News

Tim Hortons takes on the world

Tim Hortons takes on the world
Business
Plans announced this week by the coffee shop’s Toronto-based parent Restaurant Brands International Inc. suggest it is, with RBI announcing on Wednesday that it will grow its global restaurant footprint to 40,000 from 26,000 — including 1,500 new Tim Hortons outlets in China alone. The expansion, which would take place over eight to 10 years, would make RBI one of the largest restaurant chains in the world.

Restaurant Brands, which also owns Burger King and Popeyes, has been on an expansion tear since 2010, with the number of outlets increasing from 12,000 in 2010 to its current 26,000 tally, and sales growing to $32 billion from $15 billion over the same period. Tim Hortons, Canada’s largest quick service restaurant service chain, had a total of 4,846 restaurants in 14 countries at the end of 2018 with about 4,300 in Canada, creating what NPD Group industry analyst Robert Carter called unequalled market penetration. There were 2,823 Tim Hortons outlets in Canada in 2017.

Tim Hortons, which previously announced plans to expand in Spain, Mexico, Great Britain and the Philippines, opened its first restaurant in China in February and has added at least two more since, RBI chief executive José Cil said on an earnings call last month.

The expansion plans present a growth opportunity for the company, although “we believe there is significant uncertainty about whether the international rollout of the Tim Hortons brand will ultimately be successful,” BMO Capital Markets analyst Peter Sklar wrote in a report. “We remain concerned about its potential for success given RBI’s challenged expansion into the U.S. in the past.”

ARTICLE CONTINUES BELOW

The coffee chain is not well known outside Canada compared to Burger King, which adds to the uncertainty, he said.

But Carter of NPD Group said the move will add value, since the chain has room to grow in emerging markets such as China and Africa. He suggested that much of the expansion could be in the form of twinning — for example, a Tim Hortons outlet could be added to an existing Burger King franchise.

Because the Tim Hortons brand has saturated the market in Canada, BDO Canada partner Lyn Little said she expects future growth will mainly occur in international markets. She noted that in addition to the planned Tim Hortons expansion in China, RBI has entered into an agreement in Brazil for the Popeyes brand, where more than 300 restaurants are expected to be opened. Similarly, agreements have been announced for Burger King in the Netherlands, Japan and Taiwan, as well as Tim Hortons in Mexico, Britain and Philippines.

She said expansion will add to RBI’s bottom line and shareholder value, but she questioned how RBI will manage the growth.

Competition with McDonald’s and other players such as A&W and Mary Brown’s has been fierce, she wrote in an email. “RBI, through Tim Hortons, Burger King and Popeyes will need to keep a close eye on what is happening in their current markets to ensure the focus on international growth does not result in set-backs domestically.”
Read more on Toronto Star
News Topics :
Similar Articles :
Business
Restaurant Brands International $1.8 billion U.S. takeover of Popeyes will bring the chicken chain under the same corporate umbrella as Burger King and Tim Hortons.    Haigwood Studios /...
Business
The coffee and doughnut chain says it has signed an agreement with WeEat Company to develop the brand in the Southeast Asian country. The chain operates more than 4, 800 locations mostly in...
Business
Cara Operations Ltd. s deal to buy The Keg restaurants is the latest consolidation move in an industry dominated by three operators that account for one sixth of restaurant sales in...
Top Stories
Restaurant Brands International Inc. TSX QSP , which owns the coffee, bakery and sandwich chain, says it has teamed up with a group of investors in Mexico to form a joint venture....
Business
OAKVILLE, Ont. Restaurant Brands International Inc. of Oakville, Ont., TSX QSR has received enough shares of Popeyes Louisiana Kitchen, Inc. to complete its US$1.8 billion friendly takeover of the fast food...