Tim Hortons takes on Southeast Asia
The company plans to expand its business to the Philippines
Tim Hortons is hoping the love Filipinos have for doughnuts will turn into a sweet success for the iconic Canadian chain.
Restaurant Brands International, which owns both Tim Hortons and Burger King, announced Thursday that it has signed a master joint venture agreement with a group of investors in the Philippines to bring double-doubles and Timbits to the Southeast Asian country.
Tim Hortons would not disclose how many stores it plans to open in the island country of 100 million people, or even when it will open the first outlet. In an email, it said it believes the Philippines has a strong economy with an attractive and growing quick service restaurant market.
“We have conducted many months of consumer research and believe our signature coffee and baked goods will be a welcome addition to the product offerings available in this market,” the company said in an email.
The doughnut business will certainly be competitive — given rivals are already operating there, including Dunkin’ Donuts, Krispy Kreme and J. Co, a popular Indonesian chain.
Boxes of doughnuts are a common pasalubong, a Tagalog word that means present or keepsake, where individuals are to bring a gift or small souvenir to show you haven’t arrived back empty-handed, after travelling, however long or short a trip.
Geoff Wilson, principal at fsStrategy Inc., a Toronto consulting firm that specializes in the food services industry, says when Burger King acquired Tim Hortons in 2014, its top goal was to expand the chain internationally.
“It’s not surprising that they want to go there,” he said. “The Philippines has a pretty vibrant food service industry and people there are predisposed to coffee and baked goods.”
Wilson believes the Tim Hortons concept is portable to other countries, provided it is adapted to local tastes as other chains have successfully done, like McDonald’s and KFC around the world.
Tim Hortons has said it will introduce some unique items in its Philippine stores, but won’t say what.
According to the Dunkin’ Donuts website in the Philippines, its menu includes classic doughnuts as well as premium ones — such as a chocolate doughnut with oatmeal, raisin and cranberry, and a doughnut dipped in white chocolate, topped with white chocolate shavings.
Savoury items listed are chicken curry salad on a croissant and a mushroom sandwich.
Wilson expects Tim Hortons will continue with U.S. expansion while looking to expand internationally. The chain has more than 100 stores in the Middle East, including the United Arab Emirates and Oman.
Earlier this year, Tim Hortons, which was founded in 1964, announced deals for stores in Minnesota and Indiana. It also has stores in New York, Michigan, Pennsylvania, Ohio and Missouri. At the end of March, Tims reported more than 4,400 stores across all markets.
Mandeep Malik, an assistant professor of marketing at McMaster’s DeGroote School of Business, says while the Philippines may seem distant, the Internet has made the world a smaller place, with many consumers aware of global brands.
Given that other doughnut chains are already in place there, it may make for a softer landing for Tim Hortons, with a consumer market that is receptive, he said.
Add to that a globally mobile workforce, with many Filipinos going overseas for jobs, including coming to Canada under the caregiver pro- gram, often working as nannies.
“I’m sure they bring stories back home. There are families and extended families back home, who have likely connected with the brand,” Malik said.
“Sugar seems to resonate. The java jolt also seems to resonate everywhere,” he said.
Given the size of the Philippines, even if it captures a small niche, say five or six million customers, it would be enough to sustain it and gain a foothold in the region. It could eventually lead to expansion elsewhere in Asia, including Indonesia, Malaysia or even China.
“It’s a good neat market to test in. You can make small mistakes and be forgiven,” Malik said. “You can’t go in and make a big mistake in a market like China,” given its sheer size.
“Sugar seems to resonate. The java jolt also seems to resonate everywhere.” MANDEEP MALIK MARKETING PROFESSOR