With Burger King’s help, Tim Hortons poised to go global
Watch above: Tim Hortons and Burger King could be on the verge of a merger deal that would see them become one of the biggest fast food chains in the world. Mike Drolet reports.
Canadians unequivocally adore Tim Hortons coffee. And it now seems many, many other countries around the world could soon get the chance to see what we’ve spent decades queuing up for.
Experts’ early read on a blockbuster deal that will see U.S. fast-food giant Burger King acquire Tims is that the takeover will serve as a launch pad for the coffee chain to go truly global.
“A key driver [of the deal] would be to use Burger King’s presence in around 98 countries to accelerate Tim Hortons’ expansion in international markets,” investment experts at Desjardins Securities said in a note Monday morning.
Tim Hortons and Burger King acknowledged that potential in a joint statement on Monday as well, noting the combined mega-chain would benefit from “global scale and reach.”
Indeed, while there’s a host of challenges here at home, where Tims operates about 3,600 stores, a chief aim for new Tim Hortons boss Marc Caira is to take the company further abroad next year.
A key plank in Caira’s five-year plan set out earlier this year called for the chain to be “positioned to enter new markets in 2015,” Scotiabank analysts say.
WATCH: What will a Tim Hortons merger with Burger King mean to you?
U.S. expansion and beyond
Tim Hortons already boasts a chain of 866 stores in the United States, with a focus on cross-border regions frequented by Canadians, such as Western New York, Detroit, Mich. and Ohio.
Still, Tims has continued to grow its U.S. chain – and has even made a foray into the Middle East, opening locations in the United Arab Emirates in 2011. The first location in Kuwait was opened last year.
In all, Tims said last year it plans to expand its partnership in the Middle East to 120 multi-format restaurants in the UAE, Qatar, Bahrain, Kuwait and Oman over five years.
Global middle class
But experts say a deal with Burger King, which operates 13,000 restaurants around the planet, could mean Tims’ expansion ambitions increase dramatically.
With growth slowing in North America, companies like McDonald’s, KFC and Burger King are doubling down on efforts to tap burgeoning middle classes in China, Brazil, India, Turkey and elsewhere where there’s pent up demand.
“North American brands have a lot of global cachet,” Will Mitchell, a business professor at the University of Toronto’s Rotman School of Management, said.
“If the growth is double digits in China and single digits at best in North America, you’ve got to go where that growth is,” Prof. Mitchell said.
Sales at existing Tim Hortons locations in Canada were up 2.6 per cent in the spring months.
In the pair’s joint statement, Tim Hortons and Burger King said the proposed deal will create a “global leader in the quick serve restaurant business.”
Still, experts say the iconic Canadian chain should proceed with caution: “It is not simply enough to export that which has worked [here],” Scotia said.
The two companies said no deal has been formally reached, and would require approvals from shareholders and authorities.
© Shaw Media, 2014