By Kimberley Donoghue
PBN Web Editor
(Updated, 10 a.m.)
OAKVILLE, Ontario – Tim Hortons announced Wednesday it will close all of its Providence and Hartford restaurants as well as two in Portland, Maine, the company said in its third-quarter earnings release.
Tim Hortons’ U.S. segment had an operating loss of $17.5 million in the third quarter due to a $20.9 million asset impairment charge - an unexpected or sudden decline in the service utility of a capital asset that can be written off – related to the three New England markets.
The company said it will close 36 stores and 18 self-serve kiosks and expects to see an additional cash charge of no more than $30 million in its fourth quarter related to lease and location closing costs. It explained that it intends focus on “core growth markets in the Northeast and Midwest.”
“The restaurants we are closing in the New England region have detracted from that performance and our overall development in the U.S. We believe this step removes a significant impediment to our long-term growth and development,” said Don Schroeder, president and CEO.
“These restaurants represent a small portion of our overall system in the U.S, but had a disproportionately large negative impact on earnings, average unit volumes and same-store sales growth in the segment,” he said.
The restaurants scheduled to be closed had a negative impact of about $4.4 million on the operating income year-to-date, the company said.
In Rhode Island, many Tim Hortons stores were former Bess Eaton shops. When Bess Eaton went bankrupt in 2004, Wendy’s International Inc. purchased them and converted them to its Tim Hortons brand. Wendy’s spun off the doughnut shop chain as its own company in 2006.
Tim Hortons spokesperson David Morelli said the company has six stores in Providence.
The Providence metropolitan area has more doughnut shops per capita than any other region in the Untied States, according to a January study by the market-research firm NPD Group Inc.
As of Oct. 3, Tim Hortons had 621 restaurants in the U.S. and 3,082 in Canada.
For Tim Hortons’ third-quarter earnings release, click here.