Tims takes its brand to China

Plans to expand as coffee culture gains in popularity

Tim Hortons plans to open more than 1,500 of its coffee-and-doughnut shops in China over the next decade.

The expansion seeks to capitalize on the country ’s burgeoning coffee culture and is the latest international location for the coffee chain aiming to become a global brand.

“China’s population and vibrant economy represent an excellent growth opportunity for Tim Hortons in the coming years,” the brand’s president Alex Macedo said in a statement.

The chain signed a master franchise joint venture agreement with private equity firm Cartesian Capital Group for it to develop and open the restaurants. Financial terms were not immediately available.

China may give a boost for a brand that has struggled in recent quarters amid disputes between parent Restaurant Brands International Inc. and Canadian franchisees.

RBI wants to boost Tim Hortons’s sales by remodelling locations and revamping the menu with more espresso and lunch offerings. Last April, CEO Daniel Schwartz acknowledged results at Tim Hortons “were a little softer than we would have liked.”

Still, a move into the world’s most populous nation while a trade conflict escalates between the U.S. and China could be risky.

Some U.S. brands like Pizza Hut and Starbucks are already having trouble gaining traction there.

“There is the risk that there will be more anti-western or anti-u.s. sentiment in consumers that develops over time,” said Bloomberg Intelligence analyst Jennifer Bartashus.

In 2012, Cartesian Capital partnered with RBI, which also owns Burger King and the Popeyes brand, and the Kurdoglu family to open more an 900 Burger King restaurants in China.

City dwellers, especially youth, and white-collar staff in China increasingly drink coffee and have helped the cafe industry see strong growth, according to market-research firms. The interest partly comes from lifestyle changes, higher salaries and more people living in cities, according to the firms.

BMO Capital Markets analyst Peter Sklar said the expansion presents a growth opportunity. “However, we believe there is significant uncertainty about whether the international rollout of the Tim Horton’s brand will ultimately be successful,” he wrote in a report. The Canadian Press

With files from Bloomberg