Tim Hortons Inc. is lining up plans for further international growth after warming American coffee enthusiasts in the Big Apple to its fritters and Timbits.
The iconic coffee company said Tuesday it will outline a new round of expansion plans when it releases its 2009 year-end and fourth-quarter results on Feb. 25.
Tim Hortons is in the process of determining how to go about international expansion, chief executive Don Schroeder told a New York audience at the Cowen and Company Consumer Conference.
"We are beginning to work on an international growth strategy, where we recognize we have significant opportunity,” he said. "The question is: Do you do it yourself, do you do it as a joint venture, or do you do it as a sale of a master franchise?”
Schroeder added that the company has already made a "small footprint” internationally, with self-service machines in Ireland and the U.K.
The chain also has plans for further U.S. growth following a high profile expansion in New York City last summer, where it opened 12 new locations.
Tim Hortons has since been ramping up its U.S. presence, opening locations at several key tourist spots like Fort Knox, the iconic U.S. army facility in Kentucky and site of a major U.S. gold depository. The company also had its coffee featured on the U.S. network sitcom How I Met Your Mother.
"We are getting to a size in our core regions in the northeast and Midwest U.S. that we are beginning to gain the recognition and awareness that comes from being a more established player,” Schroeder said.
After 15 years of operating as a U.S. entity, Tim Hortons reorganized as a Canadian public company in September, citing lower Canadian tax rates as an incentive.
Robert Cavallo, an analyst at Research Capital Corp. said the move also provided the company with better tax breaks on international earnings, which opens the door for international expansion.
He said choosing small strategic opportunities in Europe, possibly through partnerships, would be a logical step for international growth.
"There’s nothing like a North American type of coffee in Europe outside of a Starbucks, so it’s a really good opportunity, but it’s a really long and arduous task to build on the infrastructure and the marketing of the brand.”
Cavallo added there are plenty of growth opportunities left in Canada and the U.S. and Tim Hortons’ main focus should be on expanding those primary markets.
Schroeder said the company operates in 11 states with a market three times the size of Canada, which gives it significant opportunities in the U.S., "without going into overdeveloped markets.”
Tim Hortons opened 38 restaurants in the U.S. and 71 new Canadian locations in the first three quarters of 2009, despite an overall downturn in the quick-service industry.
