TORONTO, Canada — Look out Starbucks and Dunkin’ Donuts. Here comes the new international corporate powerhouse Tim Hortons. They have a huge niche — and market presence — here in Canada and they can easily create their own huge presence in the U.S.
When the Canadian coffee/coffee shop giant announced last summer that it was merging with Burger King, many dismissed and dissed it as strictly a tax move where Burger King could avoid paying taxes in the United States. Nothing could be further from the truth. Still other stories focused on what this would mean to Burger King’s international growth plan. But the whole issue became a political football with some Americans saying they’d never eat at Burger King again. Etc.
Americans who are blasting Burger King and Tim Hortons for the merger most likely haven’t been to Canada where you can’t escape a Tim Hortons (its restaurants, presences in gas stations, in convenience stores) and the utter zeal and pride many Canadians have in their brand of coffee.
The following is NOT — repeat NOT — exaggerated:
1. No sooner had I arrived at my hotel in North York, near Toronto, when as I was unpacking my bags a very friendly housekeeper stuck her nose in the door to say hello. I told her it was my first trip to Canada. “Oh!” she said, coming towards me and pulling out a card. “Then you HAVE to try OUR COFFEE! Tim Horton’s is a must! Here’s a card I got. If you have two cups while you’re here, you’ll get a third one free! I don’t need this card now anyway, but I have to have my fix twice a day!”
2. That evening I did a family night show at a private school in my non-writing incarnation (which is why I was in Canada). As I unpacked the principal chatted with me for a few minutes, then said: “If you’re from the U.S., you have to try our coffee! I’ll get you a double double. It’s amazing.
!!” She sent a teacher off to…Tim Hortons.
3. I visited a dear relative who my family helped get out of Russia in the 1970s. He immigrated to Israel and later moved to Canada. He and his wife invited me to dinner, and then coffee came up. “Tim Horton’s is great,” his wife said. What about Starbucks. “Oh,” she said with a dismissive wave of her hand, “Starbucks is gourmet. But Tim Horton’s is everywhere and it’s not just the coffee: it’s the prices and the food is great!”
4. I stayed at a hotel in Carleton Place. This little hotel that had seen better times didn’t have breakfast. “There’s a Tim Horton’s down the street,” the manager told me. In fact, on that street there were TWO: one at a convenience store and an actual Tim Horton’s coffee shop. I went to get a newspaper at a gas station and when I told the guy on duty where I was going he said: “I almost invested in a Tim Hortons. They’re amazing. Realize: these are 24 hour operations, the quality is great no matter where you go and they’re all over!”
And, yes, they are indeed all over in Canada. You can see them in big, sparkling malls, in convenience stores, as stand-alone coffee shops and in dingier strip malls:
From what I’m told, the chain started with coffee and increased its menu to include delicious donuts (including the popular Canadian Maple one), bagels — and now more: you can get breakfast sandwiches and high quality lunch/dinner sandwiches. Even soup.
One morning I sampled the white egg/turkey sausage sandwich. And it could not be confused with McDonald’s or Burger King which have breakfast foods which have a fast-food ring to it. The one I had was far closer in quality to Starbucks’ muffin sandwich with cheese, egg and turkey bacon.
And — keep in mind– their slogan is “always fresh” and they are always open.
Stories about the merger have focused on the huge corporate giant it would create or on the Burger King aspect. I maintain that’s a mistake. Tim Robbin’s can indeed carve out a niche (perhaps a big one) in the United States and its biggest collateral damage victim could be Dunkin’ Donuts, the powerhouse on the East Coast in particular. Starbucks will still be “gourmet” for many and its business model is of the European style cafe where you can sip some coffee or tea and stay there for hours. Tim Horton’s restaurants are almost always booming with people getting food to go, young people with their laptops, old folks talking with friends. It’s fast, it’s QUALITY and it’s always open.
And the merger most assuredly sounds as if it’ll go through. The Toronto Star:
Canada’s competition bureau announced Tuesday that it has issued a No Action Letter with respect to Burger King’s acquisition of Tim Hortons, clearing a key hurdle in the fast food merger deal.
“The bureau concluded that this transaction is unlikely to result in a substantial lessening or prevention of competition due to, among other things, the existence of a large number of competitors and the low barriers to entry in the fast food industry,” the federal government said in a statement.
The transaction is still subject to antitrust approvals in Canada and the U.S., along with Tim Hortons’ shareholder approval.
A No Action Letter confirms that the bureau has reviewed a specific proposed transaction and concluded that it will not, at this time, challenge that proposed transaction before the Competition Tribunal under the mergers provisions of the Competition Act, the release says.
And the Ottaw Citizen has this piece that is worth looking at in detail about how Tim Hortons is on the upswing in the U.S.:
The country’s biggest coffee and baked goods chain beat analyst estimates Wednesday and reported its second-consecutive quarter of higher-than-anticipated sales in its U.S. restaurants.
It was a timely boost, given the top Canadian coffee chain’s pending takeover by Burger King Worldwide Inc. Same-store sales rose 6.8 per cent in the U.S. and 3.5 per cent in Canada at Tim Hortons restaurants in the third quarter ended Sept. 28, ahead of average industry growth of two per cent to three per cent for established chains. That followed same-store sales growth of 5.9 per cent at Hortons’ American outlets in the second quarter, at the time the company’s highest performance in the market since early 2012.
The results come months after Tim Hortons vowed to win over new customers by axing 24 products and offering new ones, such as the crispy chicken sandwich. It also encouraged people to spend more during each visit, promoting combination sandwich deals with drinks and side dishes, such as hash browns and kettle chips.
In other words, it’s adapting — and quickly:
“Tim Hortons is definitely putting more resources into understanding the U.S. consumer and adapting more to that U.S. market,” said Robert Carter, executive director at market research firm NPD Group in Toronto. “I think it is the combo (meal) activity and higher pricing strategy as they move to more of a bakery café positioning, closer to a Panera bread. That gets more consumers coming in through different times of the day — lunch, snack, even in the evening, so there is less of a focus on just the morning meal.”
The story notes that the company has been in the United States for some time, but has not caught on as much as in Canada:
Tim Hortons first moved into the U.S. in 1985 and has expanded and retrenched several times as it tried to gain a stronger foothold in that market, where it now has 869 outlets. Last year, it spent $6.6. million to close 11 underperforming U.S. stores in the fourth quarter.
Facing shareholder pressure about its U.S. investment, which involved buying up existing chains and fixing them up under its own banner, the company embarked on a “capital light” strategy, partnering in development agreements with regional businesses.
It has since announced seven such development agreements to build 145 U.S. restaurants over the next decade, including partnerships in New Jersey, Missouri, Ohio, Indiana, North Dakota, Pennsylvania, West Virginia and New York.
On Wednesday, Tim Hortons said the U.S. business recorded operating income of $7.4 million, an increase of $4.7 million compared with the third quarter of last year.
AND:
“We know we can’t win in the new era by doing things the same way we have always done them,” chief executive officer Marc Caira told analysts and investors on a conference call Wednesday. He said the U.S. market “is competitive, but show me a market in the world today that is not competitive — you won’t find too many,” adding low-growth industries often lead to competitive intensity.
Go to the link to read the story in its entirety.
Can I admit it? I’m hooked. I still like my Starbucks and Dunkin’ Donuts and I know there are some Tim Hortons’ in cities such as Niagara Falls, NY (where lots of Canadians go). But if there were more readily available? In terms of the quality of the coffee, the quick service, the quality of the food, the wifi and being open 24 hours? Count me in. Canadians have a right to be proud. And Starbucks and Dunkin’ Donuts (which are looking to expand their evening menus) have a right (and need) to look over their shoulders.
Photos by Joe Gandelman
Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.