TORONTO -- Tim Hortons is overhauling its loyalty program after parent company Restaurant Brands International Inc. announced that profits at the coffee chain are down, and its coffee and doughnut giveaways are partly to blame.
Restaurant Brands International Inc. released its fourth-quarter and full-year financial results on Monday, showing Tim Hortons profits were down, with same-store sales dipping 4.3 per cent in the quarter ended Dec. 31. Sales were down even more in Canada, falling 4.6 per cent in the same period.
RBI CEO Jose Cil blamed the decline on the Tims Rewards loyalty program ballooning to 7.5 million members sooner than expected.
“We’ve attracted far more guests to our loyalty program far more quickly than we had planned,” Cil said during a conference call with analysts. “Despite our recent results, we have a clear plan and believe it's within our control to restore Tim Hortons to growth in Canada.” To do so, Cil said RBI will launch a "back-to-basics approach" focused on what Tim Hortons is known for -- coffee, baked goods and breakfast items -- to regain momentum.
Starting Feb. 26, Tims Rewards is changing to what the company calls a points-based system. CTVNews.ca explains what’s changing and how consumers will be affected:
THEN: HOW TIMS REWARDS USED TO WORK
- Customers with a Tims Rewards card used to be able to redeem for a free coffee or baked good after every seventh purchase
NOW: HOW TIMS REWARDS IS CHANGING
- Customers with Tims Rewards cards will collect with 10 points for every purchase
- Cardholders who don’t register their cards (online or on the app) will still receive a coffee, tea or baked good after every 70 points
- Those who do register can choose one of 14 rewards levels, each comprising a different set of menu item rewards offered for different numbers of points
- When registered cardholders have enough points, they can redeem for an item in their chosen reward level or continue collecting
HOW IT’LL WORK
- After collecting 50 points, people will be eligible to start redeeming items
- Regardless of how many items you purchase, you’ll only receive 10 points per transaction
- You can bank up to 20,000 points and redeem whenever you order
- Customers must wait 30 minutes before they can receive another 10 points on their next purchase
- To be eligible, each purchase has to have a pre-tax total of more than $0.50
WHAT COULD MY POINTS GET ME:
- 50 points: hash browns, classic doughnut, specialty doughnut, cookies
- 70 points: brewed coffee, tea, Dream Donuts, bagels and baked goods
- 100 points: hot chocolate, French vanilla, iced coffee, wedges
- 140 points: Classic Iced Capp, frozen beverages, espresso drinks, box of 10 Timbits, yogurt, oatmeal
- 180 points: breakfast sandwiches, soups
- 220 points: BELT, farmer’s breakfast sandwiches, lunch sandwiches, chili
If Tims Rewards members haven’t registered by April 22 they will only be eligible for a free coffee, tea, or classic doughnut after earning 120 points.
Points expire after one year after you earn them. Tims will also send exclusive offers and birthday rewards to registered members through the new program.
RBI says only 25 per cent of the current 7.5 million members are currently registered.
Despite the upcoming changes, RBI said Tims Rewards is expected to drag down sales for several more quarters.
NEW ROLL UP THE RIM FORMAT
The roll-out of the new loyalty program has pushed back Tim Hortons signature promotion Roll Up the Rim, which runs annually from February to April.
The coffee chain said its iconic contest would undergo a major revamp last year after it failed to boost sales and the company received backlash from environmentalists over its disposable cups.
RBI says a big part of refreshing the promotion will be moving it online. However, Tims has yet to reveal what the new promotion will look like or when it will start.
RBI chief operating officer Joshua Kobza said during the call that the chain wants to give customers time to understand the loyalty program changes before announcing a new Roll Up the Rim format in the coming weeks.
CHANGES IN MILK OPTIONS, COFFEE QUALITY
In addition to the loyalty program changes, RBI said it plans to fix Tim Hortons' sales performance by elevating the quality of its products. This includes offering skim and almond milk to customers, and improving the quality of bread and bacon used in its sandwiches.
Cil said in the conference call that RBI plans to roll out fresh coffee brewers for a better-tasting and more consistent cup of coffee. The technology is in place at more than 2,000 locations and Cil said it will be installed in remaining stores by mid-year.
The plan will also see Tims take a step back from experimenting with new menu items that stray from its "core values." Tim Hortons wiped Beyond Meat burgers from its menu in September, two months after introducing the alternative-protein product at most of its nearly 4,000 locations across Canada.
"These adjustments may seem basic, but that's the point: being the absolute best at the basics that we're already famous for," said Cil.
With files from The Canadian Press
