Tim Hortons puts American consumers in spotlight

by Eric Schroeder
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OAKVILLE, ONT. — The ability of Tim Hortons Inc. to ramp up average unit volumes in core priority markets is key to driving growth in the restaurant chain’s U.S. business, the company’s top executive said in a May 7 conference call with analysts to discuss first-quarter results.

Marc Caira, president and chief executive officer of Tim Hortons, said the restaurant chain’s core priority markets have been the main recipient of investment and also represent a significant part of the chain’s breakfast day part business. The company now will look to build loyalty beyond the breakfast day part, and, at least initially, plans to do this by developing products specifically for American consumers.

“This is something that’s a little different because in the past we may have tried to perhaps use Canadian products a bit too often,” Mr. Caira said. “So these will be products developed for American consumers. These will be products that perhaps could go beyond lunch, into snacking, into the lunch plus area.

“The point here is that we’re not finished with breakfast yet. There’s still a lot of things that we need to do with breakfast in the U.S., and we’ll continue to build breakfast. We’ll continue to build coffee. We want to bring more consumers in from drive-thrus into our restaurants. So there’s work to be done there.”

Tim Hortons’ U.S. segment had operating income of C$4,357,000 ($4,007,000) in the first quarter ended March 30, up sharply from C$910,000 in the same period a year ago. Total U.S. revenues increased nearly 8% to C$51,175,000 ($47,070,000) from C$44,448,000.

“We need to improve the financial matrix of our U.S. business,” Mr. Caira said. “So the fact that we’re doing quite well at our operating profit line is very encouraging. I’m convinced that our top-line will be more in line to where they need to be, provided that the weather cooperates a little bit. And we know that we need to build our business beyond the breakfast day part. So all the elements have been identified. So I rely on our team for what we call around here, ‘flawless execution.’”

Overall, net income attributable to Tim Hortons Inc. totaled C$90,909,000 ($83,615,000) in the first quarter, equal to C$0.66 per share on the common stock, up 6% from C$86,171,000, or C$0.56 per share, in the first quarter of fiscal 2013. Total revenues were C$766,402,000 ($704,854,000), up 5% from C$731,537,000.
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