The new owner of Tim Hortons Inc. has an aggressive plan to expand the coffee chain beyond Canada by borrowing from the playbook of sister chain Burger King Worldwide Inc. and teaming with deep-pocketed local franchisors – even in markets in which it didn't think it would be welcome.
It's a strategy that helped Tim Hortons's new owner after it acquired Burger King in 2010 and was set to tackle France. It worried that sophisticated French consumers would turn up their noses at hamburgers and fries, Josh Kobza, chief financial officer of Tim Hortons's parent, said on Thursday.
"It's not an obvious place that we would do very well" in, Mr. Kobza told a CIBC retail and consumer conference in Toronto. "It would seem like we would get crushed."
As Burger King expands around the world, it counts a handful of restaurants in France as top performers within less than two years of their launch. Now the company is betting that consumers in France or other global markets are ready to open their wallets for Oakville, Ont.-based Tim Hortons amid rising café competition.
Restaurant Brands International Inc., parent of Tim's and Burger King, has its work cut out for it. In the United States, Tim's has struggled to make headway and has had to retreat from some areas. It's felt the heat from Dunkin' Donuts, McDonald's Corp. and even up-market Starbucks Corp. as they battle to snag store locations and customer loyalty.
Tim Hortons's business has performed well in nearby U.S. cities such as Buffalo, but not as well in some other U.S. markets farther from the border. As Perry Caicco, retail analyst at CIBC World Markets, asked: "What is it going to take to make that Tim's brand work in places other than ice-cold cities?"
Mr. Kobza said Tim's will need to partner with master franchisors that are familiar with each market and have access to capital and the ability to move quickly, as Burger King has done.
In the United States, it needs to blanket areas that have not been as infiltrated by rivals such as Dunkin' Donuts, he said.
"We need a more aggressive approach to grow faster," he said.
Burger King came to France thinking it may be an unlikely place for it to thrive, Mr. Kobza said. It seemed people there preferred more formal dining rather than fast food, he said.
But it teamed with a local restaurant specialist, Groupe Olivier Bertrand, along with private equity firm Naxicap Partners, to aggressively expand Burger King in France. The group knew the local market well, he said.
"You can drive down any street in Paris and they can tell you the story of every single restaurant along that street and how they're doing," he said.
In India, where people don't eat beef, Burger King had to develop alternatives, such as the Veggie Whopper, in a joint venture with a local operator, he said.
Mr. Kobza did not say which specific markets the company is considering for Tim Hortons.
The restaurant company is owned by 3G Capital, the Brazilian private investment firm that has been on a tear buying up a string of other companies such as Heinz and, this week, closing a deal for Kraft Foods. 3G quickly cut costs from companies, selling corporate jets and slashing jobs, to improve the bottom line.
At Tim Hortons, which it acquired at the end of 2014, it already has shaved 350 jobs or about 15 per cent of the 2,300 headquarter and regional office positions. The company has also put up for sale its Gulfstream 100 jet.
Mr. Kobza said the firm liked Tim Hortons because it had a strong track record and name in Canada. It doesn't plan big menu or marketing changes, he said.
He said Tim's is unique in drawing customers for breakfast, lunch and snacks, rather than just one or the other.
But he also showed some humility as he spoke to investors, many of whom are very familiar with Tim Hortons. "Most people in the room probably know more than I do about Tim's," Mr. Kobza said.