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TORONTO - Despite rising food and fuel prices in Canada and the U.S., Tim Hortons Inc. says it's on track to meet its 10 per cent income growth rate for the year after serving up an 11.5 per cent increase in its quarterly profits.

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"Our second quarter results reflect the strength of our business model in what can only be described as a difficult and challenging macroeconomic environment," CEO Don Schroeder said Thursday on a conference call.

"We continue to be on track to meet our earnings target of 10 per cent operating income growth excluding the $3.1 million restructuring charge announced last quarter," he said.

The offerings at the iconic coffee and doughnut retailer's outlets "position us well" for future growth, he said, adding the company is pushing forward with its plans to open up as many as 250 new outlets in Canada and the U.S. by the end of the year.

Second-quarter net income rose to $75 million from $67.2 million last year. That amounted to 41 cents per share, up from 36 cents last year, while sales increased to $510.7 million from $465.3 million.

Investors seemed impressed by the company's numbers boosting the stock by nearly five per cent to $31.15 on the TSX.

Tim Hortons said system-wide sales, which include sales from company-operated and franchise restaurants, grew by 9.8 per cent compared to the same period last year.

Sales from Canadian stores open for at least a year increased 5.7 per cent and U.S. same-store sales increased 3.1 per cent.

"While we have seen some challenges in Canada, the macroeconomic challenges are deeper and more embedded in the U.S.," Schroeder said.

"The Canadian segment accounts for 92 per cent of our revenues."

The restructuring, announced in April, involved a realignment of the company's senior management organization.

Brian Yarbrough, an analyst with the Edward Jones brokerage in St. Louis, Mo., said the earnings were right in line with expectations.

Over the course of the year, it plans to open between 120 to 140 new outlets in Canada and between 90 to 110 in the U.S.

"We will only open sites in a disciplined manner in locations that we believe will be successful over the long term," Schroeder said, adding that the chain now has 213 licensed sites in the U.K. and Ireland under the Tim Hortons' name.