Burger King recently acquired Tim Hortons, a giant Canadian coffee maker through its parent company 3G Capital. The Canadian brand is known widely for its coffee and its large imprint in the Canadian breakfast market but little is known about the effects this will have on the coffee maker's future days as well as its business in the United States.
In February this year, prior to its acquisition by Burger King, Tim Horton's CEO Marc Caira outlined an aggressive plan that would ensure Tim Hortons became a global brand through an extensive expansion network across Canada and the United States. The chief executive announced plans to open up 500 new restaurants in Canada, half of which were to be opened in this year alone, and 300 new restaurants in the US by 2018. The company currently operates 850 locations in the US and 1300 stores in Canada.
Upon acquisition through a $94 dollar a share deal, the Canadian brand merged with Burger King to become the third largest quick service restaurant in the world with a combined global sales of $23 billion and boasting of 18000 locations in 98 countries.
This merger has a lot of effects on the United States coffee and breakfast tables. Principally is the brand recognition that Tim Hortons has now acquired in the United States. The coffee maker began operations in the US through a flagship store in New York in 1984. The coffee maker has been struggling in the US market largely because of what analysts refer to as a lack of brand recognition.
With Burger King's acquisition comes brand presence, not to mention billions in financial resources and a ravenous parent company that is known for its greedy acquisition. Could Tim Hortons finally find proper footing in the United States.
The Canadian firm already boasts of selling 8 out of every 10 coffee cups sold in our northern neighbor's territory. An expansion is likely in the offing, meaning other restaurants such as McDonalds may have a huge battle on their hands. McDonalds has braved through a rough couple of months through promotions such as its free McCafe offer that's still running. The question remains for how long it can keep this up amid growing competition.
