It has been nearly half a year now since Tim Hortons signed deal with Cartisian Capital to expand their venues to China. According to the Huffington Post, in July, the Canadian coffee giant was slated to open up to 1,500 stores across Asia in 2019. However, no more news has been released since then regarding the details of the plan, the first opening, the location of the flagship store, or anything, for that matter.
There are also those suspicious whether the company has halted the expansion plan due to escalating political tensions between China and Tim Hortons’ home of Canada.
Politics aside, Tim Hortons is late to the game and faces challenges from a slew of competitors, such as Starbucks, McDonald’s, and the Chinese digital brand, Luckin Coffee. While it is hard to compete with the ubiquitous Starbucks and its inveterate reputation, Tim Hortons’s fatal disadvantage resides in being unfamiliar with the Chinese e-commerce culture. Unlike a majority of North American customers who still prefer to pop into a store or stop by a drive-thru, the Chinese proclivity for online ordering is so prevalent that it has changed the business landscape.
The Internet model is not only convenient for consumers, but cost-effective for vendors, who have gradually freed themselves from the burden of skyrocketing rents. Take Luckin Coffee as an example. The Chinese local brand rose in an Internet frenzy that has seized China’s coastal cities in less than half a year. Applying a branding strategy that entails a combination of lower price, around-the-clock coupons, fast delivery service as well as brick-and-mortar stores, Luckin Coffee had charmed over 1.3m coffee lovers into downloading its App by the time Tim Hortons announced its expansion plan to Asia.
By contrast, Tim Hortons’ current Apps, featuring only everyday menus and top-picks, has a long way to go if the company is serious about having a chance in the digitised, Chinese market.
In addition, it remains unclear whether the Oakville, Ontario-based firm could withstand the test of the local taste buds. However unfamiliar to the Chinese ear, the Canadian coffee chain emblematises a national identity, and whose signature drink; “double-double”, literally double cream, double sugar; has served Canadians as their taste of home. But for many Asians, the drink is saccharine. While it is possible to customise a “double-double” to a “single-single”, some iced, sugary drinks are pre-mixed and unable to be tailored to personal preferences.
Meanwhile, more like McDonald’s, Tim Hortons operates at a lower price with kitchen that serve hot food, which could be an advantage over competitors such as Starbucks, and an embarrassment.
Some 25-plus years ago, when McDonald’s first landed in China, sales was abysmal. The company then incorporated flavours more adept to the local palate and the strategy that blended Mickey D’s image into the Chinese mainstream. Only then did it gradually establish itself as a fast food giant in the Middle Kingdom.
Fortunately, Tim Hortons will not face such strong resistance as did McDonald’s. Nearly three decades of foreign trade has brought about moderate change to the Chinese culinary culture. In more fashionable, first-tier cities, such as Shanghai, many young people these days prefer muffins, donuts, or cream cheese bagels over Chinese breakfast items such as “baozi”. The success of western-themed restaurants such as Wagas, or New Concept, instantiates China’s growing appetite for foreign foods and the ideologies behind them.
Tim Hortons could seize the moment if it plays the game right. Beside cutting down on a few shots of sugar, it should keep the price low and the service fast, so it appeals to a larger population from that sector of Generation-Z who fancy the lifestyle of those sipping hot soup by the window at New Concept but can’t afford the price.
While prospects look positive for Tim Hortons overall, and there remains not enough coffee in the world to satisfy Chinese cravings, we can only hope that rancid politics will not spoil anyone’s appetite.