, the company plans to re-launch its dark roast coffee blend in 2021.

“We’re really focusing on the core. We will always have a certain level of limited time offers, to keep the menu exciting, but we’ll have a much bigger focus on elevating our core offering.”

‘Absolutely’ the best approach

Nearly one year ago, Jose Cil, the CEO of Tim Hortons’ parent company Restaurant Brands International (QSR.TO), went on a cross-country tour of Canada to speak to hundreds of franchise owners about what the brand needed to improve in 2020.

Tim Hortons was struggling. A few weeks after visiting seven cities across the country, RBI reported full-year financial results that showed the coffee and doughnut chain’s comparable sales had fallen 1.5 per cent in 2019. Burger King and Popeyes, each run by RBI, reported increases of 3.4 per cent and 12.1 per cent, respectively.

Tim Hortons’ business was Cil’s top priority, he told analysts on a conference call in February. After “dissecting every part of the business” and speaking to franchise owners, Cil said the company had a clear view of what it needed to do “to accelerate growth and profitability.”

“There is no catchy name to the plan,” Cil told analysts at the time, “reflecting our mentality to simplify the business as we return to being the best at our basics and embracing our heritage, all while infusing some more modern features.”

Getting back-to-basics is “absolutely” the best approach, says David Soberman, a professor of marketing at the University of Toronto’s Rotman School of Management.

“I think focusing on coffee and making their breakfast menu second to none is the most important thing for Tim Hortons,” he said.

Over the past year, the company has offered fewer limited time offers and has instead focused on its coffee, baked goods and breakfast items.

Tim Hortons finished installing fresh brewer technology, which is supposed to improve the consistency of Tim Hortons coffee. The coffee and doughnut chain is also in the midst of upgrading its 2,700 drive-thru locations with digital boards, replacing paper ones that have to be manually changed by employees frequently. It has also tweaked its breakfast sandwiches, replacing omelette-style eggs and in with freshly cracked ones, a move Schwan says will be “a massive improvement” and one customers that have called for.

Tim Hortons still faces challenges. The COVID-19 pandemic has disrupted morning and commuter routines, contributing to the decline in sales at Tim Hortons, particularly in cities like Toronto. Sales were down 12.5 per cent in the most recent quarter, a deeper dive from a decline of 1.5 per cent a year earlier.

But according to Cil, the moves are paying dividends. He said after the company’s most recent financial results in October Tim Hortons has “seen a substantial improvement in product satisfaction scores nationally, and an increase in our already significant market share leadership in coffee.”

While Schwan won’t say what other changes will be coming to the Tim Hortons menu next year, he says it will be all about core items.

“We have some other interesting product ideas on how to further make things better than we already have,” he said. “That’s really what we’re focusing on.”

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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