A Comparison Of Big Chains, Starbucks And Tim Hortons

Depending on the execution and implementation of an expansion and its success rates, shares could go up or down in value accordingly, which then effects the companies’ shareholders.

Starbucks and Tim Horton’s are two companies that specialize in the food and coffee service industries. Information about each company, a comparison of how each markets their brand and their differing distribution methods will be provided.

Tim Hortons is known as Canada’s favourite coffee shop. The company however, has expanded beyond Canada’s borders and has as of December 31, 2016, 4613 locations in nine different countries ("Tim Hortons", 2017). The company currently has international locations in the U.S., Dubai, the U.A.E., Oman, Kuwait, Qatar, the Philippines, and the U.K. ("Tim Hortons", 2017). Tim Horton’s also has plans to expand across the Middle East by opening up to 120 stores in countries that current have locations including Qatar, Kuwait, Oman and the U.A.E., while also looking into moving into the new market of Bahrain ("Tim Hortons", 2017).

The ratio expresses the relationship of gross profit on sales to net sales in terms of percentage (Van Horne, Wachowicz & Bhaduri, 2005). Goss profit is the result of the relationship between prices, sales volume and costs. Gross profit margin of Starbucks Corporation is 23% whereas the ratio for McDonald’s is 35%. McDonald’s ratio is high as compared to Starbucks which is a sign of good management. It implies that the cost of production of the firm is relatively low. The McDonald’s has reasonable gross margin which ensures adequate coverage for operating expenses of the firm and sufficient return to the owners of the business, which is reflected in the net profit margin.

Tim Hortons has faced major criticism in regards to its international expansion, but not all their locations in Canada are beloved. Common customer complaints boil down to a franchisee not being up to standard with the main company. The average review for Tim Hortons is about 5 out of 10. (http://thecustomerservicebox.com/Canada/2/CustomerService/2/Category/Food-FastFood/11/Merchant/TimHortons/522) Other complaints are in comparison to their competitors. “At the Tim Hortons the counters are bare excepting a napkin holder. No offering of sugar, cinnamon, nutmeg or any other flavorings offered to the public to add to our choice of beverage. In contrast to Starbucks where their chai latte is absolutely delicious & the store customer counter offers

My informant explained an observation she had made about the flow of the customers in the coffee house. Due to the location, the flow of customers corresponds to the arrival of public transportation, trains and buses. When a train arrives and customers get off the train, many wait to transfer to a bus close to the entrance of the coffee house. During that time, there is usually an influx of customers in the restaurant. Sometimes the line to order extends to the entrance door, during this time the customers wait time to receive their order is much longer than the wait to place an order. My informant explained that the extended wait time for an order was due to a limited number of staff working in the kitchen.

Tim Hortons belongs to a vast sector, termed the Hotel, Restaurant, & Leisure Industry. This sector is comprised of owners and operators from casinos and gaming facilities, betting services, hotels and cruise-ships, travel agencies, tour operators, leisure facilities, restaurants, bars, pubs, fast-food or take-out facilities and services (CMDportal, n.d). Industry Sector Classification is often used to specify businesses at the Legal Entity level. At the Legal Entity level, the classification is based upon their industry activity.  In terms of Tim Hortons, its activity lies within its Coffee and Snacks industry.

Starbucks financial statements were analyzed for the fiscal year ended September 27, 2015. Like all public companies, annual and quarterly financial statements are required to allow regulators and other interested parties to analyze the financial status and management decision making of the company. This analysis focuses on the results of Starbucks most recent published annual report containing their balance sheets, statement of earnings and cash flows. These statements will be analyzed against the results of one of its competitors, Dunkin Donuts, to investigate how the two companies compare to each other. It was noted that Starbucks and Dunkin Donuts do not have corresponding fiscal year ends. The data therefore is not directly comparable since the reports do not reflect the same time period of data but should provide additional insight. The paper will attempt to provide a brief analysis of Starbucks operations in terms of its liquidity, leverage, activity, profitability and growth ratios used by analysts in the industry.

1.From the annual reports you previewed, what is the company's corporate strategy? What are their company goals and were they successful in achieving those goals? Please list the company of the annual report you previewed.

The fast food, or quick service restaurant industry (QSR), represents approximately 200,000 restaurants and $155 billion in sales in the U.S. alone, they are one of the largest segments of the food industry (Hoovers, 2011). This segment of the restaurant industry is “highly competitive and fragmented… number, size and strength of competitors vary by region, market and even restaurant. All of these restaurants compete based on a number of factors, including taste, quality, speed of service, price and value, name recognition, restaurant location, customer service and the ambience and condition of each restaurant” (Chipotle, 2010).

As a Tim Hortons team member I understand the importance of having a motivated and engaged staff when running a store. The most successfully run businesses are often in direct correlation to the quality of the staff working there, and the work put forth by the staff is highly influenced by the strength of their head leadership. Restaurant owners are the unseen hand behind the front line of any operating Tim Hortons store and they know it is as important to achieve staff satisfaction as it is to have high customer satisfaction. As a restaurant owner I would ensure that all team members felt valued and received the proper appreciation for quality performance. Another invaluable resource would be receiving updated training and open support from senior staff so they may feel comfortable and confident with the work they put forth. Lastly I would make sure that my staff worked in an environment that allows fun among team members while also maintaining their professionalism and focus.

Starbucks Corporation is an American global coffee company and coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with 20,366 stores in 61 countries, including 13,123 in the United States, 1,299 in Canada, 977 in Japan, 793 in the United Kingdom, 732 in China, 473 in South Korea, 363 in Mexico, 282 in Taiwan, 204 in the Philippines, and 164 in Thailand.

There is a more rapid pace at McDonald’s. Here customers have the option of driving through or dining in. The customers walk up to the counter and give their order. The food should be ready in the next two minutes. However, if the counter person gets the order wrong, the customers may have to wait longer. If the customer goes through the drive-thru, they drive up and say their order into a box operated by a person they don’t see. Next they drive around to the little window, the casher takes their money. The customer then drives to the next window

1. What factors in the global environment provide opportunities or threats for Starbucks? How do Starbuck’s strengths and weaknesses match up to its opportunities and threats?

When the consumer is waiting alone and have nothing to do, especially in an unfamiliar facility, the feeling of boring, uncertain about waiting time, stress and anxiety will be increasingly enlarged with time passing. Queuing also seems more burdensome if people feel physically uncomfortable. Moreover, because of a fear of “been forgotten”, the senses of “get started” of customers are fervent. It is claimed that the anxiety level is much higher while waiting to be served than it is while being served, even though the latter queuing will be longer (Lovelock & Wirtz, 2011, p.267; Maister, 1985).