TIM HORTONS INC CASE STUDY

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It would be a year of dramatic change for Tim Hortons in 2014, up 3.6 percent from 2013. While this would be Inc. On August 26, 2014, the company's board of directors the fifth consecutive year of real growth, it was lower had agreed to be acquired by G3 Capital, the investment than expected for post-recession recovery. The restaufirm that owned Burger King. The new company would rant industry's share of the overall food dollar was up to become the third largest fast food restaurant chain in the 47 percent, almost double the 25 percent it held in 1995.6 world with 18,000 locations in 98 countries and com- It was expected to employ 13.5 million people in 2014 . The bined international sales of $23 billion dollars. 1 The new industry was highly fragmented, with the 50 largest comcompany would be headquartered in Oakville, Ontario, panies accounting for only 20 percent of the revenue.? Canada and largely operate as two separate entities. In Canada, revenues from commercial food service The deal still had to be approved by 'Tim Hortons' were projected to be $57.5 billion in 2014 , an increase of shareholders and potentially by Canadian and American 4.7 percent over 2013 . Growth was expected to come from regulatory authorities. It was believed that this deal higher average bills rather than from additional food traffic would help Tim Hortons with its plans for interna- in restaurants." In 2012, there were approximately 1.1 miltional expansion. 2013 had been an ambitious year. Tim lion employees in the Canadian restaurant industry at more Hortons had opened 261 new locations and refreshed than 81,000 restaurants, bars and catering businesses.9 more than 300 existing locations in Canada and the The restaurant industry in North America was United States. While Tim Hortons was almost synony- divided into two categories: full service and limited sermous with the Canadian identity, its brand and products vice. Full service included family, casual and fine dining were far less known outside of Canada's borders; to hit where patrons would be seated and food was ordered at ambitious growth targets, international expansion was a the table. Customers paid after eating, and the average must, and Burger King's global experience could provide bill was the highest for any of the segments at $13.66 in expert advice. Marc Caira, Tim Hortons' president and 201310 Full service dining restaurants incorporated all chief executive officer (CEO), commented, "We are very, types of cuisines and included Boston Pizza, Red Lobster, very confident that we can grow much quicker in this and Ruth Chris' Steak House, among others. However, must-win battle called the United States with our part- the majority of restaurants in this segment continued to ners than we would have otherwise done on our own." be individual or family-owned establishments. Even with the acquisition, Tim Hortons would need. The limited service restaurant sector differed from full to make clear strategic choices to achieve its aggressive service dining in that consumers were not waited on at the growth and financial goals. Inconsistent economic growth table. Instead, customers went to a central counter where was fostering increased competition and consumer tastes they ordered, paid before receiving their food and either ate were evolving, making menu innovation an important pri- in the restaurant or had it "to go." The limited service restauority. Achieving the returns shareholders expected would rant sector in the United States was expected to post total be challenging. 2014 would be the 50th year of operations revenues of USs195.4 billion in 2014, a 4.4 percent increase for Tim Hortons. Even with Burger King's help the com- over 2013." Customers in this category looked for good ser