TORONTO – The president of Tim Hortons says a plan to conquer a crowded Chinese coffee market hinges on tailoring its menu to local habits and tastes — including offering congee and matcha alongside signature items like double doubles.
Alex Macedo believes the coffee chain’s plan to open 1,500 stores in Asia over the next decade will face lofty competition from a slew of companies who have dominated the market as the continent warms to drinking coffee.
“We are late to the game for sure,” Macedo said in an interview with The Canadian Press.
He’s made regular trips to Asia to observe the operations of rival coffee purveyors, including U.S. heavyweights Starbucks, McDonald’s, and Dunkin’ Donuts; Beijing-based start-up Luckin Coffee; and U.K. chain Costa Coffee.
“They created an atmosphere that is almost get in and get out, and it is very fast paced,” he said, noting the tables and ambience differ from that in Canadian and U.S. cafes, where patrons tend to sit and linger with their cup of java.
China’s coffeehouse atmosphere contrasts against the “home-y” feeling that Macedo wants to build to encourage customers to spend as much as time as they’d like at Tim Hortons Asian locations, a custom popular with many Canadian Tims regulars.
“We want our team members to be the most welcoming staff in China,” said Macedo. “We want people to be able to sit in our restaurants for 10 hours if they want to with only one cup of coffee if they want to or not ordering a cup of coffee at all.”
The company’s coffee has already proven popular in early overseas testing, he said, as have the brand’s iced cappuccino drinks.
They will be featured on the menu alongside products featuring matcha — a tea-based powder that comes in a bright green hue and is a perennial favourite in Asia.
The food selection will reflect local taste preferences, he said, adding the company has noticed Chinese consumers don’t eat baked goods or doughnuts as frequently as Canadians.
A completely local breakfast and lunch menu will feature Asian-style rice porridge called congee.
“A lot of (Asian) coffee shops will sell a piece of cake or whatever, but they don’t have a kitchen like we do, so that is where we are spending most of our time, trying to figure out what to serve for breakfast and lunch,” he said.
Despite some of the adjustments the brand will have to make, food industry expert Robert Carter thinks the expansion makes sense because China’s growing middle class is willing to spend their increased wealth on eating out, and more people are starting to drink coffee over tea.
However, Carter believes Tim Hortons needs to find a balance between serving local cuisine and signature Tim Hortons treats in order to succeed in China.
He pointed to one menu item in particular: iced coffees.
Research, he said, indicates it is the fastest-growing area for coffee, particularly with younger consumers.
“They will try traditional brewed coffees, but it is really those coffee-based, sugary beverages that are driving them into coffee shops, not only in China, but in North America,” he said.
“I would expect Tims to have a pretty aggressive portfolio with those types of beverages.”
Tims announced an agreement last month with private equity firm Cartesian Capital to bring thousands of restaurants to China, with plans to open the first location in 2019.
Tim Hortons has previously announced plans to expand to Spain, Mexico, Great Britain and the Philippines.
Its U.S. expansion, however, appears to be faltering. Last month it closed four locations in Ohio, the latest in a string of closures south of the border in the past several years.
In June, after reports parent company Restaurant Brands International was scaling back on its U.S. expansion plans, Macedo said in a statement that the company has seen softer comparable sales growth in the U.S. in more recent quarters amid a very competitive environment.
Follow @Tara_Deschamps on Twitter.
Companies in this story: (TSX:QSR)