Tim Hortons creating Toronto stores with 'similar offering' as Innovation Cafe: CEO

Restaurants Brands International’s (RBI) chief executive Jose Cil says the company is constructing Tim Hortons locations in Toronto based on its modern and upscale Innovation Café concept.

Speaking at the Morgan Stanley Global Consumer and Retail Conference on Tuesday afternoon, Cil said the company is “looking at a couple super urban locations in Toronto” that he said will be like the store it opened in downtown Toronto earlier this year.

“I’ve seen them under construction and I know that they’ll be ready to start selling really soon and they’ll have a similar offering and a similar image – kind of an evolved image – from what we see in the Innovation Café,” Cil told analysts and investors gathered in New York City.

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“We have an opportunity with that platform to... not just to offer innovative products and experiences, but also to develop more restaurants in urban locations which we currently under index relative to other parts of the country.”

Tim Hortons spokesperson Sarah McConnell declined to provide additional details about Cil’s comments or the new Toronto locations.

“I can confirm that the first Tim Hortons Urban Format restaurant is opening in Toronto later this month,” she said in an emailed statement.

Tim Hortons, which is operated by parent company RBI, opened its first ever “Innovation Café” in downtown Toronto’s financial district in July. Located in the same building as Tim Hortons’ headquarters, the space is a departure for the coffee chain that has long been known for simple double-double coffees and Timbits. The space is contemporary and sleek, including a brew bar with lattes on tap, and a fresh lineup of doughnuts, sandwiches, espresso drinks and coffees brewed seven different ways.

Tim Hortons previously said the focus of the Innovation Café is to test out new menu items and, depending on the customer response, potentially roll out popular products at locations across the country.

“It’s just the beginning of what we think will be an evolution of the experience in urban locations,” Cil said of the Innovation Café on Tuesday. He did not provide additional details about the “super urban locations,” or when they would open to the public, during the Morgan Stanley conference.

Vince Sgabellone, a food service industry analyst with the NPD Group, expects that part of the reason why Tim Hortons is adding more Innovation Café-styled restaurants is to attract more younger, urban dwellers into their stores. But he doesn’t expect this type of store to pop up outside of major city centres, like Toronto.

“The downtown customer is different than the core, suburban, drive-thru Tim Hortons that we’re all maybe more accustomed to. It can support something a little bit different, a little bit on the edge and a little bit more expensive and upscale,” Sgabellone said in an interview with Yahoo Finance Canada.

“They use the term specifically of a few locations in urban centres. This isn’t a wholesale brand upgrade, or change of the brand.”

Sales at Tim Hortons were a weak spot amid otherwise stellar results in the most recent quarter for RBI, which also operates Burger King and Popeyes. Tim Hortons’ comparable sales, a key metric in the retail industry, fell 1.4 per cent in the three month period ending Sept. 30, while Burger King saw an increase of 4.8 per cent and Popeyes sales jumped 9.7 per cent.

Cil said Tuesday that he sees “tremendous opportunity” to improve operations and drive growth at Tim Hortons, particularly through its core offering of products, which includes beverages, baked goods and breakfast items.

“We’ve seen a little bit of fluctuation, ups and downs, in the sales performance over the last few quarters, partly I think because we’ve been focused on somewhat short-term opportunities,” Cil said. Tim Hortons launched a Beyond Meat burger at its restaurant in the summer, only to pull the product a few months later.

“I think we need to be focused on the core, on the long-term initiatives that are going to have a big impact on the business, including the work we’re doing on beverages, the work we’re doing on drive-thrus, and the work we’re doing on technology.”

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