The Restaurants Chain Tim Hortons and Its Business Model

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Table of Contents

Executive summary
Background
Statement of Problem
Recommendations
Implementation or Action Plan

Executive summary

Tim Hortons, the Canadian restaurant’s chain, is going to penetrate to the US market. The analysis of the peculiarities of the American market is an essential part of the strategy development. It is recommended to use the adjusted strategy with co-branding and entering the new market niches.

Background

The same business model of Tim Hortons that has been applied in Canada would hardly be successful in the United States. The main reason for this is the strong competition from the side of similar companies such as Dunkin’ Donuts, Starbucks, and even McDonalds. The idea has made the business model of Tim Hortons stand out in the Canadian market.

However, this will not be the case in the US where companies with similar ideas have already taken their market shares. The market of the foreign country has its own peculiarities ranging from the customer’s mentality and preferences to the legal requirements and national features of running the business. That is why although the business model has been successful in Canada, it needs changes to fit the requirements of the market in the United States.

Statement of Problem

Tim Hortons should find an effective strategy for penetration to the American market.

Situation Analysis

The US market is characterized by myriad small cafes. The conditions of the perfect competition make it harder to earn profits in the long-run. In order to compete successfully, Tim Hortons plans to acquire prime locations, cooperate with local companies in the field of co-branding, to go upscale targeting new market segment, and to launch its brand taking into account the preferences of local consumers in order to break new ground.

Analysis of Alternatives

The effective marketing campaign should make customers interested in the product. The creation of the associations is one of the ways to attract customers’ attention. In Canada, Tim Hortons has successfully used hockey, which is considered as the national sports game of the Canadians, to attract consumers’ attention. However, in the US, this approach needs to be revised with making a different emphasis in marketing.

Baseball is one of the favorite sports games of the Americans. However, it is used by Dunkin’ Donuts, one of Tim Hortons’ main competitors in the US market. As the alternative, the emphasis can be put on the movie making, comics, or other elements of the American pop culture.

The movie-making, for instance, is considered as one of the traditional symbols of the United States. The company can invite Hollywood stars to participate in Tim Hortons’ advertising campaign. The design of the outlets can be also made in the style of Hollywood movies or popular comics.

Although Tim Horton’s position itself as the restaurant’s network focused on value and freshness, many of its competitors also do so. The strategy of penetration to the American market of the company is based on four pillars: acquiring prime locations, co-branding, going upscale and breaking new ground.

I think this strategy has the following advantages: it is adjusted to the peculiarities of the foreign market, it aims at taking the particular market niches, it repositions the brand in somewhat new image attracting customers’ attention. However, it also has its disadvantages including the fact that it is based on the high uncertainty and involves significant risks.

Recommendations

Taking into account the strengths and weaknesses of the suggested strategies, it is recommended to Tim Hortons to use the adjusted strategy in the US market with the particular emphasis on the creation of the customer’s associations with the American symbols. Besides, it is recommended to use the co-branding with American food chains. And last but not least, Tim Hortons should find new market niches.

Implementation or Action Plan

Co-branding assumes cooperation with the local food staff producers and cafes. In particular, Tim Hortons plans to cooperate with Kahala Corporation which will sell its ice cream together with Tim Hortons. This step will increase the consumers’ awareness of Tim Hortons’ own brand. Going upscale is the new approach in the Tim Hortons business model which is traditionally based on the low cost/high volume selling.

In the US, the company plans to position itself in the other market segments targeting the broader audience. Breaking new ground means presenting the brand to the foreign public. In order to present it successfully, the company needs a strategy and time to find out which approach will work in a foreign country.

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