Tim Hortons (Canada) to Continue to Expand its Presence in China
06 May 2021 - The Canadian coffee-and-doughnuts chain already has 200 locations in the country and new investors as it looks to further its global expansion.
China has apparently taken to Tim Hortons, and not just because of the country’s growing affinity for coffee.
“The Chinese consumer connects well with the Canadian brand,” Jose Cil, CEO of Tim Hortons’ parent company Restaurant Brands International, told investors on Friday. “Not Tims necessarily, but Tims Canada as a broader concept. Obviously, things like hockey players aren’t going to be highly relevant in China. But there’s a lot more to Canada than hockey players.”
Tims built its first restaurant in China in the first quarter of 2019. The brand has been building them quickly ever since. It operates 200 locations there now—meaning one out of every five non-Canada Tim Hortons locations is in China—and the company plans to double that this year.
Cartesian Capital Group is RBI’s lead partner in Tim Hortons China and the company just received a new funding round from an existing investor, Tencent, along with Sequoia Capital and Eastern Bell. The agreement will help the brand build another 1,500 restaurants in the country, but clearly Tims has broader visions there.
The China performance is an important one for the brand. Burger King merged with the brand 2014 to create RBI, with the idea of taking Tim Hortons outside of its Canadian home.
Tims is the dominant brand in Canada and operates more than 3,900 locations in the country. But it has not enjoyed much success away from home. RBI was supposed to change that. The company used joint ventures and aggressive expansion strategies to more than double Burger King’s international presence. It was to take that same strategy with Tim Hortons.
More than six years later and Tim Hortons is still pretty Canadian. Today, 79% of the brand’s nearly 5,000 global units are in Canada—about the same percentage as in 2014.
A lot of Tims’ non-Canada problem is in the U.S., where it has long hoped to grow but where consumers have been thus far hesitant to embrace the allure of Tim Bits—U.S. system sales for Tim Hortons fell more than 20% last year and the brand has shrunk by a quarter since the Burger King merger. It is also fighting with franchisees in the U.S.
China is a far more open market, however. And the company believes it’s a strong proving ground for the brand’s international potential. “It’s like a micro example of the possibilities with Tims internationally,” Cil said.
In an interview last week, Cil said that the company doesn’t, “see this as a short-term thing” and that it is poised for “massive growth in China.”
“We have good teams in China,” Cil said. “They’re nationals who know the market well. They did a lot of research. It’s a growing coffee market, growing in the solid double digits.”
He said the company’s beverages have been performing well and that the company adjusted its food offering to fit China’s tastes more. It also operates with a more “digital forward” concept there. More than 50% of Tim Hortons’ sales in China are coming through digital channels.
“The things that resonate are the quality of the product, the quality of the digital experience, the design that we’ve built that are really modern-looking and very cool and connecting with our customers and convenience,” Cil told investors. “The local team in China is doing an awesome job with Tims.”