Sales and franchisee profits at Tim Hortons fell in its most recent quarter, prompting parent company Restaurant Brands International Inc. to launch a back-to-basics approach to regain momentum.

B次元官网网址淭here is clearly a sizable gap between what this brand is capable of and the performance weB次元官网网址檝e delivered,B次元官网网址� said CEO Jose Cil during a conference call with analysts Monday after the company released its fourth-quarter and full-year financial results.

Comparable sales, a key retail metric, at Tim Hortons fell 4.3 per cent for the quarter ended Dec. 31, including by 4.6 per cent in Canada.

Investment in the companyB次元官网网址檚 rewards program geared at attracting members dragged down comparable sales by three per cent in Canada, the company said, while softness in lunch food added another one per cent of negative performance.

System-wide sales for the quarter fell 2.9 per cent at Tim Hortons, whose parent company keeps its books in U.S. dollars, at US$1.679 billion.

Franchisee profitability also fell compared to last year, said Cil, though the company did not provide a figure. He attributed the drop to lower sales, as well as pressure from labour costs in parts of Canada.

RBI plans to fix the coffee-and-doughnut chainB次元官网网址檚 performance by elevating the quality of its core categories through innovation and investments in modernizing the brand.

It plans to accelerate a roll out of fresh coffee brewers for better-tasting and more consistent coffee quality, said Cil.

The chain also plans to start offering more than one type of milk for customers, including skim milk and a dairy alternative, almond, starting this spring.

B次元官网网址淭hese adjustments may seem basic, but thatB次元官网网址檚 the point: being the absolute best at the basics that weB次元官网网址檙e already famous for,B次元官网网址� said Cil.

On the breakfast front, Tim Hortons is working to improve the quality of bacon in its sandwiches.

The company will transform nearly all its drive-through boards to digital from paper, he said, which will allow it to tailor offerings based on location, time, weather and other factors.

Tim Hortons is also shaking up its loyalty program, which it says has more than 7.5 million active members but only about a quarter who shared contact information. The new program will be based on points rather than visits and make most of the menu items available for redemption.

When the company starts the Roll-up-the-rim contest in the coming weeks, it will have been updated to tie into its digital focus, and will help drive digital adoption and loyalty registration.

The rewards program is expected to continue to drag down sales for several quarters.

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The company did not say whether Tim Hortons, which has about 30 stores in China mostly in the Shanghai region, has seen any impact from the ongoing novel coronavirus outbreak.

RBIB次元官网网址檚 principal focus is on the health and safety of its employees in the country, said Cil in an interview following the conference call, and RBI is working closely with its master franchisee partner and the local authorities to take any measures necessary.

B次元官网网址淪everal of the restaurants have been temporarily closed,B次元官网网址� he said.

B次元官网网址淲e donB次元官网网址檛 typically share an outlook,B次元官网网址� Cil said, but the company doesnB次元官网网址檛 believe the outbreak has changed any of its long-term objectives or goals in China. RBI announced in 2018 that it plans to open more than 1,500 Tim Hortons locations in the country over a decade.

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On the call, Cil noted the impact of coronavirus when speaking about Burger KingB次元官网网址檚 performance. Burger King China accounts for about two per cent of the chainB次元官网网址檚 consolidated system-wide sales, he said.

B次元官网网址淲hile itB次元官网网址檚 too early to say how long the impact on our business there will last, weB次元官网网址檙e monitoring the situation very closely.B次元官网网址�

The poor Tim Hortons performance came as RBI sales grew, boosted by its new chicken sandwich at Popeyes, and the company raised its dividend.

The parent company of Tim Hortons, Burger King and Popeyes will pay a quarterly dividend of 52 cents per share, up from an earlier payment of 50 cents.

RBI reported net income of US$257 million or 54 cents per diluted share for the quarter, down from US$301 million or 64 cents per diluted share in the last three months of 2018.

On an adjusted basis, Restaurant Brands earned US$351 million or 75 cents per share for the quarter, up from an adjusted profit of US$318 million or 68 cents per share in the same quarter a year earlier.

Revenue totalled nearly US$1.48 billion, up from nearly US$1.39 billion. Burger King comparable sales grew 2.8 per cent and Popeyes rose 34.4 per cent, fuelled by the chicken sandwich.

The company was expected to post 73 cents per share in adjusted profits on US$1.46 billion in revenues, according to financial markets data firm Refinitiv.

For the full year, net earnings were US$1.11 billion on US$5.6 billion of revenues, compared with US$1.2 billion on $5.59 billion of revenues in 2018. Adjusted profits equalled $2.72 per share, one cent better than estimates.

Aleksandra Sagan, The Canadian Press

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