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The October 2010 issue of Report on Business magazine.
The October 2010 issue of Report on Business magazine.

How Tim Hortons will take over the world Add to ...

Tim Hortons' policy of only expanding into territories that are adjacent to existing markets serves a double purpose: stretching the ad budget and building critical mass. "We can't go into Cleveland and open one store," says Clanachan. "We're not destinational. We have to be convenient."

And convenient is what the company is becoming in this part of Ohio. Tim Hortons has had stores here since the mid-1990s, when it was bought by Columbus-based Wendy's. The owner of the Troy store, Ryan Holland-a former cop from London, Ontario-owns two other franchises nearby, with a total of 88 employees. "People here have embraced the product," he says. "We've reached that relationship with customers where we are part of their day, their life. I think Tim's does that better than anyone else." When he was approached by head office to test out the concept store, he jumped at the opportunity. "It's created a lot of buzz in the community," he says. "It's been a great success at bringing in new people."

So, will we be seeing the new, upscale Tim Hortons in Canada? Miles Mattatall, who has toured the model store in Oakville, says the Franchisee Advisory Board is already discussing introducing free Wi-Fi at Canadian stores. "It all boils down to what can we do to make customers happy," he says. But, he adds, "up here in Canada, I don't know whether we'll get to a place with fireplaces and lounge chairs."

Stateside, Clanachan won't rule anything out. And all franchisees are contractually bound to update their stores every 10 years (at their own expense), so it's conceivable Canadians will start seeing elements of the new design soon. "The company has to constantly evolve," Clanachan says. "If you don't, you die."

At 6 p.m. on July 10, 2009-a Friday-12 Dunkin' Donuts locations in New York City shut their doors. Over the next 60 hours, a battalion of builders tore down every last pink-and-orange Dunkin' sign, along with menu boards shilling Munchkins and Coolattas. They ripped out countertops, display cases and light fixtures. In their place, they installed Sure Shot cream dispensers, iced cappuccino makers, Always Fresh ovens and freezers, and signs heralding the arrival of Tim Hortons Coffee & Bake Shop. Much of the work was done at night, to avoid the logistical nightmare that is Manhattan traffic. "Try to get a lumber truck down Fifth Avenue at rush hour," says Gary Trimarchi, the man who spearheaded the top-secret operation. "It's not like pulling up to the back of a strip mall."

First thing Monday morning, the 12 locations reopened as Tim Hortons. The switchover sparked a media sensation, complete with impromptu Tim's-versus-Dunkin' throwdowns on the streets of Manhattan-and generating tons of free publicity for the new kid in town.

NYC is not adjacent to any existing Tim Hortons markets, and the company's foothold there is a long way from convenient-in a city of eight million, the company's 14 stores (it has opened two additional ones since last year) work out to less than one Tim's for every half-million New Yorkers, a notoriously cranky and habituated cohort of consumers. Here, it seems, Tim Hortons has thrown out much of its carefully crafted formula-which, one could argue, it will also have to do if it's going to survive in markets as diverse as China and India. But opportunity knocked: When a 70-year-old restaurant company calls and offers to guide you into one of the world's toughest markets, you do not say no.

It was in the fall of 2008 that Tim Hortons' franchising department got a call from Trimarchi, the president and chief operating officer of Riese Restaurants, a family company that owns 110 stores across NYC, boasting banners such as T.G.I. Fridays, KFC and Pizza Hut. Riese had given Dunkin' its entree to New York about 20 years before, but it was ready to part ways with the Massachusetts-based chain (by all accounts, the feeling was mutual). Trimarchi went looking for a new partner and stumbled on Tim Hortons. "I searched out the best and biggest franchisor I could find," he says in a heavy Long Island accent. "I'm also a hockey fan, so I know the name Tim Horton very well."

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