Why Tim Hortons’ same-store sales grew through menu innovation

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Menu innovation

We discussed in the last part of this series that traffic (or the number of customers) and ticket (or the average check) help improve same-store sales. To increase these two metrics, restaurants often introduce new products in their menu and use promotional campaigns to drive customers into their restaurants.

New Products 2014-09-04

New menu options

The new menu items introduced in the second quarter include Frozen Green Tea, Greek Yogurt Parfaits, Pineapple Mango Smoothies, Oreo Iced Capp Supreme (a cold coffee-based beverage topped with Oreo-flavoured whipped cream), and Ultimate Cinnamon Buns.

Burger King (BKW), too, offers similar items in its menu. But it lacks the wide array of cold beverages that Tim Hortons offers.

The Canadian market

In Canada, same-store sales benefitted from products that launched in the first quarter, like the Turkey Sausage Sandwich, the Crispy Chicken Sandwich, the Hot Breakfast sandwich, and improved Hash Browns.

According to the company, the new iteration of the Hash Brown is crispier, 35% bigger, and more golden in color than the previous version.

The U.S. market

Tim Hortons (THI) introduced its Frozen Hot Chocolate beverage in the second quarter in the U.S. This beverage helped drive same-store sales in the U.S., according to the company.

Besides menu innovation, the company is also focusing on combo initiatives and channel development to grow revenues. We’ll discuss these topics in the next part of this series.

McDonald’s (MCD) and Taco Bell, under the umbrella of Yum! Brands (YUM), are both included in exchange-traded funds (or ETFs) like the Consumer Discretionary Select Sector SPDR Fund (XLY). They both offer combos in their respective menus.

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