Menu prices are expected to rise slightly at Tim Hortons in the coming months as the coffeehouse chain grapples with ongoing supply chain issues and higher food and labor costs.
The banner’s parent company, Restaurant Brands International, reported on Tuesday that it saw a spike in commodity volatility and high inflation in its most recent quarter. “Given the level of commodity costs and labor inflation we are seeing, we expect further price increases in 2022,” the company’s CEO observed. , José Cil, during a conference call with analysts.
RBI, which also owns Burger King, Popeyes Louisiana Kitchen and Firehouse Subs, announced an increase in its dividend on Tuesday, as it reported fourth quarter earnings and revenue up from the same period a year earlier. early.
Although its results are better than expected, the company continues to struggle with staff shortages and supply chain issues — a situation facing the entire restaurant industry, from fast food chains to full-service restaurants. RBI is trying to ease the labor shortage for franchisees by streamlining internal processes and developing plans to help with hiring and retention, Cil said.
However, with inflation rising rapidly, adjusting menu prices is one of the main ways the business recovers costs. Menu prices are based on several factors, including commodity prices, shipping costs, competitor prices and regional variances, observed RBI’s director of corporate services, Duncan Fulton.
The company also looks at market research on what consumers are willing to pay, he explained. “It’s an ongoing process,” Fulton said in an interview. “We want to stay competitive for our customers and we want to be fair to franchisees. »
Price increases at Tim Hortons tend to be in line with or slightly below inflation, Cil said. Statistics Canada reported last month that the consumer price index rose 4.8% in December, on an annual basis.
Nevertheless, improving sales is also key to the chain’s post-pandemic recovery.
The company’s chief financial officer, Matt Dunnigan, said Tim Hortons posted solid year-over-year growth as sales improved throughout the quarter. “We will continue to manage the volatility that has been prolonged this year and […] We will remain focused on growing volumes in a high quality manner,” Dunnigan said on the conference call.
Results up
Tim Hortons reported a 10.3% increase in sales at its cafes that have been open for at least a year for the quarter ended Dec. 31.
COVID-19 has contributed to labor issues at restaurants, RBI said, which in some areas has led to reduced opening hours and services offered and put pressure on the chain. supply. Even so, the vast majority of Tim Hortons locations in Canada have returned to normal business hours, with dining rooms reopened to customers, although some restrictions, such as capacity limits, persist in some provinces, Ms. Fulton.
The company said it will now pay a quarterly dividend of 54 US cents per share, down from the previous 53 US cents.
RBI posted net income attributable to common shareholders of US$179 million, or 57 cents per share, for the three months ended December 31, up from US$91 million, or 30 cents per share, year earlier. Revenue for the quarter totaled $1.55 billion versus $1.36 billion in the last three months of 2020.
On an adjusted basis, RBI said it earned 74 cents per diluted share in its most recent quarter, compared with adjusted earnings of 53 cents per diluted share a year earlier. Analysts on average had expected adjusted earnings of 69 cents a share and $1.52 billion in revenue, according to financial markets data firm Refinitiv.