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Tim Hortons (Canada)

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Tim Hortons is Canada's biggest restaurant brand, beating both McDonald's and Starbucks into second place in their respective sectors. Known to its customers as Tim's, it is widely regarded as a national icon. A 2007 survey by a local historical group found that 40% of Canadians under 35 consider the chain's Timbits bite-size mini-doughnuts to be a national symbol of Canada. The group has gradually expanded its food range beyond donuts and coffee, adding muffins, bagels, soups and sandwiches. In 2014, Tim Hortons agreed to be acquired by US rival Burger King for around $11bn. The deal completed at the end of 2014 with the creation of new parent group Restaurant Brands International.

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Competitors

See Restaurants & Bars Sector for other companies

Brands & Activities

Tim Hortons ranks as Canada's leading quick-serve restaurant, far ahead even of McDonald's, with 45% market share by customer traffic in 2015, more than the combined total for the next 15 chains (McDonald's is #2 with around 14%), and 35% share of dollar spend. In the overall coffee and tea beverage segment, it has an extraordinary 87% local share, far ahead of Starbucks and similar brands. Tims' "Double Double" coffee serving (meaning double-cream, double-sugar) is such a familiar phrase it's even included in the Canadian Oxford Dictionary. The chain also sells packaged ground coffee for home use, including, since 2011, in single-serve capsules for Tassimo coffee machines, and since 2012 for the Keuring K-Cups system.

By the end of 2016, there were 3,800 restaurants and kiosks across Canada, providing blanket coverage equivalent to around one outlet for every 9,600 Canadians. (McDonald's, by comparison, has less than half that penetration in the US). However the greatest concentration of stores is on the Eastern seaboard of the country in Ontario and Quebec. Virtually all outlets are franchised, with only 16 still company-operated. Around 400 of Canadian outlets are partnerships with Imperial Oil, which controls the Esso and Mobil service station networks in Canada. Another 150 are co-branded joint ventures with US fast-feeder Wendy's, previously the owner of Tim's.

Tims is best-known for doughnuts, muffins and other breakfast pastries, but has steadily widened its range. A key development was the introduction of freshly prepared filled bagels in 1996, followed by other sandwich-based dishes and soups. More recent introductions include sandwiches and grilled wraps. The chain's biggest business is still serving the morning daypart - it has a 33% share of Canada's entire out-of-home breakfast market - but it has captured an ever-larger proportion of lunchtime customers and all-day snackers. Most standard stores are open 24 hours.

Marketing has been based for several years around "true stories" of Tim's customers, or a successful NHL ice hockey sponsorship partnership. However one of its biggest successes has been the annual "Roll Up The Rim" promotion, a prize giveaway in which a variety of different prizes are offered, according to the message printed under the rim of each of the store's coffee cups.

Tim's also has a collection of around 680 stores in the US, operating as Tim Hortons Cafe & Bake Shop. These are mostly situated within driving distance of the Canadian border in the Northeast and Midwest. In 2008, it agreed a partnership with food retailer Tops Friendly Markets to open concessions in several stores in New York and Pennsylvania. It also began testing a co-branding exercise with Cold Stone Creamery ice cream stores to operate jointly branded outlets in Canada. That arrangement was terminated in 2014.

The group also has a growing presence in the United Arab Emirates, Qatar and other Gulf states where there were almost 130 outlets by the end of 2016. These were originally established to provide a home-from-home for Canadian soldiers stationed in the Gulf but have gradually developed their own local following. All but 24 of the group's 4,400 outlets are franchised. In 2016, the group announced plans to launch the brand in the Philippines and the UK.

Financials

Revenues for 2013 rose 4% to C$3.26bn, with net income up 5% to C$424m. Around 93% of revenues were generated in Canada. Combined systemwide sales for 2013 were C$6.8bn, up almost 6%. Canadian system sales were C$6.2bn in 2013, well ahead of McDonald's (C$3.8bn) and Subway (C$1.6bn). US systemwide sales rose to around $589m in 2013.

For 2015, Tim Hortons' systemwide sales were US$6.35bn. At constant exchange rates, sales were up over 9%, but the decline of the Canadian against the US Dollar resulted in 4% decline in reported sales. The contribution of Tim Hortons to Restaurant Brands International was $2.96bn in revenues and $682m in income.

Tim Hortons systemwide sales topped US$6.7bn in 2017.

Background

The business was founded in 1964 by Miles Gilbert "Tim" Horton, a well-known former pro ice hockey star for the Toronto Maple Leafs. The first two stores served only coffee and donuts, including two home-made inventions, the Apple Fritter and the "Dutchie", a square glazed doughnut with raisins. Retired policeman Ron Joyce became his business partner three years later and the chain expanded steadily, opening another 35 stores by the early 1970s. Tragically, Horton was killed in a car accident in 1974, but Joyce soldiered on as sole owner, eventually establishing the chain as Canada's leading breakfast venue despite a limited menu restricted more or less exclusively to "donuts" and coffee.

Paul House was recruited as COO in 1985, with a brief to widen Tim's appeal. He cleaned up the mainly male-oriented outlets, replacing the chain's counters and bar-stools with tables and chairs, and introduced a wider menu including sandwiches and soups. US hamburger chain Wendy's established a partnership with Tim's in the early 1990s to develop jointly branded outlets, and took full control of the business in 1995, expanding it into the northern United States. A decade later, under pressure from investors to improve its own flagging performance, Wendy's issued an IPO of around 15% of Tim Hortons in March 2006, and spun off the remaining shares six months later. It is now a wholly independent company.

Last full revision 27th September 2016

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