Tim Hortons is focusing its next phase of U.S. expansion on snowbirds and retirees
A pedestrian walks past a Tim Hortons restaurant.
Ben Nelms | Bloomberg | Getty Images
Tim Hortons is set to open its first location in Houston this summer, signaling the Canadian coffee chain’s strategy to move further south for its next phase of US expansion.
The Restaurant Brands International chain has more than 600 locations in the United States, making it the third largest coffeehouse chain in the country, behind Starbucks and Dunkin’. But it’s a distant third, and the chain is struggling to establish itself with American consumers despite past attempts, dating back decades when it was owned by Wendy’s. Still, Tims is looking to close the gap and pass Dunkin. In 2021, the chain saw its strongest growth of new restaurants in the United States since 2016.
Jose Cil, chief executive of parent company RBI, said in an interview that the chain’s packaged coffee business is growing “quite broadly” in the United States through direct-to-consumer sales on websites and in grocery stores. .
“It’s a good indicator of awareness, as well as demand for our products, so there are a number of markets in the United States, south of our most southern restaurants: places like Texas, like Florida,” he said.
Most of Tims’ current US locations are concentrated in states that share a border with Canada: New York, Michigan and Ohio. The next phase of US expansion will focus on markets like Texas and Florida, according to Cil.
“Between snowbirds and people who have moved to Florida permanently, there are over 3.5 million Canadians, so brand awareness is really strong. Demand is strong. We just have to be there for it. respond,” Cil said.
In recent years, the company has redesigned its business model. He rebuilt many of his Ohio locations with a smaller square footage. Cil said the new format is faster to build and has better unit economics than the older model. The new US restaurants also focus on drinks, pastries and hot breakfast sandwiches, unlike its Canadian stores, which have branched out into lunch and dinner.
“We are not full [quick-service restaurant]we focus on what we do best,” Cil said.
The United States isn’t the only international market to see aggressive expansion from Tims. The chain recently opened its 400th location in China, less than three years after opening the first.
In its home market of Canada, Tims has faced a fair share of struggle. Before the pandemic, it was in turnaround mode, improving its coffee and food offerings and launching a loyalty program in the face of stagnant sales growth. The Covid outbreaks have put additional pressure on his return.
However, the chain reported Canadian comparable store sales growth of 11.3% for the fourth quarter, helped by sales from loyalty program members and popular promotions, such as a collaboration with singer Justin Bieber.
Shares of Restaurant Brands rose more than 3% in afternoon trading on Tuesday after the company reported fourth quarter results. Its profits and revenue both beat Wall Street estimates, a rarity this quarter for restaurant companies as they face higher costs.