RBI sending Tim Hortons into China
Restaurant Brands International is heading to China with Tim Hortons. The multi-brand owner of Burger King, Popeyes Louisiana Kitchen and Tim Hortons is taking the latter to the Chinese market in a big way.
The company announced it looks to build 1,500 Tim Hortons locations across China in the next 10 years.
“China’s population and vibrant economy represent an excellent growth opportunity for Tim Hortons,” said Tim Hortons President Alex Macedo. “We have already seen Canada’s Chinese community embrace Tim Hortons and we now have the opportunity to bring the best of our Canadian brand to China with established partners.”
RBI is leaning on some very established partners: the private equity firm Cartesian Capital Group. They financed a major push by Burger King into the country. Since inking a similar partnership in 2012, the firm funded TFI TAB Food Investments, which grew the China market from 85 locations to more than 900, making them the largest Burger King franchisee.
The move comes as RBI sees a slowdown in North America. Tim Hortons same-store sales declined by 0.3 percent in the latest quarterly earnings filing, accelerating downward from -0.1 percent in the prior quarter. It’s also facing higher costs of sales in home markets. The stock rose nearly 2 percent on the news, the highest it’s been since November as stock buyers bought into the growth prospects.
The company may find the coffee market tougher than burgers. According to International Coffee Organization, the average Chinese citizen drinks just five or six cups in a year, and most of that is instant coffee at home. That does mean growth is possible, and Starbucks has had some success in the country by positioning itself as a luxury brand, but it’s unlikely RBI will find the daily caffeine addicts that fuel its brand. As RBI made the announcement, Chinese coffee startup Luckin Coffee raised $200 million to propel its own goals.