The Double Double on the Tim Hortons & Burger King Potential Merger

There has been much hype this week around the recent merger between Canada’s beloved Tim Hortons’ and Burger King that has caused many Canadians to wonder, “what will happen to our iconic Canadian coffee shop?”.

Tim Hortons’ lives and breathes Canadiana. When you walk into a Tim Hortons’ you see people of all ages, sexes, ethnicities and professions all waiting in line or actively enjoying their ‘double double’ and a doughnut. Tim Hortons’ is a place where Canadians flock daily to find warmth in their coffee on their early morning winter trek to their kids’ hockey practice, or some much needed caffeine during a long day at the office. Its coffee is deeply rooted in the Canadian psyche, and almost every Canadian has memories that involve our beloved “Timmies” in some way shape or form. From the coffee giant’s humble beginnings in 1964 in Hamilton, Ontario where Toronto Maple Leafs star defenseman Tim Horton founded the first restaurant, to today’s reality with over 4,500 establishments touching nearly every Canadian community from coast to coast – Timmies’ is a cornerstone of the Canadian experience.

Tim Hortons’ impact doesn’t start and stop at fresh coffee and doughnuts, though. The company has authenticated their commitment to Canadians by sponsoring and supporting local causes and events – and on a national scale supporting grassroots, amateur and professional sport from Timbits to the NHL. Their community ties hit home with consumers – making Tim Hortons’ Canada’s most recognized brand, and the sixth most influential brand overall. This brand love translates into sales as well, with the coffee maker ranking #1 in quick serve restaurants over McDonald’s, and #1 quick serve coffee house over Starbucks (with over 77% of the coffee industry market share).

This potential merger scares many Canadians who see a big American chain buying a Canadian brand – with the risk of the conglomerate ‘Americanizing’ its operations and feel, potentially tearing the heart and soul from a brand that means so much to us here in Canada.

But before we go too far, let’s stop for a second and look at the numbers.

  • Although Burger King has 13,667 restaurants globally compared to Tim Hortons’ 4546, Tim Hortons’ actually has revenues of $3.2B compared to Burger King’s $1.1B.
  • With 90% of its sales within Canada (across over 3600 restaurants), Tim Hortons’ in Canada produces more revenues than Burger King globally.
  • Due to the highly profitable nature of Burger King’s franchising model, both companies actually produce roughly the same amount of annual profits at ~ $1B.
  • Using this estimate of $1B annual profits, Tim Hortons’ average profit per restaurant is $219,973 compared to Burger King’s $73,169.

Factoring these numbers into the overall equation starts to paint the picture that Tim Hortons’ is essential to the newly formed parent company that owns Burger King and Tim Hortons’ future success. As you can see, Tim Hortons´ is three times more profitable per restaurant than Burger King, with its success in Canada driving these figures.

So, what will happen to Tim Hortons’ brand in Canada you may ask? Well, I believe the impact will be impossible to detect here at home. This is supported by our recent poll that found that 77% of respondents believe that the merger will not impact Tim Hortons’ brand in Canada. Tim Hortons’ authentic integration into communities and the daily lives of almost all Canadians is too powerful to tamper with and will be essential to their continued success and loyalty in Canada. As this partnership between these two restaurant moves forward, Tim Hortons’ may scale in Canada and globally, but the Tim Hortons’ that we’ve all grown to love in Canada won’t be changing anytime soon. In fact, it may be Burger King who will learn a thing or two about how to dominate a market, taking on some of the strategies and tactics that Tim Hortons’ has been so successful implementing in Canada.

So with that being said, I’m off to grab my afternoon coffee… And yes, it’s going to be a ‘double double’ from my neighborhood Tim Hortons’!