Tim Hortons to open in Great Britain

TORONTO — Canada’s biggest coffee chain is venturing into the land of tea and crumpets.

Tim Hortons Inc. announced a new development deal Wednesday to open restaurants in Great Britain, part of a push for global expansion that began when the Canadian company merged with Burger King in 2014 to become Restaurant Brands International Inc. The company is following a pattern it set with its rapid global deployment of Burger King, which opened more than 2,000 new restaurants between 2013 and 2015 and now has 15,100 outlets.

“This deal is part of our growth plan to take the iconic Tim Hortons brand around the world,” Daniel Schwartz, chief executive of Restaurant Brands International, said in a statement.

“Great Britain is an attractive quick-serve restaurant market with a strong and growing coffee culture, so it is a natural fit for the brand.” Schwartz was not available for further comment Wednesday.

Tim Hortons, which has steadily grown its breakfast and lunch menu over the years to increase sales and traffic, also said it is looking forward to bringing signature products such as Timbits to England, Scotland and Wales with the unnamed joint venture partner. At the same time, the company often localizes its assortment in foreign markets, offering items such as Halloumi cheese wraps and Cardamom Chai tea in Dubai.

The latest news caps off a year of international expansion for the purveyor of the double-double. During the second quarter ended June 30, Tim Hortons announced a deal to open outlets in Minnesota with local partners. And last month, the chain announced a development deal for the Philippines.

Tim Hortons did not give a timeline for rolling out the U.K. outlets or divulge how many stores it plans to open there.

But in interview with Bloomberg News earlier on Wednesday, Schwartz said Tim Hortons’ “larger competitors” have several hundred restaurants in the market. “Our plans are quite ambitious,” he said.

Corporate sibling Burger King operates restaurants in U.K., as do rivals McDonald’s Corp., Starbucks Corp. and Dunkin’ Donuts.

Foodservice expert Robert Carter, executive director at market research firm NPD Canada, said it is a timely move for the brand to expand in Great Britain.

“The coffee culture in Great Britain is starting to develop,” with volume at restaurants up four per cent in the last year compared with overall restaurant volume of three per cent.

Additionally, Great Britain has a far smaller percentage of fast food restaurants and cafés than Canada does, he added, with the food service market still largely dominated by full-service dine-in restaurants and a thriving “home meal replacement” takeout market at grocery stores.

In Canada, about 68 per cent of restaurant traffic is at quick-service establishments, about double that of quick-service restaurants in Great Britain, according to NPD.

Alan Middleton, marketing professor at York University’s Schulich School of Business, said Tim Hortons’ success in the U.K. market depends on the experience of the local joint venture partner and their ability to secure good real estate.

“Unlike the U.S., the U.K. is not primarily a price-driven marketplace. With U.S. companies, the first instinct is to cut price when competition comes. The cost in the U.K. is the location, either as rental or ownership costs. So although the consumer market is less price sensitive, real estate is costly in markets such as London — less so in smaller cities.”

Middleton also believes Tims’ fare will be perceived as somewhat healthier than the offerings of other fast food players. “That is one trend working in their favour, and that’s something Burger King can’t do.”

At the beginning of 2016, Restaurant Brands International had 4,413 Tim Hortons restaurants, including 3,650 in Canada.