Tim Hortons double-doubles down in China

Is that immense market ready for Timbits and salted caramel iced capps? asks Sylvain Charlebois.

Tim Hortons is going where the growth is: east to China. The Canadian institution announced it will expand its portfolio of 4,700 restaurants by signing a joint venture partnership with a Chinesebased equity firm.

Tim Hortons currently has locations in the United States, the Arab Emirates, the Philippines and the United Kingdom, and it intends to open 1,500 new restaurants within the next decade. By 2028, almost a quarter of Tim Hortons restaurants will be in China.

Cartesian Capital, the equity firm partnering with Tim Hortons, has worked with its parent company, Restaurant Brands International (RBI), in an expansion of the Burger King franchise into China. Burger King now has more than 1,000 restaurants in China.

Over the years, the Chinese-Canadian community has embraced the Tim’s menu, which is a result of their familiarity with its place in the country’s culture. In China, the majority of the population might only vaguely understand the appeal of hockey, never mind the allure of Timbits and Salted Caramel Iced Capps. Burger King has been successful thanks to the directness of its name.

It will be interesting to see what kind of brand and menu adjustments RBI will make as it works to adapt the namesake of a top NHL defenceman to the Chinese market, without betraying Tim’s deep Canadian roots. Starbucks has already infiltrated the Chinese market, boasting more than 2,800 locations. The demand for coffee in China is up more than 15 per cent.

In Canada, growth is minimal, even though more than 71 per cent of Canadians over the age of 18 drink coffee daily, compared to 67 per cent who regularly drink water.

Coffee is trendy in China as the country prospers from rapid urbanization, a growing middle class, and rising incomes. What was considered as the republic’s favourite drink, tea, is slowly giving way to its roasted rival. While coffee is increasingly consumed outside the home, tea remains a traditional, domestic favourite.

Tim Hortons’ legacy in Canada lies in convincing Canadians to make and consume coffee somewhere other than their home. However, in the past few years an increasing number of Caucasian Canadians are preparing coffee themselves; the trend for Asian Canadians is the opposite. For marketers, this shift represents the golden goose. RBI understands that once a certain level of wealth is achieved, and disposable income increases, coffeerelated behaviours will change.

The advantage Tim Hortons has over Starbucks in China is its middle-of-theroad approach to coffee. To convince someone who traditionally drinks simple tea to switch to a decadent Frappuccino presents a significant challenge. Tim Hortons can slip in between current Chinese habits and the representation of an idealistic western way of life. Its menu will need to be tweaked, of course; potato wedges and steak wraps will likely not be crowd pleasers, at least initially.

With deep roots in Canada, and an American flair to its management, Tim Hortons could emerge as a global coffee player in the next decade. Its status as a cultural icon in the Canadian market was well established before RBI bought the chain in 2014. Tim Hortons’ entry into China could bring Canadian culture to an entirely new and burgeoning market, giving international exposure to our values, beliefs and way of life — things Canada is known for, but never intentionally exported. If Tim Hortons is successful, it could reap dividends for other sectors as well.

One thing is for sure: Tim’s may well have to imagine promotions other than the Roll Up the Rim to Win campaign.

Mandarin or Cantonesespeaking customers may find it difficult to incorporate such a tongue twisting slogan into their lexicon, but perhaps the taste of a double-double might ease the transition.