TORONTO — Tim Hortons (TSX:THI) is giving itself a makeover in the United States by serving up a new restaurant format as part of expansion plans over the next three years.
The coffee and doughnut store giant said Friday it would unveil a new restaurant concept that will be piloted in at least 10 existing U.S. locations. The redesign is intended to more sharply define Tim Hortons’ image with what the company calls “enhanced finishes, fixtures and seating areas.”
It comes as Tim Hortons works to strengthen the Oakville, Ont.-headquartered company’s presence in the United States by selling itself as a higher-end establishment in certain markets.
Last year, the company opened stores at several key U.S. tourist spots, particularly in the New York area, but they were generally smaller spaces that had been vacated by Dunkin’ Donuts.
The company didn’t specify which locations would be part of the new concept. Tim Hortons currently has 563 locations in the United States.
“In the U.S., we don’t have the scale or the marketing advantages that we have in Canada,” president and CEO Don Schroeder said at an investor conference on Friday.
“But what we do have is a cultural mindset of acting differently as a challenger-brand that is nimble, and prepared to be creative in making us appear bigger than we actually are.”
The iconic Ontario-based company known for its coffee, doughnuts and light meals says it expects 900 new stores of various formats by 2013.
They would include 600 stores in Canada where Tim Hortons already has more than 3,000 locations under its banner.
Up to 60 locations in Canada will be converted to include the Cold Stone Creamery concept in partnership with the American ice cream chain.
The restaurant operator says it plans to spend $180 million to $200 million this year to support its growth initiatives.
The company is aiming for same-store sales growth of three per cent to five per cent in Canada and two per cent to four per cent in the United States.
It’s also aiming to earn between $1.95 and $2.05 per share.
Beyond 2010, Tims has set the goal of 12 per cent to 15 per cent compound annual average growth in earnings per share from 2011 to 2013.
“Our strategies will continue to transform Tim Hortons, not only adding significant scale but also introducing important additional growth layers to our business platform to extend our position as a leader in the North American restaurant industry,” said Don Schroeder, president and CEO.
“We are a growth company with significant long-term opportunities in Canada, and we are also excited by the prospects of continued profitable growth in the U.S., and potentially internationally in the longer term.”
Much of the growth in Canada this year will be focused on Quebec, western Canada and major urban locations. In the United States, it will be focused on major regional markets such as New York, Ohio and Michigan.
The company says it plans to spread out from these bases, with about 30 per cent of its development activities between 2010 and 2013 in markets adjacent to its existing territories.
Tim Hortons shares were ahead nearly three per cent, or 87 cents, to $32.79 at the Toronto Stock Exchange on Friday near midday.