The restaurant business has been experiencing a period of extraordinary difficulty this year, as large chains have been forced to deal with declining sales, closures, and even declarations of bankruptcy. However, although many of its competitors are experiencing difficulties, two fast-food restaurants, including Taco Bell and Tim Hortons, are now seeing a meteoric rise in popularity.
On November 5th, Yum! Brands and Restaurant Brands International (RBI), the parent businesses of Taco Bell and Tim Hortons, respectively, presented their most recent quarterly financial reports, and the findings were not entirely positive.
The majority of the firms’ well-known chains saw significant drops in revenues, according to both companies. All three of the companies that fall under the RBI umbrella, namely Burger King, Popeyes, and Firehouse Subs, as well as Tim Hortons, had a decline in systemwide sales and same-store sales during the most recent quarter, with rates ranging from 0.6% to 4.8%. While this was going on, the same-store sales of KFC and Pizza Hut, both of which are owned by Yum, dropped by 4% during the most recent quarter.
In sharp contrast to the performance of Taco Bell and Tim Hortons during the time in question, these poor outcomes presented a significant challenge. When compared to Tim Hortons, which had its systemwide sales increase by 2.8% and its same-store sales increase by 2.3%, Taco Bell saw its systemwide sales increase by 5% and its same-store sales increase by 4%.
During earnings calls that were held this week to discuss their quarterly results, Yum and RBI provided some surprising insights into the reasons why the two chains are now experiencing such an abundance of success. According to officials at Taco Bell, the chain’s great “value perception,” connection with fans, and menu innovations that generate excitement around the brand are all factors that contribute to the chain’s success.
“Taco Bell’s distinct advantages in innovation, value leadership at compelling price points, and strong buyer connection are obvious reasons why the brand remains a category of one when it comes to receiving with consumers in any economic environment,” David Gibbs, the CEO of Yum, stated during the Nov. 5 conference telephone conference call.
In the meanwhile, officials at RBI feel that the successful performance of Tim Hortons may be attributed to the company’s emphasis on providing food that is reliable, accessible, and inexpensive.
“An excellent team continues to demonstrate the power to offer high-quality food and beverages at an economical everyday price, excellent restaurant-level execution, unrivaled simplicity, and dedicated restaurant owners,” the company’s chief executive officer stated.
According to Kobza, the donut and coffee chain is the most significant contributor to RBI’s adjusted operating income (AOI), which is the income of a corporation after operating expenditures have been subtracted from that level of revenue. He pointed out that Tim Hortons has been able to capitalize on the growing demand for breakfast sandwiches and wraps. In addition, he said that the implementation of the new flatbread pizzas in Canada earlier this year has resulted in an increase in the number of customers who visit the chain at “historically slower” periods of the day, which has led to an increase in the number of checks.
“Our constant enhancements and operations, coupled with our promotional initiatives, remain an uninterrupted driver of traffic growth, and I’m proud to see the dedication that drives the Tims team and restaurant owners driving positive sales growth and competitive outperformance,” Kobza said to reporters.
Each of the firms is now working on projects that are targeted at revitalizing their respective restaurant brands. Firehouse Subs, for instance, has just recently brought back its well-known Hot Sauce Bar, Popeyes is striving to improve its pricing and restaurant operations, and Burger King is now in the middle of a $400 million “Reclaim the Flame” effort to strengthen its brand, menu, and restaurants. All of these initiatives are intended to improve the overall quality of the company’s offerings.
According to Gibbs, who was speaking at Yum, Pizza Hut’s new Chief Brand Officer, Kalen Thornton, is focused on “repositioning the brand in the long term.” In the meanwhile, the KFC team intends to concentrate on providing consumers with a better value and expanding upon the success of its rewards program, which, according to Gibbs, has contributed to an increase in digital sales of more than twenty percent from the previous year.
However, for the time being, the most recent sales data suggests that Taco Bell and Tim Hortons are the franchises that Yum and RBI should be keeping an eye on.