Tim Horton case study

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Feb 20, 2024

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TIM HORTONS-A CANADIAN COMPANY LOOKING FOR NEW MARKETS To many Canadians, there is nothing that defines our country more than stopping off for coffee (and donut) at a Tim Hortons location. Tim Hortons is a Canadian, and more recently a north American, success story. Tim Hortons opened it first location in Hamilton, Ontario, in 1964. There were only two items on the menu at that time: coffee and donuts. The chain expanded but, more importantly, as consumers’ tastes changed, Tim Horton’s adapted its menu. Timbit were added to the menu in 1976, with muffins, cakes, pies, croissants, and cookies all added in the early 1980s. in 1990s there were bagels, flavoured cappuccino, and later iced cappuccino. Today, there are flavoured teas, soup, fresh sandwiches, croissants, and pastries. The company does not stand still and is launching the Tassimo brand of single serve coffee as well. However, despite the growth of its menu, Tim Hortons stayed true to its focus of offering good coffee (that must be served within 20 minutes of being brewed, otherwise it is not served) in convenient locations. Tis “convenience factor” means that most locations are open 24 hours a day (a long-standing tradition), but more recently the company has expanded into drive-thru locations, as well as locations in “nonconventional” locations such as shopping malls, hospitals, and universities campuses. Today there are almost 4600 locations across Canada, the united states, and the Gulf cooperation council. It serves more coffee than any restaurant chain except Starbucks, boasting that it serves 8 out of 10 cups of coffee sild on Canada to 5.3 million customers daily. It is one of the largest publicly traded, quick-service restaurant chain I Canada, and the fourth largest in north America. The company connects to all communities in Canada and is active in fostering a lifetime relationship with its customers through sponsorship of youth camps and sports programs and its partnership with Ronal McDonald House Charities. For many years, some analysts have said that the Canadian market is nearly fully saturated with Tim Hortons locations, and the company has proven them to be wrong with continued Canadian growth innovative business decisions: entered the retail market of coffee with Keurig and Tassimo cups, mobile payment and co- branded Visa with CIBS. Nonetheless, expansion into united states seems to be natural next step for the company, and indeed there are currently 869 restaurants in the united stated. But the U.S. market has been a difficult fit for Tim Hortons in the past, and the Canadian market has also been tough for U.S. chain to enter. One example is Krispy Kreme Doughnuts and their failed attempts to break into the Canadian market. This company was found in 1937 and is headquartered in north Carolina. Krispy Kreme became known for its freshly baked donuts, with each location lighting a sign in its window when a batch of hot, fresh donut had been produced. Yet in early 2001 and for much of its history, the company was only located in the southeastern united states.

That changed in the late 190s. the company opened its first store in new York city in 1996 and later its first location in California in 1999. This was followed by very fast growth. In April 2000, the company’s stock went public on the new York stock exchange. And then it all began to fall apart for Krispy Kreme. The company was hit by an accounting scandal that called into question the company’s overall profitability during its period of fantastic growth and was affected by the great recession of 2008, as well as changed in customer eating trends. Numerous vice- presidents were removed from the company and lawsuits from angry stakeholders forced the company into a massive restructuring. Despite these past drawbacks, the company managed to establish operations in Canada with restaurants and café opened in Ontario (5 locations), Quebec (4 locations), and British Columbia (1 location). On September 29, 2019, the company offered free donuts across Canada, a promotion strategy that worked well in united states. In addition, as of 2019 the company has opened several locations in the Midwest, west, and northwest united states. The united states has proven to be tough market for Tim Hortons. Much of the company’s US expansion came through its purchase, in 1995, by Wendy’s International. Through the late 1990s, as Wendy’s struggled with profitability and closed some of its locations, the Tim Hortons unit (and success in Canada) drove much of Wendy’s growth. Wendy’s was never able to develop outstanding synergies between its brand and Tim Hortons. In 2005, major company shareholders applied pressure on Wendy’s to spin off Tim Hortons back into a separate company. In March 2006 Tim Hortons was partially spun-off from Wendy’s and was a completely separate company as of September 2006. This independence lasted for less than a decade. In December 2014, the company was bought by burger king, with both restaurants operating under the name Restaurant Brands Inc. this new company, now including popeyes, became the third-largest fast-food chain on the planet, with 26000 locations in more than 100 countries and US $32 billion in sales. The deal, valued at $12 billion and an example of FDI, has laid out plans to open many more restaurants “at a significant grater pace” than what Tim Hortons has previously planned, according toa press release issues when the companies merged. Time will tell whether access to grater synergies and capital will result in greater fortunes for this global company, which is still headquartered in Canada. CASE DISCUSSION QUESTIONS 1. How can a company like Tim Hortons maintain its quality when it is operating in different markets around the globe? 2. Is there anything wrong with a company like Tim Hortons sticking to a marketplace that it knows well? 3. Can a company grow too quickly? What are the problems associated with fast growth?

4. What markets do you see as a good fit for Tim Hortons’ future expansion? Explain your choice. ANSWER SAMPLE 1: 1. Tim Hortons can maintain its quality across different global markets by implementing a comprehensive and adaptable quality control system. This involves establishing standardized operational procedures, sourcing high-quality ingredients consistently, and providing ongoing training to ensure that staff in each location adheres to the company's quality standards. Regular audits and customer feedback mechanisms can help identify any deviations from these standards promptly. Moreover, Tim Hortons should tailor certain menu items to local preferences while maintaining a global core menu, ensuring that it delivers a consistent and high- quality experience to customers worldwide. 2. While there might be comfort and success in sticking to a known marketplace, Tim Hortons should carefully consider the potential benefits of exploring new markets. The company's expansion into the United States demonstrates the ability to adapt to different markets, although challenges have been encountered. Striking a balance between retaining core values and adapting to local preferences is crucial. Tim Hortons can leverage its strengths in its home market while strategically exploring new opportunities, maintaining a cautious approach to ensure a positive reception in unfamiliar territories. 3. Rapid growth can pose challenges, and Tim Hortons should learn from the experiences of other companies, such as Krispy Kreme. The company should be wary of overextending its resources, ensuring that each new location is adequately supported in terms of supply chain management, operational efficiency, and quality control. Problems associated with fast growth, such as maintaining consistent service standards and managing increased competition, must be addressed through careful planning. Tim Hortons should consider a phased expansion strategy that allows for thorough integration and operational adjustments, preventing potential pitfalls associated with overly rapid growth. 4. Potential markets for Tim Hortons' future expansion could include countries where there is an existing coffee culture and a sizable consumer base. Building on its success in North America, the company could consider further expansion in the United States, focusing on strategic locations. Additionally, exploring European markets with a strong coffee-drinking tradition might be a viable option. Countries in Asia, where coffee consumption is on the rise, could present new opportunities. However, thorough market research and adaptation to local preferences are crucial for success in each new market. The company should prioritize regions where there is both a demand for coffee products and a cultural alignment with Tim Hortons' brand values.

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