Tim Hortons CEO: Intensity of QSR environment unlike anything in past 40 years

 
Feb. 26, 2014 | by Alicia Kelso

Tim Hortons executives spent a lot of time during Tuesday's investor day talking about the "new era," or the "new reality," created by a confluence of trends driven largely by consumer demand and technology.

CEO Marc Caira put in a new 5-year strategy to navigate this new era when he joined the company about eight months ago. The main themes of that plan include being bold; simplifying the business; and executing flawlessly.

Caira defines this new era by heightened consumer demands, changing demographics (both aging and diversified), low growth environment, evolving market forces, sweeping technology changes and intensified competition, all of which is "unlike anything I've seen in 40 years in this industry," he said.

"There is no such thing as a global consumer. Consumers are local," Caira said. "In the new era, if we sit on our laurels, if we become complacent and don't change, we will lose. There are no miracles, just hard work and rigor and discipline."

Caira and other executives outlined their plans on how to become the "industry's most consumer-centric brand." That entails expanding the brand's presence, not only with new unit development in Canada, the U.S. and internationally, but also beyond restaurant walls. The team calls the latter strategy "Tim Hortons, wherever, whenever, however." A big part of that effort will focus on retail, which was discussed at length during last week's earnings call.

"Be bold, be different, be daring. We need to stand out because we're all starting to look the same," Caira said. "In this new era, I don't see many homeruns. I see solid singles and doubles, and we will score runs if we execute."

Development

Development was a major theme at the investor day event. Execs called the U.S. is a "must win" battle.

"It's the largest foodservice market. It's growing. We need to get the right model and then scale it aggressively," Caira said. "Once we scale up, the whole market is available."

The brand specifically plans to add 300 restaurants in the U.S. by 2018, with a focus on markets such as St. Louis, Ohio, Indiana and North Dakota.

In addition to the U.S., international markets are a "white piece of paper," with a lot of development opportunities. Tim Hortons expects about 40 new restaurants in the Middle East region this year as part of that plan.

Product development

As Tim Hortons embraces a more simplified menu, it will also evolve from "just" a coffee destination to a meal destination. Bill Moir, chief brand and marketing officer, said a big focus will be on the consumer demand for healthier products, flavorful products, portable products and premium products.

From a health and wellness perspective, for example, Tims last month launched a turkey sausage breakfast sandwich, and plans to rollout a frozen green tea offering in May.

"Convenience and portability will continue to be important, and the idea of value will play a more significant role, whether customers are trading up or down," Moir said. "From a menu and product development standpoint, the goal is to have differentiated innovation. We need a robust pipeline with an understanding of trends."

To approach this goal, Tim Hortons is relying on a three-pronged approach: An innovation council, a formalized internal program that generates insights; demand spaces, research that uncovers factors that drive guests' choice for a specific occasion; and an innovation lab, which is basically test marketing.

(Editor's note: See an update on Tim Hortons operations initiatives here).


Topics: Customer Service / Experience , Food & Beverage , Franchising & Growth , Marketing / Branding / Promotion , Operations Management , Trends / Statistics


Alicia Kelso / Alicia has been a professional journalist for 15 years. Her work with QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.
View Alicia Kelso's profile on LinkedIn

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