Tim Hortons will bring its double doubles and Timbits to Mexico as part of the coffee purveyor’s ongoing global expansion.
Canada’s largest restaurant chain, which has 4,492 outlets in North America and the Middle East, announced a master franchise joint venture on Friday with a group of investors in Mexico, but did not divulge how many restaurants it plans to open in its first Latin American endeavour.
“Mexico has a thriving coffee market, so we are very optimistic about the opportunity to grow the brand across the country,” said chief executive Daniel Schwartz of Restaurant Brands International, the company that owns Burger King and Tim Hortons.
The megabrand restaurant company, majority-owned by Brazil-based investment firm 3G Capital, operates the respective head offices out of Miami and Oakville, Ont.
The world’s third-largest foodservice operator announced last summer that it had established local partnerships to roll out Tim Hortons restaurants in the U.K. and the Philippines.
Schwartz has said Restaurant Brands is keen to transform Tim Hortons into a larger international brand like Burger King, which has had restaurants in Mexico since the 1990s.
But Mexico might be a tougher market for the Canadian coffee and baked goods chain, particularly given the brewing discord between the United States and Mexico, said Doug Fisher, president of Toronto-based foodservice consulting firm FHG International.
“Politics have changed, and Mexico’s economy is going to be altered because of the Trump presidency,” he said. “Now could be a challenging time for Tim Hortons to expand there.
Mexican cafés and bakeries also tend to do their baking in-house, unlike Tim Hortons, Fisher noted, and that may work to the chain’s disadvantage. “Cutting the deals and actually expanding are two different situations. It’s a reasonable opportunity in a big market, but I think the markets that are best for Tim Hortons are ones that do little in coffee and little in baking, though baking only makes up about 10 per cent to 15 per cent of Tim Hortons’ sales. The expansion in the U.K. could be very good, though.”
The Canadian brand has performed well as part of the restaurant conglomerate, with total revenue rising 7 per cent to US$790 million in the third quarter ended Sept. 30, and opened 28 new stores. Same-store sales, an indicator of retail performance that strips out year-over-year square footage changes, rose two per cent at Tim Hortons in the period.
Darren Tristano, president of Chicago-based foodservice consultancy Technomic, Inc., said it is easier in general for American players to expand operations into Mexico than to other countries, because of proximity and brand awareness.
“In North America we have certainly seen a saturation of fast-food concepts but they are outperforming full-service restaurants because of value and convenience,” Tristano said. “As the market continues to mature, going abroad is one of the most important strategies for continued growth. And as for Tim Hortons, they will have an opportunity to build upon their relationships with existing Burger King franchisees there.”
Rival Dunkin’ Donuts began opening outlets in Mexico in 2015, and Tristano noted Firehouse Subs, based in Jacksonville, Fla., announced plans this week to expand into the Latin American nation, where it will compete alongside big franchises such as McDonald’s, KFC and Subway.
Restaurant Brands’ shares rose one per cent to $65.21 in midday trading Friday on the Toronto Stock Exchange.