Tims China Reaches 700 Stores as Food-Inclusive Orders Rise to 50%

This is an English adaptation of a FoodBud historical article originally published on August 30, 2023.

On the evening of August 29, 2023, Tim Hortons China and Popeyes China, referred to by the company as Tims China, released second-quarter 2023 results.

Total net revenue reached RMB 411.7 million, up 129.7% year on year. Adjusted EBITDA at the company-owned store level was RMB 18.22 million, positive for the fourth consecutive quarter. The company-owned store adjusted EBITDA margin was 5.0%, up 31.6 percentage points year on year.

Store Network and Membership

As of June 30, 2023, Tims China operated 700 stores across 42 cities. Registered members reached 14.7 million.

The company continued to expand through franchising and the more flexible Tims Express format. In Q2, it opened 52 new stores, a 68% increase versus the previous quarter. In the first half of 2023, franchised stores accounted for 71% of new openings.

During the period, Tims China continued its “city franchisee” and “KA franchisee” models, with new-store development focused on the Tims Express format.

Partnership examples included:

• Sinopec Easy Joy x Tims Express: 36 integrated stores opened nationwide.
• C21 x Tims Express: 12 stores opened in Chengdu, Suzhou, Beijing, Shanghai, Xiamen and other cities.
• New Q2 partners included Three Winged Bird, Haier’s smart-home brand, and Lingka, a coffee-service provider affiliated with a real estate development and hotel operations company.

Tims Express also entered home-furnishing stores and hotels. The brand opened first stores in northwestern Chinese cities including Yinchuan and Lanzhou, extending into lower-tier markets.

Food Mix and Same-Store Recovery

Under its “Coffee Plus” strategy, Tims China increased the share of orders that included food to 50% in Q2 2023, up from 43.7% in Q2 2022.

New products in 2023 included iced grape sparkling cold brew, grape TimsShake, watermelon cold brew, and watermelon coconut water. The grape series was especially popular after launch; at peak, average single-store sales of iced grape sparkling cold brew exceeded 70 cups.

Company-owned same-store sales growth was 20.4% in Q2 2023, up 25.7 percentage points from the same period in 2022.

Cost Structure

At the company-owned store level, the earnings report showed:

• Food and ingredient costs fell from 35.8% to 34.0%.
• Rent costs fell from 34.9% to 20.8%.
• Labor costs fell from 39.1% to 21.9%.

At headquarters level:

• Marketing expense ratio fell from 10.7% to 6.3%.
• Adjusted general and administrative expense ratio fell from 35.2% to 13.3%.

Popeyes China Integration

Tims China opened its first Popeyes fried-chicken store in August 2023 in Shanghai’s Huaihai commercial district. The refreshed Popeyes format upgraded product development, store design, customer service, and the broader customer experience. On opening day, the store set a global record for transaction count.

Popeyes, the U.S. fried-chicken quick-service chain, had more than 4,100 stores globally at the time and was described as one of the world’s largest fried-chicken QSR brands.

In March 2023, Tims China acquired the exclusive operating and franchise rights for Popeyes in mainland China and Macau. The first store opening was positioned as the initial step in rebuilding Popeyes’ China presence under Tims China.

Tims China CEO Lu Yongchen said Popeyes planned to open 10 stores in China within 2023 and no fewer than 1,700 stores in China over the following 10 years. He also said Tim Hortons China and Popeyes would work closely together across the industrial chain, supply chain, digital operations, and other areas, with the goal of building Tims China into a multi-format, multi-brand restaurant group.

Note: acquisition details and forward store-opening targets are historical figures from 2023.