Tags: Tim | Hortons | coffee | THI

Tim Hortons: Coffee to Canada and Beyond

By    |   Tuesday, 22 Nov 2011 09:28 AM

Canadian restaurant franchise company Tim Hortons (THI) has become one of the largest restaurant chains in North America. The company continues to grow profits by primarily selling coffee to all of Canada but also beyond — an international expansion is under way.

Tim Hortons restaurants offer gourmet coffee, coffee drinks, sandwiches, soups, baked goods and donuts. The company franchises almost 100 percent of its restaurants and acts as the vertically integrated supplier to the restaurants. There are more than 3,000 Tim Hortons restaurants in Canada and approximately 600 in the United States. One analyst noted that the company sells more than 80 percent of the restaurant-sold coffee in Canada.

For the third quarter of 2011, Tim Hortons reported revenues of $511 million, up 9.3 percent from a year earlier. For the first nine month of the year, sales were $1.46 billion, up 11 percent.

Net income for the three quarters was $1.71 per share, up 21 percent from the $1.41 earned in the first nine months of 2010. For the full year, the company is forecast to earn $2.34, compared to $2.15 earned in 2011.

International expansion

Tim Hortons is not adding new stores at a very rapid pace and the bulk of growth comes from increases in same-store sales. For the 2011 third quarter, same-store sales in Canada were up 4.9 percent and the U.S. stores increased sales at a 6.3 percent clip. The company did open 64 new restaurants in the third quarter.

A unique path to international growth is an agreement to open 120 Tim Hortons restaurants in Dubai. The first restaurant there opened in September. The company faces stiff competition in both Canada and the United States from McDonald's (MCD) and Starbucks (SBUX).

Recently, analyst Brian Yarbrough at Edward Jones noted Tim Hortons is working hard to maintain its dominant position for breakfast sales in Canada. Analysts at Credit Suisse have initiated coverage on THI with a neutral rating on the stock.

The company next reports on Feb. 23.
 

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Canadian restaurant franchise company Tim Hortons (THI) has become one of the largest restaurant chains in North America. The company continues to grow profits by primarily selling coffee to all of Canada but also beyond an international expansion is under way. Tim...
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2011-28-22
Tuesday, 22 Nov 2011 09:28 AM
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