How Tim Hortons and other fast-food chains are navigating the value meal
The owner of Canada’s most recognizable fast-food chain managed to grow its profit in its most recent quarter, even as a pullback in consumer spending that’s long been roiling retailers cropped up in the quick-serve market.
The chief executive of Restaurant Brands International Inc. (RBI) said his company’s brands — Tim Hortons, Burger King, Popeye’s Louisiana Kitchen and Firehouse Subs — have been “navigating a softer consumer environment.”
“There’s no denying that the environment has been tough,” Joshua Kobza told analysts on a Thursday earnings call.
That sentiment has proliferated the fast-food market in recent months with brands as big as McDonald’s conceding the effects of high interest and mortgage rates would see it adopt a “street-fighting mentality to win,” the company’s chief financial officer Ian Borden said during an April 30 earnings call.
Last week, sales at McDonald’s locations that have been open for at least one year fell for the first time since 2020.
RBI’s brands — alongside McDonald’s, Wendy’s and other fast food chains — have been leaning on value messaging and offerings to boost sales during a summer of intense competition that media outlets have dubbed “the value meal wars.”
Cheap burgers, $1 coffee
At Tim Hortons Canada, for example, the chain has been advertising $3 breakfast sandwiches with a coffee purchase — a deal Kobza said he’d taken advantage of Thursday morning. Burger King has similarly been putting the spotlight on its $5 “Your Way” meals.
“I think we’ve been really disciplined in our everyday pricing, which has been paying really good dividends,” Kobza said.
Rivals, however, have used similar tactics. In Canada, Wendy’s has been advertising two for $4 breakfast combos and Starbucks has been offering 25 per cent off iced drinks on Fridays in the summer.
McDonald’s, meanwhile, dropped its starting price for cups of coffee to $1 in Canada and over the summer offers ice cream cones for the same price.
Asked about its pricing strategy and rivals, Kobza said “Tim’s is doing a great job outperforming the market, even in a difficult market.”
“That’s been the case for a while now,” he continued, while noting inflation has softened in Canada but there’s still higher unemployment compared with the U.S.
Tim Hortons, in particular, has been strong because it has long had a leading share of Canada’s brewed coffee and breakfast sandwich market, executives on the call said.
The brand has spent the last year attempting to expand that hold even further. In recent months, it launched flatbread pizzas nationally and rolled out new wraps, bowls and sparkling fruit drinks in a bid to gobble up more afternoon and evening sales.
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