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Restaurant Brands (QSR) Strengthens Tim Hortons in Canada

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Restaurant Brands International Inc.’s (QSR - Free Report) Tim Hortons recently announced a corporate investment of C$80 million in Canada, to support its Back to Basics Plan. Notably, the investment will cover menu improvements, digital enhancements and advertising expenses for 2021.

As part of the Back to Basics Plan, the company had previously launched dark roast coffee, Craveables lunch sandwiches and freshly cracked Canadian eggs in breakfast sandwiches. Going forward, the investment will boost awareness of these launches. Also, it will support additional menu upgrades and related advertising throughout 2021.

Moreover, the investment will boost the adoption, usage and level of guest engagement with respect to the Tims Rewards loyalty program and application in Canada. Currently, the company is working on the improvement of personalized offers in the app. Also, it is rolling out predictive selling on its drive-thru menu boards. Nonetheless, the initiatives remain in line with the company’s intentions to boost the digital guest experience in Canada.

With respect to the launch, Jose Cil, chief executive officer of Restaurant Brands International, stated, “With an exceptional leadership team now at the helm, early successes in our digital journey and encouraging results from our investments in product quality, we are confident the business is heading in the right direction. Our investment today reflects that confidence and our optimism in the plan."

Focus on Tim Hortons’ Positioning in Canada

Restaurant Brands continues to focus on Tim Hortons’ positioning in Canada through the enhancement of core platforms, product innovation and by leveraging technology. During the fourth-quarter earnings call, the company stated that it has rolled out its new fresh brewers across 90% of its locations in Canada. Moreover, the company boosted its menu offerings with the launch of improved Dark Roast, Tims Craveables and Dream Donuts, in Canada. Also, it rolled out fresh cracked eggs, backed by positive Canadian consumer feedback.

Coming to modernization, the company rolled out approximately 1,300 outdoor digital menu boards in 2020, while the remaining are likely to get upgraded in 2021. Going forward, the company anticipates that continued substantial progress on the back of its strategy is likely to enhance the depth and quality as well as drive solid growth in the long term.

Price Performance

Coming to price performance, shares of Restaurant Brands have moved up 14.6% in the past six months compared with the industry's 14.4% growth. Notably, the company has been benefiting from its solid expansion efforts, various sales-building strategies, loyalty program and digitalization.

However, coronavirus-related woes persist. Although the company has reopened most of its restaurants, it is likely to witness dismal traffic due to the social-distancing protocols. Due to a rise in COVID-19 cases in different parts of Canada, municipal bodies have reimposed restrictions, thereby temporarily closing dining rooms in Ontario and Quebec. Notably, the environment in Canada remains challenging. Meanwhile, earnings estimates for 2021 have declined over the past 30 days, depicting analysts’ concern regarding the stock’s growth potential.

Zacks Rank & Key Picks

Restaurant Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Zacks Retail-Wholesale sector include L Brands, Inc. , Abercrombie & Fitch Co. (ANF - Free Report) and Jack in the Box Inc. (JACK - Free Report) . L Brands and Abercrombie sport a Zacks Rank #1, while Jack in the Box carries a Zacks Rank #2 (Buy).

L Brands and Abercrombie’s earnings for 2022 are expected to rise 15% and 286.3%, respectively.

Jack in the Box has a three-five-year earnings per share growth rate of 17%.

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