Tim Hortons Inc. is now moving customers through some of its drive-in windows every 25 seconds, but the company’s new chief executive officer says that’s not fast enough to thwart competitors threatening the iconic chain’s market share.
Marc Caira, the new chief executive officer of the coffee and doughnut chain, also says it offers too many varieties of products, which slows service, and not enough stand-out items to help it fight off McDonald’s Corp. and other rivals.
In the coffee wars, Tim Hortons remains by far the the largest purveyor of high-margin coffee at fast-food chains in Canada, but it is losing ground to McDonald’s, which has put a big push on java.
Tim Hortons’ share of the $4.6-billion “quick-service” restaurant-brewed coffee market slipped to 76.3 per cent in the year ended in May, from 78.1 per cent in 2009, according to researcher NPD Group. By contrast, McDonald’s share rose to 10.7 per cent from 5.4 per cent in that same span.
And while Tim Hortons already is “best in class” in speedy fast-food drive-through orders, it can be even quicker, Mr. Caira said.
“We need to be better and we’re taking action to do that,” he said in an interview in a recently refurbished Tim Hortons restaurant – with leather armchairs and a gas fireplace – across the street from its head office in Oakville, Ont.
Pressure is mounting on Tim Hortons to sharpen its operations as McDonald’s and other rivals race to try to lure cash-strapped consumers loathe to shell out more at restaurants. Mr. Caira, who took the top job at Tim Hortons on July 2, feels the urgency to shrink lineups, streamline offerings, introduce healthier options and win over unhappy shareholders and franchisees in a tight economy that shows no signs of improving.
“He has a lot of challenges,” said Ron Joyce, co-founder of Tim Hortons who left the company about 12 years ago but still has friends and relatives among the franchisees. (A cousin of his waged an unsuccessful legal fight over the company’s decision to flash-freeze “Always Fresh” baked products.) “His challenge is going to be to restore confidence in the system.”
But Mr. Joyce gives Mr. Caira high marks for moving quickly to tackle the issues. “McDonald’s is doing a great job of upgrading the quality of its product,” Mr. Joyce said. “They have great coffee. It’s a very competitive world.”
Mr. Caira said he wants to borrow from the playbook of global food and beverage powerhouse Nestlé SA, where he was an executive previously, in introducing more innovation to coffee and other Tim Hortons offerings to lure customers.
And he wants to get consumers through the checkout faster. “Our lineups are too long,” he said. “As a result, our people are much busier in the back. When our people are much busier, sometimes the order accuracy is not what it should be.”
Mr. Caira said Tim Hortons already provides the fastest drive-through service. Its goal is to move customers through the drive-through every 25 seconds and “some restaurants are ahead, some are not there yet,” Alexandra Cygal, a Tim Hortons spokeswoman, said later.
Mr. Caira said Tim Hortons needs to simplify the food and beverage preparation process to “make it easier for our people to deliver the ultimate in customer service.” He questioned, for instance, whether Tim Hortons needs 63 varieties of donuts.
Still, he said Tim Hortons is in a strong position and “there’s nothing here that really needs to be fixed ... It’s more an evolution than a revolution.”
But in the “new reality” of a sluggish economy and intensified competition, Tim Hortons has to do a better job of marketing itself, especially online and on social media, he said. And it needs to launch more milk-based and juice-based beverages to lure younger consumers who aren’t drinking black coffee, he suggested. “I think we need to take a few risks.”