Can Tim Hortons Take Manhattan?

Can Tim Hortons Inc. (THI) take Manhattan?

Analysts are applauding the coffee chain’s Big Apple takeover of a dozen Dunkin’ Donut sites, which began Monday, saying the move could help raise the made-in-Canada chain’s brand profile in the United States.

“It is, in our view, a very rare opportunity to obtain such high-profile sites in Manhattan,” analyst Keith Howlett of Desjardins Securities wrote in a note to clients. He rates the shares Hold with a target price of C$32.

The sites offer the potential (far from a certainty) to begin to seed Tim Hortons' brand in the minds of Americans. The brand is not well known outside of western New York state, the Detroit area, and Columbus, Ohio.

Under its recent arrangement with the ice cream chain Cold Stone Creamery, Tim Hortons will also open three dual-branded outlets in early August at three existing Cold Stone Creamery locations in New York, which the analyst also sees as positive.

He wrote:

Cold Stone Creamery is a brand that has captured positive mental shelf space with U.S. consumers as being associated with an interesting and high-quality ice cream experience. We view these market initiatives as important steps in developing brand awareness of Tim Hortons in the U.S.

Comments

[BarryP:]

Frozen pre-packaged donuts that minimum wage employees heat up? This is going to take Manhattan by storm and then the rest of America? Doubt it!

Jul 14 06:25 AM

[John Gordon:]

The time and expense of expanding within the United States, with its general restaurant over-penetration, sluggish (at best) sales and economy can't be over-emphasized. In 2008, Tim Horton's closed some US stores in Southern New England, for example.

Still, grabbing the high profile NYC Riese sites, plus Horton's much higher AUVs versus Dunkin ($1.7M vs. $850K) is notable. If Horton's can expand on the West Coast, from Seattle and further south along the US west coast, it could block a Dunkin's prime expansion zone.

John A. Gordon
Chain Restaurant Earnings and Econmomics Experts
pacificmanagementconsu...

Jul 14 11:26 AM