A CUP HALF EMPTY
Timmies seeks to connect
TORONTO In May 2018, it seemed as if the reputation of Tim Hortons was done for. Swept up in a year of bad business decisions, angry franchise owners and internal acrimonious rows, all laid out on a public platform, the coffee chain’s image was left in shambles.
However, in the span of a year, the corporation had managed to — somewhat — begin to turn things around. Yet marketing experts say they aren’t convinced that Tim Hortons can fully recover the iconic popularity it enjoyed among Canadians, especially millennials.
“When you look at five years of Tim Hortons and some of the challenges they’ve faced, particularly with the franchise lawsuit, I think what it did was give Canadians a glimpse inside of how these franchise organizations work,” said Robert Carter, an NPD industry analyst.
“It took the shine out of Tim Hortons’ Canadiana.”
Last year, the coffee chain’s parent company, Restaurant Brands International, announced a new marketing strategy, “Winning Together,” to help improve the chain’s relationships with franchise owners, improve the customer experience and counter the negative media it had been receiving.
“(It’s) a return to the classic Tim’s kind of communication,” said Alan Middleton, who teaches at the Schulich business school. “Use of a couple of local hockey stars, very much a part of Tim’s character, they put a lot of effort into going back out to the franchises to bring them on-board and they slowed down the pace of new meal introduction so it was more handleable. It’s a positive struggle to get back to where they were.”
The efforts partially paid off. Ipsos, a global market research company, reported that the chain made its way back into the top 10 most influential brands in 2018, after dropping down to 16th place the year before.
Sales at the Canadian Tim Hortons locations also grew by 2.2 per cent for the quarter ended Dec. 31, the strongest growth in the past 10 quarters.
However, on Monday, Tim Hortons posted same-store metrics for the quarter ended Sept. 30 that indicated the chain is still in a slump. Sales decreased by 0.1 per cent and same-store sales by 1.4 per cent — contrary to a rise of 0.6 per cent last year.
On the other hand, sister brands Popeye and Burger King saw samestore sales increase by 9.7 per cent and 4.8 per cent, respectively, notably due to the launch of the Popeye chicken sandwich and Burger King’s plant-based burger. Tim Hortons’ own similar products were not as successful.
“They were late,” said Middleton. “And competitors move so fast nowadays and you don’t necessarily have to be the first out, but if you’re going to be behind them then you better have a better-value proposition …. (and) there was nothing different about their late response, so they had the worst of both worlds.”
“The market has changed so dramatically,” said Carter. “It doesn’t make sense for them to focus on the Canadiana and the hockey rink, even though it’s popular. Over the next seven years, (Canada’s) population is going to (grow by) one million due to immigration, there’s a changing demographic.”
That also includes catering to the younger generation of millennials and Gen Z. The current strategy “doesn’t go that far,” he adds. “There’s opportunity for it to be more aggressive … is it going to take the company into the next generation?”
According to Patricia McQuillian, Canadian branding consultant, millennials and Gen Z “are more discerning in their product affiliation.”
“What the product stands for and how it threads through their organization,” she said. “Tim’s has that ability but they need to get it out there.”
Competitors such as McDonalds and Starbucks are already ahead in the game. “They’re at least building on childhood memories and appealing to younger kids, with their happy meals and fast service,” she said. “Tim’s is more of a stodgy brand.”
She believes the answer lies in product innovation. “There seemed to be a shift when they moved into coffee beverages but they didn’t seem to keep going on with product development. And the challenge here is how do you improve the strength of Tim Hortons and their product offerings beyond diversifying their specialty coffee.”
It doesn’t make sense for them to focus on the Canadiana and the hockey rink, even though it’s popular. ... There’s a changing demographic.
A good example, she suggests, is doughnuts. “Monster Doughnuts, a shop in Hamilton, is an example that caters to millennials,” she said. “Matcha latte doughnuts, lavender doughnuts, vegan doughnuts, apple fritters that will blow your mind.”
As Starbucks, for instance, was successful with their specialty lattes, so Tim’s has the same opportunity with their doughnuts. “Go beyond the birthday sprinkle doughnut and offer funkier options,” she said.