Among the Canadian concepts that haven’t translated easily to the US are native Ryan Reynolds (with two box-office flops this summer) and peameal (Americans insist on calling it Canadian bacon). Could Tim Hortons be threatening to add another unfortunate border crossing to that list?
After spending $664 million and a decade building more than 800 stores in Flyover Country in the US, Tim Hortons’ esteemed coffee and tasty pastries haven’t made a dent in the business of its targeted rival, Starbucks. The Oakville, Ont.-based brand had hoped to score heavily with a formula that makes it a national treasure in Canada, and was familiar to many Americans who traveled north, but Horton’s has notched only a 2.7 percent share of the US quick-service business, according to restaurant-consulting firm Technomic.
And more shareholders are getting restive. “The company’s consistent and long-standing underperformance should long ago have been a wake-up to Tim Hortons’ board and management,” New York-based shareholder Scout Capital Management said in a letter to the company last month, according to Bloomberg. “We urge you to curtail the use of the company’s cash flow to fund real estate or new-store capex in the US.”[more]
The thing is, Hortons has little other choice. Despite its strange insistence on not providing thermal sleeves for its very hot coffee (double-cupping, instead), the brand has reached near-market-saturation levels on its home turf, now with nearly 3,500 locations across Canada—more than McDonald’s. It’s a proud national institution.
Founded in the Sixties by the late National Hockey League player Tim Horton, the company has had the hockey connection going for it; Tim Hortons also sponsors minor hockey-development programs across the country. Italso does what it can to take advantage of its unique QSR connection to all-things Canadian. It recently teamed up with Vancouver-born celebrity Jason Priestley, for instance, to find an original doughnut invented by a member of the Canadian public.
Not everything is hunky-dory between Hortons and Canadians, however: It faced an online backlash recently when it was revealed that the chain restricted customers from accessing Dailyxtra.com, the online home of a LGBT newspaper that’s distributed in Ottawa, Vancouver and Ontario.
Still, Horton’s keeps building in the US; one new outlet recently popped up in Rochester Hills, Mich., for instance, on the site of a former Dunkin’ Donuts. But if more Americans don’t soon take to Tim Hortons’ fine mocha and other products, and more strongly so, the chain could face the ultimate let-down south of the border: withdrawing back to its national boundary.