Tim's Coffee Mug - © Tim Horton's

Tim’s Forges Ahead With Intl. Expansion

In spite of the ongoing war with its franchisees in Canada and the U.S., and lawsuits alleging the company misused pooled marketing funds as well broke contractual agreements made during the buyout by Restaurant Brands International (RBI), Tim Horton’s is planning a mega expansion into China…

Dunkins in China - © adventurefortwo.wordpress.comDunkin’s has been in China since 2011. Starbuck’s is there, too. And they’re still in business.
Doughnuts and Coffee seem to have caught on – in the biggest cities, anyway.
Perhaps there’s hope, yet, for Tim’s China expansion…

The Canadian Coffee Giant is still deep in turmoil with a major group of its franchisees and staring plummeting brand popularity and fallen revenues in the face each fiscal quarter, but it’s apparently decided to go ahead with the plan, announced earlier this year, to spend (C)$700 million on major store revamps and reequipping. That could reasonably be expected, in the current scenario. But the announcement this week that Tim’s will expand into China over the next ten years comes as a shock to folks who’ve been watching the Horton’s Saga unfold over the past few years, since the buyout.

What they’re doing…

It appears RBI is partnering with a holding company called Cartesian Capital to open 1,500 Tim’s stores in China – an ambitious target, even in such a huge country. Cartesian floated a similar joint venture plan to bring Burger King to China back in 2012. No word on the King is doing there. Though I heard they still have a still a pretty tightly regulated economy and are still, titularly at least, a communist republic.

Horton’s President Alex Macedo says China’s huge and growing population and booming economy make it a ‘excellent growth opportunity’. Macedo has already proclaimed that the company’s main thrusts right now are to strengthen the band in Canada and roll it out abroad.

I’d give all the tea in China to know, in advance, how the deal works out…

My take…

That makes me wonder how much thought RBI put into the expansion plan. I can envision them saying, “The Burger King thing went well. Let’s just do the same thing with Tim’s.” But Burger chains already existed in China before the King threw his crown into the ring, there.

China, last I heard, is overwhelmingly a ‘Tea’ culture, and doesn’t have a strong or widespread Coffee culture. Western influences have been slow to seep into China’s largely closed society, and I have to wonder how much demand there is there for Coffee. I predict that Tim’s will only fly in the largest, most cosmopolitan cities, where folks are most familiar with western culture, and can be expected to be most accepting of new things.

I also wonder what the current trade war with the United States, where RBI’s head office is located, might affect plans to expand to China.

If I ran RBI, I’d have been looking for more Tim’s partner in Europe, the Middle East and North Africa – where Coffee is tradition going back at least a thousand years.

Interestingly, among the (C)$700 million renovations to Tim’s Canadian stores is a prominent effort to upgrade Tim’;s Coffee and authenticise it’s specialty and Espresso offerings. They’re going to spend (C)$12,000 per store on new Espresso machines. That just bolsters my thought that European and Near-Eastern expansion should have been explored first.

However… As I often say, we’ll just have to watch and wait and see wise the latest Tim’s expansion plan turns out to be…

~ Maggie J.

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