Tim Hortons

Tim Hortons Inc.

Type	Public (TSX: THI, NYSE: THI)
Founded	Hamilton, Ontario (1964)
Headquarters	Oakville, Ontario
Key people	Paul D. House, (Executive Chairman) , Don Schroeder, CEO, and President, and Director (as of March 1st 2008) Tim Horton and Ron Joyce, co-founders
Industry	Restaurants[1]
Products	Coffee Doughnuts Timbits Bagels Muffins Soups Sandwiches Iced cappuccinos
Revenue	$1.896 billion CAD (2007)[2]
Net income	$270 million CAD (2007)[2]
Employees	100,000 (2008)
Website	TimHortons.com

Tim Hortons Inc. is a fast food restaurant chain based in Canada known for its coffee and doughnuts. It was founded in 1964 in Hamilton, Ontario by Canadian hockey player Tim Horton.^[3] In 1967 Horton partnered with investor Ron Joyce, who quickly took over operations and expanded the chain into a multi-million dollar franchise.

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^[4] and system-wide sales also surpassed those of McDonald's Canadian operations as of 2002.^[5] The chain accounted for 22.6% of all fast food industry revenues in Canada in 2005.^[4] Tim Hortons commands 76% of the Canadian market for baked goods (based on the number of customers served) and holds 62% of the Canadian coffee market (compared to Starbucks, in the number two position, at 7%).^[6] Tim Hortons had 2,733 restaurants in Canada as of July 1, 2007.

Tim Hortons also has an international presence including 345 outlets in the United States and one restaurant outside Kandahar, Afghanistan.^[7][8][9] Tim Hortons' other international expansions include a small outlet at the Dublin Zoo. 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 16 SPAR stores.

History

Tim Horton and Ron Joyce

A common road sign bearing the logo above

The chain's first store opened in 1964 in Hamilton, Ontario under the name "Tim Horton Donuts" (the name later being abbreviated to "Tim Horton's", and later still changed to "Tim Hortons" without the possessive apostrophe). The business was founded by Tim Horton, who played in the National Hockey League from 1949 until his death in a car accident in 1974.^[10]

Soon after Horton opened the store, he met Ron Joyce, a former Hamilton police constable. In 1965, Joyce took over the fledgling Tim Horton Donut Shop on Ottawa Street North in Hamilton. By 1967, after he had opened up two more stores, he and Tim Horton became full partners in the business. Upon Horton's death in 1974, Joyce bought out the Horton family and took over as sole owner of the existing chain of forty stores. Joyce expanded the chain quickly and aggressively in geography and in product selection, opening the 500th store in Aylmer, Quebec, in 1991.^[11]

Ron Joyce's aggressive expansion of the Tim Hortons business resulted in two major changes in the coffee and doughnut restaurant market: independent doughnut shops in Canada were virtually eliminated, and Canada's per-capita ratio of doughnut shops surpassed those of all other countries.^[12]

By the 1990s, the company name had changed to The TDL Group Ltd. This was an effort by the company to diversify the business, removing the primary emphasis on doughnuts. In March 2006, the company went public.^[13]

Some older locations retain signage with the company's name including a possessive apostrophe, despite the fact that the official styling of the company's name has been Tim Hortons, without an apostrophe, for at least a decade.^[14]

Relationship with Wendy's

In 1992, the owner of all Tim Hortons and Wendy's Restaurants in Prince Edward Island, Daniel P. Murphy, decided to open new franchise outlets for both brands in the same building in the town of Montague. Murphy invited Joyce and Wendy's chairman Dave Thomas to the grand opening of the "combo store", where the two executives met for the first time and immediately established a rapport.

A Tim Hortons / Wendy's sign in Milton, Ontario

Murphy's success with combining coffee and doughnuts with Wendy's fast food led to the August 8, 1995, agreement resulting in Wendy's International, Inc. merger with TDL Group. Joyce became the largest shareholder in Wendy's, even surpassing Thomas.^[15] TDL Group continued to operate as a separate subsidiary from its head office in Oakville, Ontario, although Joyce eventually retired from active management to pursue other interests.

A Tim Hortons in South Portland, Maine.

A Tim Hortons in Calgary, AB.

Under pressure from rival restaurateur Nelson Pelz, in late 2005, Wendy's announced it would sell between 15% and 18% of the Tim Hortons operations in an initial public offering, which was completed on March 24, 2006, and subsequently said it would spin off to shareholders its remaining interest by the end of 2006.^[16] Wendy's cited increased competition between the two chains and Tim Hortons' increasing self-sufficiency as reasons for its decision, but the company had been under shareholder pressure to make such a move because of the strength and profitability of the Tim Hortons brand.^[17] It should be noted, however, that Pelz in 2008 acquired Wendy's after pressuring them initially to spin off Tim Hortons.

Shares of the company began trading on March 24, 2006, with an initial public offering of C$27 per share, raising over $700 million in the first day of trading. On September 28, 2006, Wendy's spun off the rest of its shares in Tim Hortons, by distributing the remaining 82% to its shareholders.^[18] On the same day, Tim Hortons was added to Canada's benchmark stock-market indicator, the S&P/TSX Composite Index, and to the S&P/TSX 60.^[19]

On February 2, 2007, Wendy's reported a 90% drop in earnings at the end of the fourth quarter following the completed spin-off of Tim Hortons, subsequently causing the company stock to drop a total of 4%.

A Tim Hortons sign in Columbus, Ohio

Expansion

TDL Group recorded $1.48 billion in sales in 2005^[20] and has expanded across Canada into small and large markets, as well as into New York, Ohio, Michigan, West Virginia, Kentucky, and Maine.

Initially, the US stores were the result of natural expansion into Canadian border areas (i.e. stores in Maine and the Buffalo, New York area). Starting in the mid-1990s, however, the chain began expanding in the US by acquiring former locations from fast food chains. Between 1996 and 1997, thirty-seven former Rax Restaurants locations in Ohio, Kentucky, and West Virginia were bought and converted to Tim Hortons, as were thirty-five former Hardee's stores in the Detroit, Michigan area.^[21] By 2004, the chain had also acquired 42 Bess Eaton coffee and doughnut restaurants situated in Rhode Island, Connecticut, and Massachusetts. Several combination Wendy's/Tim Hortons units have also been opened throughout the United States, both in the "traditional" markets of Buffalo and Maine, and in the markets entered through acquisition.

Tim Hortons was originally concentrated in Ontario and Atlantic Canada. In recent years, however, the chain has greatly expanded its presence in Quebec and western Canada.^[22]

Tim Hortons' products have become available in Ireland and Scotland at some SPAR convenience stores^[23] and Tesco supermarkets.^[24] The first expansion into Indiana was announced with the planned opening of a location in Richmond, Indiana's southwest side.^[25]

In October 2008, Tim Hortons announced a plan to add 82 locations in U.S. Grocery stores. [34]

Tim Hortons and the Canadian military

Tim Hortons has many outlets located on or near many Canadian Forces Bases. TDL Group announced in March 2006, in response to a request by Chief of the Defence Staff, General Rick Hillier, its commitment to open a franchised location at the Canadian Forces operations base in Kandahar, Afghanistan. The new Kandahar location opened on June 29, 2006 in a 40 foot trailer on the military base.^[26] The 41 staff members of the Kandahar outlet have been drawn from the Canadian Forces Personnel Support Agency who received training on such matters as how to handle a potential nuclear or biological attack before working at the military base.^[27] The Canadian Federal government subsidizes the operation of the Kandahar outlet in the order of CAD$4-5 million per year.^[26]

Growth of the Tim Hortons Chain

Map showing the number of Tim Hortons locations by province / state as of January 2007

• Store #1 - Hamilton, Ontario - May 1964
• Store #100 - Thunder Bay, Ontario - December 1978
• Store #200 - Hamilton, Ontario - December 1984
• Store #300 - Calgary, Alberta - February 1987
• Store #400 - Halifax, Nova Scotia - February 1989
• Store #500 - Aylmer, Quebec - January 1991
• Store #700 - Moncton, New Brunswick - October 1993
• Store #1000 - Ancaster, Ontario - August 1995
• Store #1500 - Pickerington, Ohio - March 1997 (this was also Wendy's 5000th store)
• 100th US store – Columbus, Ohio - July 31 1998
• Store #2000 - Toronto, Ontario - December 2000
• Store #2500 - Cayuga, Ontario - September 2003
• Store #3000 - Orchard Park, New York - December 14, 2006,^[28]

(Source: Tim Hortons Official History^[29])

Menu

A drive thru only Tim Hortons location in Moncton, New Brunswick

Tim Hortons' first stores only offered two products - coffee and doughnuts.^[3] Aside from its coffee, tea, hot chocolate, and doughnuts, the Tim Hortons menu now contains a number of other baked goods, such as Timbits (miniature balls of doughnut dough), muffins, croissants, tea biscuits, cookies, rolls, danishes, and more recently bagels - of which Tim Hortons sells one out of every two in the Canadian foodservice industry.^[30] Take-home cakes are offered in some locations.

Since the mid-1990s, the chain has moved into other areas, including specialty and premium items such as flavoured cappuccino, iced cappuccino, iced coffee, New York-style cheesecake, and a lunch selection that includes soups, chili, and submarine-style sandwiches. In fall 2006, Tim Hortons began rolling out a breakfast sandwich. Consisting of an egg patty, processed cheese slice, either bacon or sausage as the topper, and either biscuit or bagel to wrap it up, it has sold well.^[31] In October 2007 Tim Hortons launched the Chicken Fajita Wrap, which contains spiced chicken and sautéed vegetables. As of late December 2007, they introduced the new Hash Browns and the Bagel B.E.L.T., a breakfast sandwich that also included lettuce and tomato.

Coupled with the aggressive expansion and expanded menu came the outsourcing of baked goods. Doughnuts, which used to be made at night in order to be ready for the morning rush, are now fully cooked and then frozen and delivered to every restaurant all over Canada from Windsor Ontario. The restaurants are now able to bake and finish the product throughout the day. As of April 2007, many of the various muffin batters are being revoked, as frozen, premade and prewrapped muffins are being introduced to all bakers at Tim Horton locations.^[32]

Originally Coca-Cola products, Tim Hortons switched over to Pepsi in 2007.

Brand image

Advertising and promotion

A Tim Hortons shop in Ottawa, Ontario

Tim Hortons advertising on the field at BC Place during the 2005 Grey Cup game

Tim Hortons has one of the most successful marketing operations in Canada. With powerful and effective branding, the store has established itself in the top class of fast-food restaurants in Canada. Canadian Business magazine has twice named Tim Hortons as the best-managed brand in Canada (in 2004 and 2005).^[33]

Tim Hortons commercials appear frequently on Canadian television and radio stations, and on billboards. All six of the Canadian NHL rinks have Tim Hortons ads along their boards as well as the Columbus Blue Jackets and Buffalo Sabres, two of the areas in the US (along with Michigan) where the chain is most prevalent. Since 2005, Tim Hortons has also been the title sponsor of the Brier, the annual Canadian men's curling championships, along with the Canadian Ringette Championships. Generally the chain promotes one or two "featured" products every month, such as iced cappuccinos and various sweetened baked goods during the summer, lunch products such as soup or sandwiches during the winter, and its flagship coffee promotion Roll Up The Rim to Win during the early spring. Shortly before December 2007, they discontinued their gift certificates, and replaced them with the QuickPay Timcard, with the Christmas slogan "Because it's hard to wrap a double double" (coffee with two sugars and two cream).

Tim Hortons' advertising slogans have included "You've Always Got Time for Tim Hortons" and, more recently, "Always Fresh. Always Tim Hortons."

Roll Up the Rim to Win

A winning Roll Up the Rim to Win Cup

A losing cup.

From late February until early May each year, Tim Hortons holds a very large marketing campaign called Roll Up The Rim to Win. Over thirty million prizes are distributed each year,^[34] ranging in value from vehicles to televisions, to store products. Customers determine if they have won prizes by unrolling the rim on their paper cup when they have finished their drink, revealing their luck underneath.

The ubiquitous Tim Hortons ads on the boards of hockey rinks change from the normal "Tim Hortons" signage to a "Rrroll up the Rim" display; the timing of the promotion also is key because it is during the height of the NHL season, ensuring that viewers across North America will see the ads. Television and other media are inundated with advertisements that repeat the "R-r-roll up the R-r-im to Win" slogan and encourage the recitation of the phrase using rolled R's to match the announcer's delivery.

The contest is so popular that someone has invented the Rimroller, a device for rolling up the rim mechanically.^[35]

Prizes are not distributed randomly country-wide; each of the company's distribution regions has its own odds for prize-winning.^[36]

In March 2006, two families were fighting over the Toyota RAV4 SUV prize of C$32,000 value after their daughters found a winning "roll up the rim" coffee cup in a garbage bin of an elementary school in Saint-Jérôme, north of Montreal. The younger girl had found a cup in the garbage bin and could not roll up the rim, so requested the help of an older girl. Once the winning cup was revealed, the older girl's family stated that they deserved the prize. Tim Hortons originally stated that they would not intervene in the dispute. A further complication arose when Quebec lawyer Claude Archambault requested a DNA test be done on the cup. He claimed that his unnamed client had thrown out the cup and was the rightful recipient of the prize. On April 19, 2006, Tim Hortons announced that they had decided to award the prize to the parents of the girl who had initially discovered the cup.^[35]

Community

Iced Cappuccino Billboard, Edmonton

The store also promotes itself through community support and the "Tim Horton Children's Foundation." Founded by Ron Joyce, the Foundation sponsors many thousands of underprivileged children from Canada and the United States to go to one of six high-class summer camps located in Parry Sound, ON; Tatamagouche, NS; Kananaskis, AB; Quyon, QC; Campbellsville, KY; and St. George, ON.

The foundation's highest-profile fundraiser is Camp Day, which is held annually on the Wednesday of the first full week in June. All proceeds from coffee sales at most Tim Hortons locations, as well as proceeds from related activities held that day, are donated to the foundation. Small stores located in Esso Service Stations do not donate coffee proceeds on Camp Day.

A Timbits hockey player, from Niagara Falls

Mr. Joyce's dedication and commitment to the Tim Horton Children's Foundation earned him the Gary Wright Humanitarian Award in 1991, presented periodically in recognition of the outstanding contributions to the betterment of community life throughout Canada. In recognition primarily for his work with the Foundation, he received an appointment to the Order of Canada, with the official presentation taking place on October 21, 1992, in Ottawa.

Tim Hortons also sponsors the Timbits Minor Sports Program, a community program for local sports teams involving children aged four to eight years. The program places an emphasis on learning the sport and building friendships among the participants, as reflected in the program's advertising tagline—"The First Goal is Having Fun."

A Canadian cultural fixture

The ubiquity of Tim Hortons, through both effective marketing and the wide expansion of its outlets, makes it a prominent feature of Canadian life. Tim Hortons' prevalence in the coffee and doughnut market has led to its branding as a Canadian cultural icon, and the media routinely refer to its iconic status.^[37] A series of Tim's television commercials promotes this idea by showing vignettes of Canadians abroad and their homesickness for Tim Hortons.

A smaller Tim Hortons location, with a focus on drive-through

Noted Canadian author Pierre Berton once wrote: "In so many ways the story of Tim Hortons is the essential Canadian story. It is a story of success and tragedy, of big dreams and small towns, of old-fashioned values and tough-fisted business, of hard work and of hockey."^[38]

Film director Kevin Smith name-drops Tim Hortons several times during a portion of his DVD An Evening with Kevin Smith 2: Evening Harder which was taped at a college "Q&A" appearance in Toronto, Ontario. At one point, a fan comes up onto the stage while Smith is speaking, and brings him a few bags of Timbits.

Some commentators have bemoaned the rise of Tim Hortons as a national symbol. Rudyard Griffiths, director of The Dominion Institute, wrote in the Toronto Star in July 2006 that the ascension of the chain to the status of cultural icon was a "worrying sign" for Canadian nationalism, adding: "Surely Canada can come up with a better moniker than the Timbit Nation."^[39]

A Canadian term used at Tim Hortons outlets is "double-double," which indicates a coffee with two creams and two sugars. It was added to the second edition of the Canadian Oxford Dictionary on August 10, 2004."^[40]

Store #603, the most northern store, in Yellowknife, Northwest Territories, recently earned the honour of top sales in the chain for 2007-2008. According to co-owner Greg Barton, the store handles around 2900 Yellowknifers per day.^[41]

Quebec rock duo Tracteur Jack has released a song entitled "Tim Horton's", in honour of their favorite song-writing location.^[42]

Criticism

David Swick reported in the Halifax Daily News on September 19, 2003, that Tim Hortons donuts were to be remotely factory-fried and shipped, frozen, to Tim Hortons outlets in Atlantic Canada, where they would then be reheated at the push of a button.^[43]

In September 2006, Tim Hortons courted controversy by mandating that employees were not to wear red as part of the Red Fridays campaign by families of the military to show support for Canadian troops. Within a few hours, Tim Hortons partially reversed its position and has allowed staff in Ontario stores to wear red ribbons or pins to show support for the wear red on Fridays campaign.^[44]

Although litter is not a problem caused by Tim Hortons, it appears to be a problem wherever a franchise is opened up. Disposable cups produced by the company are one of the most common litter items in Canada. Company spokespersons claim that irresponsible customers are the problem, not Tim Hortons. Yet their cups show up as litter in direct proportion to the number of Tim Hortons outlets nearby.^[45]

"Tim Horton's does not sell organic coffee, does not sell Fair Trade coffee, and does not disclose the source of its green beans" as quoted from weblog Coffee and Conversation.^[46] In 2005, Tim Hortons created a program called the Sustainable Coffee Program; the first program was launched in Guatemala and in 2006 they started programs in Colombia and Brazil.^[47] where they are "directly involved with coffee producing communities by providing direct financial assistance for technical training to improve the quantity and quality of coffee produced and assist farmers in getting their coffee to market at the best time and for the best price. Assistance is also provided on environmental management, in both proper farming techniques and reforestation projects, led by Tim Hortons." In addition, Tim Hortons supported schools and sponsored medical clinics in Guatemala.

In May 2008, the chain came under scrutiny after an employee in London, Ontario was fired for giving away a 16-cent Timbit to a baby. An overly-zealous manager was blamed for the incident. The employee was eventually rehired at a different nearby location.^[48]

References

External links

• Tim Hortons official site

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