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Winnipeg Free Press - PRINT EDITION
Customers put Tim's on a diet
Afternoon sales slack as snacks dropped
TORONTO -- While Tim Hortons Inc. (TSX:THI) profits and sales continue to improve, Canada's biggest coffee chain says growth may be constrained as frugal consumers -- while not prepared to give up their morning java -- are cutting back on afternoon snacks.
The chain's 13 per cent improvement in second-quarter earnings may not suggest Tim's is taking a hit from weaker consumer confidence, but it noted a modest 1.8 per cent increase in Canadian same-store sales reflected "a challenging macro-environment.
"When a local economy is impacted, we certainly feel it in our stores," Tim Hortons CEO Paul House said Thursday.
Results may have been even better if consumer confidence were stronger, as negative sentiment about the economy has hit companies across the restaurant industry, noted CFO Cynthia Devine.
"The economic environment in both Canada and the U.S. remains volatile and the continued uncertainty appears to be impacting consumer confidence," she said. "We too noticed that some of the more moderated growth in the second quarter carried through into July."
Devine said while sales during the morning remain robust, Tim's has noticed some softness in sales during the afternoon, which appears consistent with a consumer looking to trim spending.
"The consumer, if they've got to cut back a little bit during some of these challenging times, then quite likely it's that snacking, day part."
Devine also said an unseasonably warm spring may have eaten into afternoon sales.
"You're not coming back in the afternoon for that hot coffee when the climate was what it was."
Tim's ever-expanding line of cold beverages have helped to offset declining coffee sales in warm months, but only partially, she said.
House noted along with unfavourable weather and economic conditions, the coffee and breakfast market is more competitive as McDonald's and Starbucks increase their offerings.
"Everybody's trying to get into the coffee business and the coffee business as a whole is flat, and so there's more people chasing the same dollar," said House.
For the three months ended July 1, Tim's earned $108.1 million or 69 cents per share, up from $95.5 million or 58 cents per share in the same year-earlier period and in line with analysts estimates.
Tims shares closed down 2.75 per cent or $1.44 to $50.84 Thursday on the Toronto Stock Exchange.
-- The Canadian Press
Wendy's sales up
The Wendy's Co.'s push to transform itself into a higher-end hamburger chain is showing early signs of taking hold.
The Dublin, Ohio-based fast-food company says a key sales figure rose 3.2 per cent in the second quarter, helped by renovated restaurants, new menu items and a new TV ad campaign.
Sales at restaurants open at least 15 months is a key gauge because it strips out the impact of new and closed locations.
Wendy's said the boost was driven by increased spending per visit, in line with its long-term goal of enticing customers to pay more for better food. Executives noted the company still has a long road ahead. Competition is intensifying and the economy remains weak.
-- The Associated Press
Republished from the Winnipeg Free Press print edition August 10, 2012 B12
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