A Tim Hortons employee distributes coffee from a window while driving to a customer in Mississauga, Ontario on Tuesday, March 17, 2020. THE CANADIAN PRESS / Nathan Denette
Canada’s largest coffee and donut chain saw a strong sales rebound in its most recent quarter, but rising commodity prices and strong demand for restaurant workers threaten to slow growth as economy reopens after COVID-19 lockdowns.
The parent company of Tim Hortons said on Friday that its profits more than doubled in its second quarter, as revenues from its brands – including Popeyes and Burger King – jumped 37%.
But Restaurant Brands International Inc., the fast food holding company behind the three restaurants, said inflationary pressure on goods and wages could jeopardize the pandemic recovery.
“The restaurant industry, like many other industries, is facing rising commodity costs and wage inflation,” José Cil, CEO of Restaurant Brands, said on a conference call. with analysts.
“Staffing continues to be a challenge,” he said. “As the situation evolves on a daily basis, we are working closely with our franchisees to provide tools and share best practices, including recruiting and hiring initiatives, employee retention programs and technologies that simplify the process. hiring. “
The company is also planning a national media campaign to help support recruitment efforts in Canada, Cil said.
Restaurant Brands chief executive Duncan Fulton said labor shortages are emerging at the company’s restaurants globally, including in Canada.
In addition to a nationwide hiring campaign set to launch in the coming weeks, he said the company was working with governments to shed light on the urgent need for more manpower, including access to temporary foreign workers.
“We are seeing widespread labor shortages across the restaurant industry and the owners of Tim Hortons work there like any other restaurant,” Fulton said in an interview.
“A lot of our franchisees themselves work long periods of time in restaurants, doing drive-thru service, helping customers, and helping to fill (programming) gaps.”
As to whether the restaurant will raise wages to attract more workers, he said franchisees are currently offering competitive wages.
“From a wage rate perspective, it’s a very competitive market,” Fulton said, noting that the same labor pool available for Tim Hortons could work for other restaurants and retailers as well, keeping competitive salaries.
Meanwhile, when it comes to increasing the cost of products like coffee beans, Restaurant Brands has “advanced sourcing and sourcing mechanisms” that help mitigate the ups and downs in the market for coffee products. base, he said.
“We have a pretty advanced coffee bean supply system,” Fulton said. “As we see coffee futures prices going up and down, it gives our team the ability to adjust and mitigate some of the impacts. “
At this time, Tim Hortons does not anticipate a general increase in menu prices to deal with cost pressures.
“There is nothing planned on a large scale at this point,” Fulton said. “There is always some kind of market-by-market micro-adjustments that match our competitors. “
He added, “We are pretty careful every time there is a price adjustment to make sure it is competitive and meets customer expectations. “
Restaurant Brands, which reports in US dollars, said its net profit attributable to shareholders was US $ 390 million or 84 cents per share in the second quarter, compared to US $ 163 million or 35 cents per share a year earlier.
Adjusted earnings reached $ 358 million or 77 cents per share, compared to $ 154 million or 33 cents per share in the second quarter of 2020.
Revenue was $ 1.44 billion, up from $ 1.05 billion in the prior year quarter, as Tim Hortons same-store sales increased 27.6 percent per year after decreasing by 29.3 percent. Total system-wide sales were US $ 8.9 billion, compared to US $ 6.8 billion.
Company says global system-wide sales growth was 4% higher than in 2019, before COVID-19 resulted in restaurant closures, while 378 new net locations were added in the first half of the year of the year.