BC Business
Tim Hortons and Starbucks | BCBusiness
Tim Hortons has been warming the hearts and hands of Canadians with its double-doubles and donuts for decades—or so the story goes in all but one market: Metro Vancouver.
Last year, Canada.com editor William Wolfe-Wylie calculated the number of Tim Hortons for every city in Canada, comparing them with the number of Starbucks. Overall, Tims was the clear winner, claiming nearly three times as many locations throughout the country. The single exception was Metro Vancouver, where Starbucks beat out what’s arguably Canada’s most iconic brand in nearly every neighbourhood. North Vancouver, West Vancouver, Richmond, Delta, Port Moody and especially Vancouver proper—all were Starbucks territory.
That’s an interesting fact for a company currently fixated on expansion. When Tim Hortons announced it was merging with Burger King last August, a deal that would create the world’s third-largest fast-food company and save Burger King tax money (by allowing it to move its headquarters to Canada), the benefits for Tims were less immediately clear. In a release, Tim Hortons CEO Marc Caira argued that the merger would bring the “iconic Canadian brand to a new global customer base.” That remains to be seen: presently, 80 per cent of its restaurants are Canadian—and there’s at least one domestic market it’s yet to fully crack.
So why is Tims still a Grande player in Vancouver’s Venti market? Answers range from historical (Tims entered the market late) to cultural (we’re coffee snobs). Certainly, Tim Hortons has a lot to learn from its least saturated Canadian market—lessons that could help it abroad.
Like timing. Tim Hortons rolled up to the Pacific Rim relatively recently; its first Vancouver restaurant opened in 1994 on East Hastings Street. Seattle-based Starbucks, on the other hand, entered Vancouver, its first international location, in 1987.
Tims is “coming late to the party,” says Vince Piccolo, described by Scout Magazine as the “King of Vancouver Coffee.” Piccolo, who owns 49th Parallel Coffee Roasters, also founded Caffè Artigiano in the late ’90s. “I do remember when I opened my first coffee house, I can’t think of a Tim Hortons in the area,” he says. On the other hand, “Starbucks came at a time when there was really nothing in Vancouver.”
By the time Tim Hortons got here, “most of the locations had been gobbled up by Starbucks and Blenz,” Piccolo explains. And, frankly, people were used to better coffee. “Having a glass pot on a heater is like cafeteria coffee—that was the perception for Vancouver residents,” he says. Tim Hortons does have one competitive advantage, however: “People are more forgiving because the price point is better.”
In recent years, Tims has begun targeting those upscale coffee drinkers, first with lattes, which it began serving three years ago, and now with a new dark roast this past summer.
Quality, however, is only half the battle. In B.C., there “is an absence of cultural attachment” to Tim Hortons, says Bruce Philp, a Toronto-based brand consultant and author of Consumer Republic. Many of its most famous commercials—like Sidney Crosby playing hockey with kids on a frozen pond—look like scenes out of Ontario, not B.C.
“In certain categories, Vancouver and the Lower Mainland tend to identify as Pacific Northwest as opposed to Canadian,” Philp explains. So how might Tim Hortons win the West? “I think the way forward for them would be grass roots—that and patience,” he says. “When Tim Hortons is at its best, it’s out there sponsoring hockey teams and local events.”
In short, Tims will need to double-double its efforts and earn our love. If it can, perhaps Tim Hortons stands a chance abroad—in markets that don’t love hockey. They may be harder than hat tricks, but “it would be a great mistake to underestimate Tims,” Philp says. “They’re very smart marketers.”