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Loyalty Is the Answer to Tim Hortons’ Sales Woes

Danni Santana
Loyalty Is the Answer to Tim Hortons’ Sales Woes

Tim Hortons’ new loyalty program will soon provide a much-needed boost to the Canadian coffee giant’s sales, according to parent company Restaurant Brands International.

The restaurant group Monday defended a poor first quarter sales performance by Tim Hortons, blaming both inclement weather and failed experimentation on the part of the company with its Roll Up The Rim campaign, which has offered cash discounts and free prizes to customers for three decades. Tim Hortons tried to improve its sales in the quarter by increasing giveaways to diners, but the plan backfired when the strategy did not result in more foot traffic.

Early market response to Tim Hortons loyalty play, however, suggests the recently deployed program can help lead a sales turnaround for the brand.

Five weeks after launching Tims Rewards on March 20, about one-fifth of Canada’s net population had already enrolled in the platform, RBI’s CEO José Cil said on an earnings call with analysts Monday. More than 6 million active members also accounted for half of the chain’s transactions over the period.

“The loyalty program saw quite a bit of success,” said Cil. “The impact on same-store sales was modestly positive initially, and we think there is huge guest uptick as we feel we’re just at the beginning of loyalty, and what it could do for the business long-term.”

Loyalty programs historically offer restaurants a more lucrative business proposition than discounted meals, as customers must spend money first to earn incentives. From a data perspective, chains can additionally leverage customers’ ordering patterns to tailor new products to them.

According to RBI’s financials, Tims Rewards wasn’t launched in time for it to have a significant impact on first-quarter sales. However, the coffee chain expanded its loyalty offering to the U.S. last month, following its initial success north of the border.

For the period ending March 31, Tim Hortons reported a year-over-year same-store sales decrease of 0.6 percent, compared to positive comparable-store sales growth of 0.6 percent and 2.2 percent for sister companies Popeyes and Burger King.

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