Tim Hortons Inc plans to expand in the USA

Tim Hortons Inc. (USA) (Public, NYSE:THI) is a Canadian coffee shop founded in 1964. Tim Hortons franchises spread rapidly and eventually overtook McDonald's as Canada's largest food service operator. The company opened twice as many Canadian outlets as McDonald's and system-wide sales also surpassed those of McDonald's Canadian operations as of 2002 (company website). Tim Hortons was successful in earning a name for them in the Canadian Markets. Tim Hortons captures 67% of Canada’s quick-service restaurant traffic in the morning (compared to McDonald’s 11%), 17% of the lunch crowd and 57% of afternoon and nighttime snacks (Article). The company continuously introduces new menu items that cater to every demographic.
Based on the article, partnerships and good relations with Franchise have helped Tim Hortons succeed as a coffee shop as well as take over their competitors in the Canadian Markets. Their new partnership with U.S.-based Cold Stone Creamery can help them take over the $1.2-billion Canadian ice cream market, which is a perfect way to bring in traffic during the slower evening hours (Article). Tim Hortons also made a deal with the SPAR convenience store chain in the UK and Ireland, resulting in Tim Hortons coffee and doughnuts being sold at small self service counters in 50 SPAR stores (Company Website). Franchisees have a say in radical changes to their business and they can voice their opinion through the 16-member Franchisee Advisory Board (Article). Therefore, Tim Hortons has succeeded because of their keeping up with franchisees, as well as making partnerships with the famous companies. The other reason for it being so famous could be that their products are very unique. In the late 1990’s, their merger with Wendy’s also helped them reach the top (Company’s Website and Article). Tim Hortons blankets the country, small towns, big cities, highway rest-stops, hospitals, shopping malls with stores, shutting out lesser chains and making it virtually impossible to avoid the place (Article). Their main competition is chains like Starbucks to thousands of independents, plus carts selling steaming cups of the stuff (not to mention moist, sugary doughnuts) on almost every corner (Article). Their partnership with Riese Restaurants and their ideas of advertising at Penn Station and Madison Square Garden can help the company reach out wider audience (Article).
New York is one of the busiest cities in the world, and has a total population of 19 Million as compared to Toronto’s 2.5 Million. If Tim Horton’s is successful in capturing the market share in the US, then no doubt, their revenue will increase by their entry but it’s not easy as it seems. In the US, Tim Hortons has more competitors as compared to Canada. StarBucks currently has 11,000 locations throughout USA, while Dunkin' Donuts has 6,400 and Tim Hortons has only 587 locations. Currently, I do not see Tim Horton becoming successful in the next 5 to 6 years. They will need more convenient locations and will eventually need to take over some of the small companies in order to gain the market share. StarBucks currently offers free Wi-Fi in its stores, and this is something Tim Hortons will need to match in order to keep new visitors coming. Their unique products can definitively help expand like how a marketing guru, Joe De Nardo says that “they actually put cream and sugar in your coffee, you don’t get that in New York City any more. Everything’s grab and go. It’s refreshing.”
The company already has 587 stores in the US, and its plan to build an additional 300 stores stateside can definitely help in brand recognition, and slightly help in capturing market share. As of January, 2010, the company was subsidizing struggling U.S. franchisees to the tune of $50 million (Article). Off course, they will face many more challenges like these ones if they continue to expand in the US, where they are not known. They need more capital, proper advertising as in advertising in places where at least 100,000 people can see their billboard, can definitely help, as well as advertising on American Television and sponsoring TV shows like “Two and a Half Men” and “How I met your mother”, which are watched by millions can definitely help in brand recognition in the US and worldwide.
If I were the CEO, I would focus more on brand recognition because without brand recognition, it is very hard to succeed in any market since people do not know you. I like the idea of free Wi-Fi in coffee shops as it can bring in more visitors. One thing I would do is expand slowly and try to open more convenient locations in one state before entering in another state. They do have a chance in becoming successful in the US, but it will require a lot of work and effort and most importantly, time. Very few of the Canadian companies have actually succeeded in the US, and if they are able to do it, then reaching markets like Europe and Asia won’t be very difficult.
Petroleo Brasileiro SA (NYSE:PBR) is set to open lower this morning, after gaining more than 2.62% in stock value. More than 19.91M shares were traded, and the stock was up almost a dollar per share. The usual trading volume is about 10 million shares.
The Cooper Companies, Inc. (NYSE:COO) opened higher this morning at $40.90 and went up to $41.43 before closing at $41.26 per share. The stock was up overall 1.10% in stock value with the trading volume of 400,712 shares. The usual volume of about 300,000 shares.
Sunrise Senior Living, Inc. (NYSE:SRZ) surprised investors this morning when it opened really high at $2.74 and at the end of the day closed gaining more than a dollar per share (Up 66% in stock value). The stock was trading at $2.52 for for the last week and this morning it jumped higher than expected.
Ford Motor Company (NYSE:F) has reported an increase in sales in the month of August. Although, the stock is currently under-performing as per some analysts. They have given it hold rating. The company is set to post August U.S. Sales tomorrow.
Investors are not happy with Hewlett-Packard Company (NYSE:HPQ) performance. A report showed that investors analyzed and reported that HPQ should be back at its ranking near the end of this month, after losing more than $10 per share after the CEO scandals hit the internet.
Saks Incorporated (NYSE:SKS) opened higher, and was among the top gainers for today, up more than 20% in stock value. The company's sales are going to be released on Sep 2, 2010. The company reported profit in the second Quarter and this stock jumped up $1.30 per share.
