Tim Hortons Franchise: Average Sales ($1.18M) vs. Cost ($971K-$1.71M)

In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for a Tim Hortons franchise, based on Item 7 of the company’s 2023 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Tim Hortons franchise, based on Items 5 and 6 of the company’s 2023 FDD

Section III – Number of franchised and company-owned Tim Hortons outlets at the start of the year and the end of the year for 2020, 2021, and 2022, based on Item 20 of the company’s 2023 FDD

Section IV – News updates on the Tim Hortons franchise opportunity

Section V – Presentation and analysis of Tim Hortons’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 FDD, including information on the:

• 2022 average, median, highest average, and lowest average monthly gross sales for the 558 standard Tim Hortons shops that were open as of December 31, 2022 and reported to Tim Hortons at least 10 months of sales for 2022

• 2022 average and median monthly cost of goods sold and labor expense for the 475 standard Tim Hortons shops that were open as of December 31, 2022 and reported to Tim Hortons at least 10 months of cost of goods sold and/or labor expense for 2022

• 2022 average, median, highest average, and lowest average monthly gross sales; average and median monthly cost of goods sold and labor expense for the 8 Tim Hortons shops built under Tim Hortons’ New Model that were open as of December 31, 2022 and reported to Tim Hortons at least 10 months of sales for 2022

• 2022 average and median same-store sales growth for 552 of the standard Tim Hortons shops that reported comparable sales for the same day of 2021 and 2022 and that were open as of December 31, 2022

Section VI – Key ratios, comparables, computations, and analyses for the Tim Hortons franchise opportunity (exclusive content for Platinum subscribers)

Section I – Tim Hortons Franchise Costs

• Tim Hortons franchise costs, based on Item 7 of the company’s 2023 FDD:

• Initial Franchise Fee:  $50,000
• Real Estate Taxes, Personal Property Taxes, and CAM Charges:  $5,000 to $70,000
• Equipment:  $300,000 to $410,000
• Real Estate:  variable
• Planning, Development, and Design Costs:  $20,000 to $100,000
• Site Development Costs:  $100,000 to $230,000
• Building Costs:  $440,000 to $745,000
• Training:  $20,000 to $27,000
• Start-Up Supplies and Initial Inventory:  $7,000 to $14,000
• Professional and License Fees:  $1,500 to $10,000
• Insurance:  $2,500 to $21,500
• Security Deposits:  $0 to $15,000
• Additional Funds:  $25,000
• Total Estimated Tim Hortons Franchise Costs:  $971,000 to $1,717,500

Section II – Tim Hortons’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Tim Hortons’ initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2023 FDD:

• Initial Franchise Fee:  $50,000
• Royalty:  4.5% to 6% of Gross Sales
• Advertising Contribution:  4% of Gross Sales

Section III – Number of Franchised and Company-Owned Tim Hortons Outlets

Franchised

2020

• Outlets at the Start of the Year:  656
• Outlets at the End of the Year:  633
• Net Change:  -23

2021

• Outlets at the Start of the Year:  633
• Outlets at the End of the Year:  637
• Net Change:  +4

2022

• Outlets at the Start of the Year:  637
• Outlets at the End of the Year:  636
• Net Change:  -1

Company-Owned

2020

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2021

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2022

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section IV – News Updates on the Tim Hortons Franchise

• Tim Hortons’ Sales Surge, but Franchisee Group Says Profits Are Stuck at the Top

• Tim Hortons Franchisees Spar with Parent Company RBI as Rising Cost of Goods Squeezes Profits

• Tim Hortons Posts Strong 2022 Sales but Continues to Close Stores in Canada

• Profit Slips for Tim Hortons Restaurant Owners Amid High Commodity Costs, Inflation

• Tim Hortons’ Parent Company Restaurant Brands International Replaces CEO

• Tim Hortons Ranked No. 145 on Entrepreneur’s 2023 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Tim Hortons Franchise (Item 19, 2023 FDD)

Part 1 – Monthly Gross Sales, Cost of Goods Sold, and Labor Expense

• This section describes monthly Gross Sales, Cost of Goods Sold, and Labor percentages in 2022 for certain franchised Standard Shops as described below.

A.  Monthly Gross Sales Information

• The Gross Sales information in this section was taken from 558 Standard Shops (the “2022 Shops”). The 2022 Shops were open as of December 31, 2022 and reported to Tim Hortons at least 10 months of sales for 2022.

• The first of the 2022 Shops opened in 1985 and the most recent opened in 2022.

• Included in the 2022 Shops are 8 Shops operating under Tim Hortons’ New Model.

• Tim Hortons did not include any Shops that operated under Operator Agreements (32), 28 Standard Shops that reported less than 10 months of sales information, 5 Standard Shops that provided inconsistent information to Tim Hortons, and 13 Shops that were self-serve locations.

• Included in the excluded Shops are 11 Standard Shops that closed in 2022. None of these 11 Shops were open for less than 12 months before closing.

• Average Monthly Gross Sales:  $98,691
• Median Monthly Gross Sales:  $93,090
• Number and Percentage of Shops That Exceeded Average:  254 (46%)
• Highest Average Monthly Gross Sales:  $330,167
• Lowest Average Monthly Gross Sales:  $4,101

B.  Cost of Goods Sold and Labor Information

• The Cost of Goods Sold (“COGS”) and Labor expense information in this section was taken from 475 Standard Shops that were included in the 2022 Shops.

• Included in these Shops are 8 Shops operating under Tim Hortons’ New Model.

• 83 Standard Shops were excluded because they failed to report Cost of Goods Sold and/or Labor information or reported that information for less than 10 months.

• Average Monthly Cost of Goods Sold:  30% of gross sales
• Median Monthly Cost of Goods Sold:  30% of gross sales
• Number and Percentage of Shops That Exceeded Average:  241 (51%)

• Average Monthly Labor Cost:  31% of gross sales
• Median Monthly Labor Cost:  31% of gross sales
• Number and Percentage of Shops That Exceeded Average:  255 (54%)

C.  New Model Shops

• The table below shows monthly Gross Sales, COGS, and Labor expense information (in dollars and as a percentage of Gross Sales) for the 8 Shops built under Tim Hortons’ New Model that were included in the 2022 Shops.

• The first of these Shops opened in 2020, and the most recent opened in 2022.

• No Shops operating under Tim Hortons’ New Model closed during 2022.

• Average Monthly Gross Sales:  $85,679
• Median Monthly Gross Sales: $83,231
• Highest Average Monthly Gross Sales:  $113,111
• Lowest Average Monthly Gross Sales:  $60,291
• Number and Percentage of Shops That Exceeded Average:  3 (38%)

• Average Monthly Cost of Goods Sold:  $25,112 (29% of gross sales)
• Median Monthly Cost of Goods Sold:  $24,305 (29% of gross sales)
• Number and Percentage of Shops That Exceeded Average:  3 (38%)

• Average Monthly Labor Expense:  $24,330 (28% of gross sales)
• Median Monthly Labor Expense:  $23,658 (28% of gross sales)
• Number and Percentage of Shops That Exceeded Average:  5 (63%)

Part 2 – Same-Shop Gross Sales Standard and New Model 2022 Shops (2021-2022)

• The tables below show a comparison of the average and median same Standard Shop Gross Sales growth from 2021 to 2022 for 552 of the 2022 Shops that reported comparable sales for the same day of 2021 and 2022 and that were open as of December 31, 2022.

• Tim Hortons did not include the information from 6 Standard Shops. Of these 6 Standard Shops, 2 were New Model Shops that opened in 2022 and the other 4 failed to report their sales information for the comparable time period.

A.  Total Standard Shops, Including New Model Shops

2021-2022

• Shop SSS Growth:  0.4%
• Total Number of Shops:  552
• Number and Percentage of Shops Exceeding Average SSS:  273/49%
• Median Shop SSS Growth:  0.3%

B.  New Model Shops

2021-2022

• Shop SSS Growth (Daily Average):  7.3%
• Total Number of Shops:  6
• Number and Percentage of Shops Exceeding Average SSS:  2/33%
• Median Shop SSS Growth:  4.7%

• Gross Sales include all revenues received by the Tim Hortons Shop, less refunds and sales taxes.

• Cost of Goods Sold includes food and beverages and supplies.

• Labor costs include payroll, payroll taxes, and benefits.

• In preparing these tables, Tim Hortons relied on the data contained in the unaudited reports submitted to it by its franchisees.

• The dollar amounts shown in this Item 19 have been rounded to the nearest dollar, the percentages shown for Cost of Goods Sold and Labor expense have been rounded to the nearest full percentage point, and the percentages showing same Shop growth have been rounded to the nearest tenth of a percent.

• The information above concerning Cost of Goods Sold and Labor expenses does not reflect all costs of sales, operating expenses, or other costs or expenses that must be deducted from the Gross Sales figures to reflect net income or profit.

• Moreover, this information should not be considered as the actual or probable sales results that will be realized by any franchisee or Tim Hortons Shop. Actual results vary from Tim Hortons Shop to Tim Hortons Shop and Tim Hortons cannot estimate the results of any specific Tim Hortons Shop.

• A new franchisee’s Tim Hortons Shop results are likely to differ from those of established Tim Hortons Shops.

• Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.

Section VI – Tim Hortons Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️