Companies & Industries

This is the most important number to look for in Tim Hortons’ earnings: UPDATED

Chart showing Tim Hortons same-store sales growth since 2010

This chart shows Tim Hortons’ same-store sales growth for the last 15 quarters—the amount that the chain was able to grow its sales, counting only stores that have been open 13 months or more. In other words, it shows how good the company is at wringing more money out of its existing, highly caffeinated customer base. This is the line that Tim Hortons needs to pull higher today.

Here’s the company in its own words describing why this measurement is important, from 2013’s annual report:

It is one of the key metrics we use to assess our performance and provides a useful comparison between periods. Our same-store sales growth is generally attributable to several key factors, including: new product introductions; improvements in restaurant speed of service and other operational efficiencies; hospitality initiatives; frequency of guest visits; expansion into, and enhancement of, broader menu offerings; promotional activities and pricing.

This time last year, Tim Hortons said in its annual report that its 2013 performance targets for same-store sales growth were a range of 2-4% in Canada, and 3-5% for the U.S. As you can see, it did not hit those targets once in the three quarters since—even booking a slight decline in the first quarter of 2013.

Weak same-store sales suggest that the company’s new products aren’t hitting the spot with customers; or, worse, that customers are drifting away to competitors. (The lines continually clogging many Tims’ locations suggest the latter is less of a worry, although CEO Marc Caira has hinted that he regards long wait times as an important problem.)

Missing this target again won’t doom the company, of course—but it would certainly do damage to the stock, which is down 6.5% so far in 2014. Same-store sales, and other factors that are largely dependent on growing those sales, are one of the prime areas where investors want to see some positive steps.


Results are out, and it’s not great: slightly down in Canada, slightly up in the U.S., but a full-year rate of growth of just 1.1% in Canada and 1.8% in the U.S.:

Chart showing quarterly same-store sales growth for Tim Hortons by country

From the release:

On a full-year basis, 2013 same-store sales growth of 1.1% in the Canadian segment was below our original target range of 2% to 4%; we believe this was due to ongoing challenging economic conditions and increased competitive intensity in our industry.

However, investors are reacting positively to two other pieces of news: Tims’ dividend hike — increased 23%, or six cents a share to 32 cents — and a $440 million share buyback, driving the stock up 3% in early trading.