Tim Hor­tons sets am­bi­tious U.K. ex­pan­sion in mo­tion

With the com­pany set to open its Glas­gow lo­ca­tion next month, CEO Daniel Schwartz is brush­ing aside skep­ti­cism

The Hamilton Spectator - - BUSINESS - ALEK­SAN­DRA SA­GAN TORONTO —

The CEO of the par­ent com­pany of Tim Hor­tons is brush­ing off skep­ti­cism that the Bri­tish will em­brace its dou­ble­dou­bles and Tim­bits as it read­ies to open its first lo­ca­tion in the United King­dom next month.

The cof­fee-and-dough­nut chain may be a na­tional in­sti­tu­tion in Canada, but in the coun­try syn­ony­mous with tea time, it has re­ceived a mixed re­cep­tion.

On so­cial me­dia and in Lon­don’s tabloids, some have slammed the com­pany ahead of its de­but in Glas­gow, Scot­land. “Wel­come to the world of weak cof­fee!” screamed a head­line in the Daily Mail.

“I don’t know that we’re go­ing to get to eight out of 10 cups any time soon, but we have big, big am­bi­tions,” said Daniel Schwartz, CEO of Res­tau­rant Brands In­ter­na­tional.

Tim Hor­tons says it pours 80 per cent of the cups of cof­fee sold in Canada.

To broaden its ap­peal, the cof­fee gi­ant has ex­panded its menu with of­fer­ings that may be a bet­ter fit for the Bri­tish palate, such as chai lat­tes and an espresso-based drink known as a flat white.

Some sand­wiches will be served on a brioche bun. Cana­dian restau­rants, by com­par­i­son, serve sand­wiches on cia­batta or what’s de­scribed as homestyle soft buns.

Still, Schwartz said he be­lieves sta­ples like Tim­bits will find their way into Bri­tish stom­achs and hearts, adding that the re­ac­tion has been over­whelm­ingly pos­i­tive.

The foray is one of sev­eral for Tim Hor­tons, which has been try­ing to grow its brand beyond Canada with master fran­chise agree­ments in the U.K., the Philip­pines (where it has two lo­ca­tions) and most re­cently, Mex­ico.

Master fran­chise agree­ments al­low an in­di­vid­ual or group of in­vestors to grow the brand in a spe­cific re­gion.

The Glas­gow open­ing, touted as a good fit partly due to the city’s high stu­dent pop­u­la­tion, is the first to come from the com­pany’s U.K. agree­ment an­nounced last Au­gust.

Tim Hor­tons plans to ex­pand to a num­ber of other lo­ca­tions in the U.K. over the next 12 months, though Lon­don is not among them.

“We’ll look to ramp up the pace of de­vel­op­ment pretty quickly from there,” said Joshua Kobza, RBI’s chief fi­nan­cial of­fi­cer.

He de­clined to pro­vide spe­cific targets, but said the com­pany aims to be­come one of the big­gest com­peti­tors in the coun­tries where they op­er­ate, point­ing to the num­ber of Star­bucks lo­ca­tions in the U.K. as a ref­er­ence.

The Seat­tle-based cof­fee chain had 898 stores in the U.K. as of Oct. 2, 2016, ac­cord­ing to its most re­cent an­nual re­port. Other ri­vals in­clude Costa Cof­fee, which op­er­ates more than 2,000 stores in the coun­try, and Caffe Nero, which has more than 600 glob­ally, though most are in the U.K.

The U.K. cof­fee shop mar­ket rose 37 per cent to 3.4 bil­lion pounds (about $6 bil­lion) be­tween 2011 and 2016, ac­cord­ing to mar­ket-re­search firm Min­tel. It’s ex­pected to reach 4.3 bil­lion pounds (roughly $7.7 bil­lion) by the end of 2021.

Schwartz said he be­lieves Tim Hor­tons can cap­i­tal­ize on that growth, say­ing en­ter­ing a grow­ing mar­ket with a great prod­uct and ex­pe­ri­ence will be “pretty good” for the com­pany.

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