Canadian and U.S. same-store sales grew 3.5% and 1.0% respectively, with Canada's figure assisted by a 2.5% menu price increase. Management called out "unprecedented snowfalls" as partly to blame for relatively lackluster sales growth while notably not blaming the economy.
Maybe management is saving that excuse for next time; it may be a valid one. Starbucks
Taking a gander at what Tim's cooked up on its income statement for the quarter, the top and bottom lines offer little reason for concern: Total sales increased 10.1%, and earnings rose 4.3% compared to last year. Share buybacks helped boost earnings per share 7% higher.
However, the meat of this sandwich left a bit to be desired, largely due to changes in restaurant ownership that caused a 5.7% decline in franchise fees. Add an 11.4% increase in franchise fee costs, and you have a formula that certainly isn't margin friendly. Accordingly, operating income improved only 2.4%.
While this first quarter didn't brew up to full-year targets, the company remains faithful to its guidance for the year. Tim's hopes to serve up more croissants and coffee south of the border in continued U.S. expansion. If you've ever been to Canada, you know Tim's has an incredibly loyal following, which can be a strong asset during a recession.
Trading at 23 times trailing earnings, Tim's is less expensive than its smokin' hot rival McDonald's