TORONTO — Executives at Tim Hortons are reconsidering whether it's worth the risk of flavouring your coffee break with potential controversy.
After the restaurant chain was dragged into a clash between environmentalists and oil industry supporters last month, Daniel Schwartz, CEO of Tim Hortons' parent company Restaurant Brands, said Monday the company is reviewing its Tims TV in-store digital screens.
"We're now taking a look at the whole Tims TV program and what makes sense for the brand," said Schwartz in an interview with The Canadian Press.
"As with many things in the restaurant, we explore what's best from time to time."
The review comes after Tim Hortons was put in the hot seat for giving advertisement space to pipeline giant Enbridge on its in-store digital screens.
The commercials angered environmentalists who launched an online petition to get them pulled. When Tim Hortons yanked the Enbridge ads, some oil sector supporters called it an insult to one of Canada's biggest industries and launched their own boycott.
The conflict showed the potential dangers of a brand as recognizable as Tim Hortons selling ad space to companies that could rankle its customers.
The coffee and doughnut chain began experimenting with Tims TV last year before rolling out screens at restaurants across the country. The company described Tims TV as its own version of a community space, serving as a home for the latest news, weather, local events and branded videos.
But the thrust of the concept was to pocket revenue from what's essentially a billboard inside the restaurants. Advertisers could buy airtime on Tims TV in a looping rotation of content.
Canadian movie theatre operator Cineplex Inc. (TSX:CGX) runs Tims TV as part of a multi-year agreement with Tim Hortons where both companies sell advertising time on the screens.
On Monday, Restaurant Brands International Inc. (TSX:QSR) reported a second-quarter profit of US$9.6 million, or five cents per share for the three months ended June 30. That compared with a profit of $75.1 million or 21 cents per share a year ago before the two brands combined.
The company behind Tim Hortons and Burger King said revenue totalled $1.04 billion, up from $261.2 million in the second quarter of 2014 before Burger King acquired Tim Hortons late last year.
Same-store sales — sales at outlets that have been open for at least a year — were up 5.5 per cent at Tim Hortons locations, while Burger King had same-store sales growth of 6.7 per cent.
Restaurant Brands said it will pay a quarterly dividend of 12 cents per share, up from 10 cents per share.
On an adjusted basis, Restaurant Brands earned $142.7 million or 30 cents per share in its latest quarter. Analysts had expected a profit of 25 cents per share for the quarter, according to Thomson Reuters.
Tim Hortons opened locations at a record pace in the first half of this year with net growth reaching a historical high of 105 new restaurants, Schwartz said. About 90 of those stores were in Canada.
The chain is also looking to make a bigger splash in the Middle East with its local operating partner Apparel Group. Schwartz said he recently visited the region alongside chief financial officer Josh Kobza with the intention of getting a better grasp on how to boost the brand's presence.
"I'm really excited about the progress that has been made," he said.
"We've been figuring out the target markets and started speaking with partners all around the world."
