Can Tim Hortons Be The Key Growth Driver For Restaurant Brands International In The Long Term?

by Trefis Team
Restaurant Brands International Inc.
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Restaurant Brands International (NYSE: QSR) operates three restaurant chains – Burger King (BK) (which is a strong competitor to McDonald’s), Tim Hortons (TH) (a coffee chain which has the majority of its restaurants in Canada), and the recently acquired Popeyes Louisiana Kitchen (PLK).

While Burger King has a global presence and operates more than 16,000 restaurants, Tim Hortons is still finding its feet in international markets and operates less than 5,000 restaurants. According to our estimates, based on the company’s growth plans TH is likely to add around 200-250 restaurants each year, while BK will grow by nearly 500 restaurants every year.

*Click on the above image to access these charts and modify them.


However, demand for coffee is growing as millennials look for non-carbonated beverages and Tim Hortons’ competitor Dunkin’ Donuts (owned by Dunkin’ Brands) is looking to double its number of outlets from the current figure of around 9,000 to nearly 18,000 restaurants eventually. Tim Hortons has a huge scope for expansion given that it operates less than 5,000 restaurants and can potentially expand in all locations where Burger King currently has a presence.

Average revenue generated by a TH franchised restaurant is higher compared to BK and while the EBITDA (earnings before interest, tax, depreciation and amortization) margins for this segment are lower, we expect them to increase over our forecast period.

*Click on the above image to access these charts and modify them.


A faster expansion of Tim Hortons can lead to higher revenues and EBITDA for Restaurant Brands International.

You can click here to view our interactive model and modify the above charts to analyze the impact of a faster expansion of Tim Hortons on RBI’s revenues and EBITDA.

While Tim Hortons can be a key growth driver for RBI in the long term, it is currently struggling to resolve issues with its franchisees. There is an ongoing dispute around profitability of franchisees which is alleged to be negatively impacted due to certain measures being taken by the company.  We believe that the Tim Hortons segment holds strong growth potential for RBI and an accelerated pace of expansion of this chain can drive revenues and profitability for the company in the long term.

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