Tim Hortons: Stock of the Week

Tim's is owned by Restaurant Brands International, which trades under the ticker QSR.

Andrew Willis 6 November, 2023 | 4:39AM
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Key Takeaways for Restaurant Brands International Stock:

  • Tim Hortons is a star for store growth at RBI with a major expansion into China this year – after hitting a limit on the number of Timmies the U.S. market could handle.
  • Burger King may have to give up its crown in the U.S. but has a large footprint already established abroad and is still generating impressive traction internationally.
  • Popeyes remains a growth story in domestic markets and international franchisee agreements for the brand are now being signed.


Andrew Willis: Does Timmies have what it takes to succeed abroad? From Spain to Thailand and China, Tim Hortons is making big global bets. And it might be where Restaurant Brands International (QSR) investors find growth for that segment. But is there such a thing as too many Tim Hortons’?

With 700 stores already open in China alone, the expansion should be welcome after hitting a clear limit on the number of Timmies that Americans could handle. The company's shed a quarter of its 800-unit peak in the U.S. – although we’re starting to see a small appetite for growth down South with smaller stores and espresso and cold beverage offerings.

Tim Hortons still retains some compelling economics in its domestic market however, and wait till you get the latest on Canadian consumer trends: The coffee and bakery segment now represents a whopping 40% of all quick-service restaurant transactions, which makes for one store per 9,400 Canadians according to Euromonitor and IMF data. That’s a lot of double-doubles that Tim Hortons can sell if they can keep Starbucks and McDonald's at bay.

Tim Hortons Turnaround Takes the Spotlight

Equity analyst Sean Dunlop says RBI's investments in the Tim Hortons brand have underpinned a strong turnaround and offer investors some hope as they watch the competition take a bite out of Burger King in the U.S. We see McDonald's and Wendy’s holding the lead there and see the Whopper having a better time internationally – like in China where there’s already a thousand Burger King locations.

When it comes to the Popeye’s brand, we’re only just getting started on the international expansion, with franchise agreements recently signed for countries like India and the U.K. And any hope of unseating the company domestically would of course need a superior chicken sandwich…

For Morningstar, I’m Andrew Willis.


bulls Restaurant Brands International Bulls Say

  • Burger King’s international portability, strong cash-on-cash returns abroad, and relationships with franchise partners should drive mid- to high-single-digit system sales growth through 2027.
  • Tim Hortons traction in Asia-Pacific could allow RBI to push unit growth beyond Canada, unlocking value that likely represented a key rationale for the 2014 acquisition.
  • Propelled by the Chicken Sandwich, Popeyes has established a viable route to becoming a mainstream brand in the crowded domestic market.

bears Restaurant Brands International Bears Say

  • Challenging turnaround efforts at QSR competitors (Pizza Hut, KFC) suggest that RBI's Reclaim the Flame initiatives at Burger King U.S. may not bear fruit.
  • The presence of larger, global category competitors in many of RBI's key brand and country combinations (generally McDonald's, Starbucks and KFC) could start to weigh on international development prospects over time.
  • Pressure on consumer discretionary spending from elevated inflation and economic uncertainty could weigh on near-term comparable-sales growth and drive an uptick in industry promotional activity.


Editor's Note: All images are courtesy of Unsplash.com and AP Images. 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Restaurant Brands International Inc99.39 CAD1.29Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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