Tim Hortons

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Tim Hortons Inc.
Type	Public TSX: THI, NYSE: THI
Founded	Hamilton, Ontario (1964)
Headquarters	Oakville, Ontario
Key people	Paul D. House, President, CEO, and Director Tim Horton and Ron Joyce, co-founders
Industry	Restaurants[1]
Products	Coffee Doughnuts Timbits Bagels Soups Sandwiches Iced cappuccinos
Revenue	$1.482 billion CAD (2006)
Net income	$191.1 million CAD (2006)
Employees	70,000 (2005)
Slogan	Always Fresh At Tim Hortons
Website	TimHortons.com

Tim Hortons^[2] is a coffee-and-doughnut fast food restaurant chain largely based in Canada. Founded in Hamilton, Ontario in 1964,^[3] the store rapidly expanded across Canada to become the country's largest quick-service food chain.^[4] Though many locations have also been established in the northeastern United States, Tim Hortons is often perceived to be part of the culture and national identity of Canadians.^{[citation needed]}

Tim Hortons franchise stores are plentiful in Canadian cities and towns. The chain has expanded aggressively across most regions of Canada. As of January 2007, there were 2,710 outlets in Canada, 336 outlets in the United States and one outlet just outside Kandahar, Afghanistan.^[5] Tim Hortons has supplanted McDonald's as Canada's largest food service operator; it has nearly twice as many Canadian outlets as McDonald's, and its system-wide sales surpassed those of McDonald's Canadian operations in 2002.^[6] The chain accounted for 22.6% of all fast food industry revenues in Canada in 2005.^[4] Tim Hortons commands 76% of the Canadian market for baked goods (based on the number of customers served) and holds 62% of the Canadian coffee market (compared to Starbucks, in the number two position, at 7%).^[7]

Contents 1 History 1.1 Tim Horton and Ron Joyce 1.2 Merger with Wendy's 1.3 Expansion 1.4 Tim Hortons and the Canadian military 2 Growth of the Tim Hortons Chain 3 Menu 4 Brand image 4.1 Advertising and promotion 4.1.1 Roll Up the Rim to Win 4.2 Community 4.3 A Canadian cultural fixture 5 Criticism 6 Notes and references 7 External links

[edit] History

[edit] Tim Horton and Ron Joyce

The first "Tim Horton" (the "s" came later) store opened in 1964 in Hamilton, Ontario. The business was founded by Tim Horton, who played in the National Hockey League from 1949 until his death in a car accident in 1974. Soon after Horton opened the store, he met Ron Joyce, a former Hamilton police constable. In 1965, Joyce's entrepreneurial spirit had come to the fore and he took over the fledgling Tim Horton Donut Shop on Ottawa Street North in Hamilton. By 1967, after he had opened up two more stores, he and Tim Horton became full partners in the business. Upon Horton's death, Joyce bought out the Horton family and took over as sole owner of the existing chain of forty stores. Joyce expanded the chain quickly and aggressively in geography and in product selection, opening the 500th store in Aylmer, Quebec, in 1991.

Ron Joyce's aggressive expansion of the Tim Horton's business resulted in two major changes in the coffee and doughnut restaurant market: independent doughnut shops in Canada were virtually eliminated, and Canada's per-capita ratio of doughnut shops surpassed those of all other countries.^[8]

The chain later went public under the corporate name "Tim Donut Limited". By the 1990s, the company name had changed to The TDL Group Ltd.

[edit] Merger with Wendy's

In 1992, the owner of all Tim Hortons and Wendy's Restaurants in Prince Edward Island, Daniel P. Murphy, decided to open new franchise outlets for both brands in the same building in the town of Montague. Murphy invited Joyce and Wendy's chairman Dave Thomas to the grand opening of the "combo store", where the two executives met for the first time and immediately established a rapport.

Murphy's success with combining coffee and doughnuts with Wendy's fast food led to the August 8, 1995 agreement that saw Wendy's International, Inc. merge with TDL Group. Joyce became the largest shareholder in Wendy's, even surpassing Thomas.^[9] TDL Group continued to operate as a separate subsidiary from its head office in Oakville, Ontario, although Joyce eventually retired from active management to pursue other interests.

In late 2005, Wendy's announced it would sell between 15 and 18% of the Tim Hortons operations in an initial public offering, which was completed on March 24, 2006, and subsequently said it would spin off to shareholders its remaining interest by the end of 2006.^[10] Wendy's cited increased competition between the two chains and Tim Hortons' increasing self-sufficiency as reasons for its decision, but the company had been under shareholder pressure to make such a move because of the strength and profitability of the Tim Hortons brand.^[11]

Shares of the company began trading on March 24, 2006, with an initial public offering of C$27 per share, raising over $700 million in the first day of trading. On September 28, 2006, Wendy's spun off the rest of its shares in Tim Hortons, by distributing the remaining 82% to its shareholders.^[12] On the same day, Tim Hortons was added to Canada's benchmark stock-market indicator, the S&P/TSX Composite Index, and to the S&P/TSX 60.^[13]

On February 2, 2007, Wendy's reported a 90% drop in earnings at the end of the fourth quarter following the completed spin-off of Tim Hortons - subsequently causing the company stock to plummet downwards a total of 4%.

[edit] Expansion

TDL Group recorded $1.48 billion in sales in 2005^[14] and has expanded across Canada into small and large markets, as well as into New York, Ohio, Michigan, West Virginia, Kentucky, and Maine. While some of the U.S. stores were simply the result of natural expansion into Canadian border areas (i.e. stores in Maine and Michigan [most of which are in the Detroit area], about five stores in Pennsylvania [which are in the city of Erie], and all of the New York stores), all of the U.S. Tim Hortons outlets in Ohio (except the ones in the Toledo area), West Virginia and Kentucky were either located in former Hardee's and Rax Restaurants or were opened as newly-built Wendy's/Tim Hortons combination stores. Many "Wendy's combo stores" have more recently been opened in the "traditional" U.S. Tim Hortons markets as well (such as Buffalo). By 2004, the chain had also acquired 42 Bess Eaton coffee and doughnut restaurants situated in Rhode Island, Connecticut, and Massachusetts.

Initially, the chain had relatively fewer stores in Quebec or western Canada, as compared to Ontario and Atlantic Canada. Tim Hortons has, however, expanded its presence in those areas.^[15]

Tim Hortons products have recently become available in Ireland at some SPAR convenience stores^[16] and Tesco supermarkets.^[17]

[edit] Tim Hortons and the Canadian military

Tim Hortons has gained enormous popularity among members of the Canadian military, with outlets being located on or near many Canadian Forces Bases. Bowing to the request of Canadian servicemen and women, and a personal request relayed by Chief of Defence Staff, General Rick Hillier, TDL Group announced in March 2006 its commitment to open a franchised location at the Canadian Forces operations base in Kandahar, Afghanistan. The opening of the new Kandahar location in a 40 foot trailer on the military base was welcomed by Canadian troops on June 29, 2006.^[18] The 41 staff members of the Kandahar outlet have been drawn from the Canadian Forces Personnel Support Agency who received training on such matters as how to handle a potential nuclear or biological attack before working at the military base.^[19]

[edit] Growth of the Tim Hortons Chain

Store #1 - Hamilton, Ontario - May 1964

Store #100 - Thunder Bay, Ontario - December 1978

Store #200 - Hamilton, Ontario - December 1984

Store #300 - Calgary, Alberta - February 1987

Store #400 - Halifax,Nova Scotia - February 1989

Store #500 - Aylmer, Quebec - January 1991

Store #700 - Moncton, New Brunswick - October 1993

Store #1000 - Ancaster, Ontario - August 1995

Store #1500 - Pickerington, Ohio - March 1997 (this was also Wendy's 5000th store)

Store #2000 - Toronto, Ontario - December 2000

Store #2500 - Cayuga, Ontario - September 2003

Store #3000 - Orchard Park, New York - December 14, 2006^{[citation needed]}

100th U.S. store – Columbus, Ohio - July 31, 1998

(Source: Tim Hortons Official History^[20])

[edit] Menu

Tim Hortons' first stores only offered two products - coffee and doughnuts.^[3] Aside from its coffee, hot chocolate, and doughnuts, the Tim Hortons menu contains a number of other baked goods, such as Timbits (miniature balls of doughnut dough), muffins, croissants, tea biscuits, cookies, danishes, and more recently bagels. Take-home cakes are offered in some locations, but, as of the mid-2000s, they are less common than in previous years.^{[citation needed]}

Since the mid-1990s, the chain has moved into other areas, including specialty and premium items such as flavoured cappuccino and iced cappuccino, and a large lunch selection that includes soups, chili, and submarine-style sandwiches. In fall 2006, Tim Hortons began rolling out a breakfast sandwich. Consisting of an egg patty, processed cheese slice, and either bacon or sausage as the topper, it has sold well and has led some customers to debate whether it is better than McDonald's Egg McMuffin.^[21]

Coupled with the aggressive expansion and expanded menu came the outsourcing of baked goods. Doughnuts, which used to be made at night in order to be ready for the morning rush, are now partially cooked and then frozen and delivered to the restaurants. The restaurants are now able to bake and finish the fresh product throughout the day.^[22]

[edit] Brand image

[edit] Advertising and promotion

Tim Hortons has one of the most successful marketing operations in Canada. With powerful and effective branding, the store has established itself in the top class of fast-food restaurants in Canada. Canadian Business magazine has twice named Tim Hortons as the best-managed brand in Canada (in 2004 and 2005).^[23]

Tim Hortons commercials appear frequently on Canadian television and radio stations, and on billboards. All six of the Canadian NHL rinks have Tim Hortons ads along their boards as well as the Columbus Blue Jackets and Buffalo Sabres, the two areas in the US where the chain is most prevalent. Since 2005, Tim Hortons has also been the title sponsor of the Brier, the annual Canadian men's curling championships. Generally the chain promotes one or two "featured" products every month, such as iced cappuccinos and various sweetened baked goods during the summer, lunch products such as soup or sandwiches during the winter, and its flagship coffee promotion Roll Up The Rim to Win during the early spring.

Tim Hortons' advertising slogans have included "You've Always Got Time for Tim Hortons" and, more recently, "Always Fresh."

[edit] Roll Up the Rim to Win

From March until May of each year, Tim Hortons holds a very large marketing campaign called Roll Up The Rim to Win. Over thirty million prizes are distributed each year^[24], ranging in value from vehicles to televisions, to store products. Customers determine if they have won prizes by unrolling the rim on their paper cup when they have finished their drink, revealing their luck underneath.

Advertising for the contest is always very aggressive. The ubiquitous Tim Hortons ads on the boards of hockey rinks change from the normal "Tim Hortons" signage to a "Rrroll up the Rim" display; the timing of the promotion also is key because it is during the height of the NHL season, ensuring that viewers across North America will see the ads. Television and other media are inundated with advertisements that repeat the "R-r-roll up the R-r-im to Win" slogan and encourage the recitation of the phrase using rolled R's to match the announcer's delivery.

Prizes are not distributed randomly country-wide; each of the company's distribution regions has its own odds for prize-winning.^[25]

In March 2006, two families were fighting over the Toyota RAV4 SUV prize of C$32,000 value after their daughters found a winning "roll up the rim" coffee cup in a garbage bin of an elementary school in Saint-Jérôme, north of Montreal. The younger girl had found a cup in the garbage bin and could not roll up the rim, so requested the help of an older girl. Once the winning cup was revealed, the older girl's family stated that they deserved the prize. Tim Hortons originally stated that they would not intervene in the dispute. A further complication arose when Quebec lawyer Claude Archambault requested a DNA test be done on the cup. He claimed that his unnamed client had thrown out the cup and was the rightful recipient of the prize. On April 19, 2006, Tim Hortons announced that they had decided to award the prize to the parents of the girl who had initially discovered the cup.^[26]

[edit] Community

The store also promotes itself through community support and the "Tim Horton Children's Foundation." Founded by Ron Joyce, the Foundation sponsors many thousands of underprivileged children from Canada and the United States to go to one of six high-class summer camps located in Parry Sound, ON; Tatamagouche, NS; Kananaskis, AB; Quyon, QC; Campbellsville, KY; and St. George, ON.

The foundation's highest-profile fundraiser is Camp Day, which is held annually on the Wednesday of the first full week in June. All proceeds from coffee sales at all Tim Hortons locations, as well as proceeds from related activities held that day, are donated to the foundation.

Mr. Joyce's dedication and commitment to the Tim Horton Children's Foundation earned him the Gary Wright Humanitarian Award in 1991, presented periodically in recognition of the outstanding contributions to the betterment of community life throughout Canada. In recognition primarily for his work with the Foundation, he received an appointment to the Order of Canada, with the official presentation taking place on October 21, 1992, in Ottawa.

Tim Hortons stores often locally sponsor young children's sports programs, known as "Timbits" minor sports.

[edit] A Canadian cultural fixture

The ubiquity of Tim Hortons, through both effective marketing and the wide expansion of its outlets, makes it a prominent feature of Canadian life. Tim Hortons' prevalence in the coffee and doughnut market has led to its branding as a Canadian cultural icon, and the media routinely refer to its iconic status.^[27] A series of Tim's television commercials promotes this idea by showing vignettes of Canadians abroad and their homesickness for Tim Hortons.

Noted Canadian author Pierre Berton once wrote: "In so many ways the story of Tim Hortons is the essential Canadian story. It is a story of success and tragedy, of big dreams and small towns, of old-fashioned values and tough-fisted business, of hard work and of hockey."^[28]

The Royal Canadian Mounted Police also have a unofficial radio code just for Tim Hortons, it is known as 10-99 or "Tango Hotel".^{[citation needed]}

Constantly name-dropped in the first disc of An Evening With Kevin Smith 2: Evening Harder. At one point a fan comes up onstage and brings Kevin Smith some Tim Hortons food.

Some commentators have bemoaned the rise of Tim Hortons as a national symbol. Rudyard Griffiths, director of The Dominion Institute, recently wrote in the Toronto Star that the ascension of the chain to the status of cultural icon was a "worrying sign" for Canadian nationalism, adding: "Surely Canada can come up with a better moniker than the Timbit Nation."^[29]

[edit] Criticism

In September 2006, Tim Hortons courted controversy by mandating that employees were not to wear red as part of a grassroots campaign by families of the military to show support for Canadian troops. Within a few hours, Tim Hortons partially reversed their position and have allowed staff in Ontario stores to wear red ribbons or pins to show support for the wear red on Fridays campaign.^[30]

[edit] Notes and references

[edit] External links

• Tim Hortons official site
• Tim Hortons official history