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Tim Hortons To Add 500 Canadian Locations, 300 U.S. Locations By 2018

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TORONTO - Tim Hortons Inc. (TSX:THI) sees significant room for growth in its core Canadian business and plans to add 500 locations in this country and 300 in the United States by 2018.

The restaurant and coffee chain called the plan "ambitious but achievable" and said Tuesday it will allow the company to adapt to changing consumer needs and fight for a spot in a highly competitive market.

Tim Hortons' plan includes a big focus on Canada, where it's seeking to improve customers' experience at its stores and make better use of technology to better understand and serve connected consumers.

"We believe that our enviable guest loyalty, strong restaurant base and differentiated brand position, coupled with initiatives planned in our strategic plan, will present significant opportunities to grow our Canadian business over the next five years," said chief executive Marc Caira.

But the company is also "energizing the Tim Hortons brand in all of our geographic markets and we are focusing on driving long-term, sustainable, profitable growth which we believe will return us to above-market total return to shareholders."

The plan, announced ahead of an investor's day event, will look at incorporating healthy menu options into the chain's lineup and package its products in different ways to increase the number of items customers purchase each time they get to the register.

It will also look to extend its brand reach through new restaurant formats and sizes that target specific locations such as offices, sports venues and hospitals and find ways to tap into the millennial market.

"We also see opportunity, working together with our restaurant owners, to go beyond our restaurant footprint in alternative channels," the company said.

The strategy is similar in the U.S., where it will also embark on a new push to drive brand awareness and develop more franchises.

"We expect this multi-layered, disciplined approach to developing our U.S. business will result in substantial progress in the U.S. segment and U.S. operating income of up to $50 million by 2018," the company said.

Its international approach will be "pragmatic and disciplined," and seek further expansion in the Persian Gulf region, where it has had initial success, and has a road map for adding about 220 locations in that area over the same period.

Tim Hortons said it expects between 215 and 255 new restaurants will be added in total this year, including between 140 and 160 in Canada, building on the 3,588 restaurants Tim Hortons currently has in its Canadian system, 859 in the United States and 38 in the Gulf region.

The changes come after Tim Hortons said last week it was pulling the Cold Stone Creamery brand from its Canadian restaurants and removing about two dozen items from the menu to simplify its operations, as it tries to make its service faster and the customer experience easier to boost profits.

The company reported last Thursday that its fourth-quarter profits grew marginally to $100.6 million from $100.3 million a year earlier, with earnings increasing to 69 cents but falling below analyst estimates of 77 cents per share, according to Thomson Reuters. Revenue grew 10.7 per cent to $898.5 million from $811.6 million.

It expects diluted earnings per share in the range of $3.17 to $3.27 for 2014, with same-store sales growth of one to three per cent in Canada and two to four per cent in the U.S.

Tim Hortons shares were trading up 27 cents at $58.21 Tuesday at the Toronto Stock Exchange.

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Follow @maurinor on Twitter.


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