Tim Hortons Views Canada’s Population Growth as a Prime Opportunity for Expansion

Canada’s recent population surge is offering new expansion opportunities for Tim Hortons, as the coffee and doughnut chain plans to open more locations in Western Canada starting next year.

Joshua Kobza, CEO of Tim Hortons’ parent company, Restaurant Brands International (QSR.TO) (QSR), shared in a Tuesday conference call that Tim Hortons intends to add new locations, focusing particularly on Western provinces to better serve Canada’s growing population.

“We’ve seen a lot of population growth in Canada, which opens up opportunities for more Tims locations, especially in key areas our team has been targeting,” Kobza stated.

“We expect to see some impact from these new locations next year, particularly in Western Canada, where our density is lower compared to Ontario. As we move into 2025, we’ll begin to see more of these units open,” he added.

While Tim Hortons is expanding, it remains a strong performer for RBI, which saw a third-quarter sales dip, falling below analyst expectations due to what Kobza calls “challenging macro and competitive conditions.” Demand softened at RBI’s other brands—Burger King, Popeyes, and Firehouse Subs—while Tim Hortons benefited from increased customer traffic, driving up sales. Tim Hortons’ comparable sales rose 2.3% in the third quarter, significantly outpacing RBI’s overall 0.3% growth. Meanwhile, Burger King saw a 0.7% decline, with Popeyes and Firehouse Subs posting declines of 4% and 4.8%, respectively.

Kobza affirmed Tim Hortons’ continued value in Canada, noting it as a top choice for value and one of the few major quick-service brands showing positive year-to-date traffic growth.

“Tim Hortons’ No. 1 ranking in brand love and value in Canada allows us to maintain a leading market share in coffee, baked goods, and breakfast offerings,” Kobza said. He attributed recent traffic and profit increases to promotional deals, such as a $3 breakfast sandwich with any coffee purchase, and to enhancements in afternoon menu items, including the new flatbread pizzas.

“Flatbread pizzas have given Canadians another reason to visit Tims, especially during typically slower afternoon hours, driving up both traffic and average check size,” Kobza explained. Nearly 70% of flatbread pizza sales occur after 2 p.m. or on weekends, with the platform generating 2.5 times higher average checks compared to non-flatbread items.

Tim Hortons has embraced a “back-to-basics” strategy in recent years, focusing on its core offerings like coffee and breakfast, which RBI executive chairman Patrick Doyle says has “delivered strong returns.”

Doyle highlighted that growth at Tim Hortons in previous years came from a combination of rising traffic and inflation. Now, with inflation moderating—Canada’s rate dropped to 1.6% in September—traffic growth is the primary driver.

“Tims’ growth this quarter was led by a rise in order counts, rather than check size, which reflects a very healthy business,” Doyle stated. “We’re seeing a sustainable growth path built around consistently bringing more customers into our restaurants.”

Despite Tim Hortons’ strong performance, RBI’s stock fell as much as 5% after the release of its third-quarter results on Tuesday, closing the day at $94.36 on the Toronto Stock Exchange, down 3% from Monday.