Your morning cup of coffee may not be affected, but Tim Hortons Inc. is expected to increase prices on a number of other items in August.
Credit Suisse analyst David Hartley said distribution channel checks indicate price hikes in the 10¢ to 20¢ range for sandwiches and other items at the popular restaurant chain. He does not think Tim Hortons coffee products will be affected.
Mr. Hartley also noted that select stores are going to be selling new small, square sandwich products, while the panini sandwich test in Canada appears to be a success, with a roll out expected across the Tim Hortons chain.
“We expect the new products could carry a higher margin (as percentage of sales), but could prove to be cannibalistic to higher-priced products – not so good for
royalties,” Mr. Hartley said in a report.
However, he noted that the price increases appear to be potentially positive for royalty growth.
Tim Hortons reports second quarter results on August 9. Mr. Hartley is forecasting earnings per share of 68¢, versus consensus of 70¢ and 61¢ in the second quarter of 2011.
Among the key topics he will be looking at are volume trends in Canada – is weakness related to more than just the economy?
— FP Trading Desk