Tim Hortons: Will Price Increases Stimulate Sales Growth?

Tim Hortons Inc. (THI) has confirmed that has increased prices in Ontario as of April 7 as a result of higher overall operating costs at its stores.

The price increase mostly applies to beverages and coffee in particular, a company spokesperson said, but customers have been notified with signs for more than a week.

A medium coffee will now cost C$1.22 (excluding taxes), up from C$1.17 previously. The price of a large coffee moves from C$1.31 to C$1.38, and an extra large from C$1.49 to C$1.57.

The last price hike for Tim Hortons coffee was in February 2006.

On Friday, BMO Capital Markets said the increases would boost the coffee and donut chain’s same-store sales growth.

Comments

[Guy Incognito:]

I was hoping this new 7 cents price increase would reduce the size of the lineups at the Tim Hortons drive through. Unfortunately, it didn't seem to work. The lineups keep growing.

Their prices are still way, way less than Starbucks, and their coffee is actually made with love, as opposed to SB, who just hand you a cup and tell you to put your own milk and sugar in it.

This should bump up same store sales. However, the real growth is opening new stores in the US, and that's where we need to worry about a slow down. We need an increase in consumer confidence in the US, so more people will be willing to open up stores, and more of those darned Yankees can enjoy the love in a Tim Hortons coffee.

2008 Apr 09 09:48 AM