Assignment Detail with Instruction:
Please read the attached Case Study (Tim Hortons) and answer the following questions
iefly:
1. Evaluate the strategic choices available to Tim Hortons in August XXXXXXXXXXWhat should be its immediate priorities? (550 words)
2. Is the proposed acquisition by 3G Capital a good move for Tim Hortons? Provide a full defense of your position. (words 700)
Please add citations and appropriate references.
Important:
As always, your submission should display good clarity of thought and be cohesive in terms of logic and flow. Your report should be written in a professional manner with supporting information. It should also reflect a high standard in terms of communication basics (spelling, grammar and syntax).
Recognize that these questions first require critical thinking part to understand the dimensions they contain. It is imperative you do this to best understand what is being asked as it relates to the ideas discussed throughout the course and hence, what concepts, tools, models and other resources need to be utilized in the development of your response.
Assignment Detail with Instruction:
Please read the
attached
Case
Study
(
Tim Hortons) and answer the following questions
iefly
:
1.
Evaluate the strategic choices available to Tim Hortons in
August
2014. What should be
its immediate priorities?
(
5
5
0
words)
2
. Is the proposed acquisition by 3G Capital a good move for Tim Hortons? Provide a full
defense of your position.
(words
7
0
0
)
Please
add citations and
appropriate
eferences
.
Important:
As always, your submission should display good clarity of thought and be cohesive in terms of
logic and flow. Your report should be written in a professional manner with
supporting
information
. It should also reflect a high standard in terms of communication basics (spelling,
grammar and syntax).
Recognize that these questions first require critical thinking
part to understand the dimensions
they contain. It is imperative you do this to best understand what is being asked as it relates to
the ideas discussed throughout the course and hence, what concepts, tools, models and other
esources ne
ed to be utilized in the development of your response.
Assignment Detail with Instruction:
Please read the attached Case Study (Tim Hortons) and answer the following questions
iefly:
1. Evaluate the strategic choices available to Tim Hortons in August XXXXXXXXXXWhat should be
its immediate priorities? (550 words)
2. Is the proposed acquisition by 3G Capital a good move for Tim Hortons? Provide a full
defense of your position. (words 700)
Please add citations and appropriate references.
Important:
As always, your submission should display good clarity of thought and be cohesive in terms of
logic and flow. Your report should be written in a professional manner with supporting
information. It should also reflect a high standard in terms of communication basics (spelling,
grammar and syntax).
Recognize that these questions first require critical thinking part to understand the dimensions
they contain. It is imperative you do this to best understand what is being asked as it relates to
the ideas discussed throughout the course and hence, what concepts, tools, models and other
esources need to be utilized in the development of your response.
9B14M114
TIM HORTONS INC.1
Karin Schna
and W. Glenn Rowe wrote this case solely to provide material for class discussion. The authors do not intend to
illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other
identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t XXXXXXXXXX; (e) XXXXXXXXXX; www.iveycases.com.
Copyright © 2014, Richard Ivey School of Business Foundation Version: XXXXXXXXXX
It would be a year of dramatic change for Tim Hortons Inc. On August 26, 2014, the company’s board of
directors had agreed to be acquired by 3G Capital, the investment firm that owned Burger King. The new
company would become the third-largest fast food restaurant chain in the world with 18,000 locations in
98 countries and combined international sales of $23 billion dollars.2 The new company would be
headquartered in Oakville, Ontario, Canada and largely operate as two separate entities.
The deal still had to be approved by Tim Hortons’ shareholders and potentially by Canadian and
American regulatory authorities. It was believed that this deal would help Tim Hortons with its plans for
international expansion. 2013 had been an ambitious year. Tim Hortons had opened 261 new locations
and refreshed more than 300 existing locations in Canada and the United States. While Tim Hortons was
almost synonymous with the Canadian identity, its
and and products were far less known outside of
Canada’s borders; to hit ambitious growth targets, international expansion was a must, and Burger King’s
global experience could provide expert advice. Marc Caira, Tim Hortons’ president and chief executive
officer (CEO), commented, “We are very, very confident that we can grow much quicker in this must-win
attle called the United States with our partners than we would have otherwise done on our own.”3
Even with the acquisition, Tim Hortons would need to make clear strategic choices to achieve its
aggressive growth and financial goals. Inconsistent economic growth was fostering increased competition
and consumer tastes were evolving, making menu innovation an important priority. Achieving the returns
shareholders expected would be challenging. 2014 would be the 50th year of operations for Tim Hortons.
Even with Burger King’s help, the company would need to have clear competitive advantages and make
smart strategic choices for the next 50 years to be as successful as its first half century.
THE RESTAURANT INDUSTRY
With over 900,000 locations, the restaurant industry in the United States was projected to reach US$683.4
illion in 2014, up 3.6 per cent from XXXXXXXXXXWhile this would be the fifth consecutive year of real growth,
it was lower than expected for post-recession recovery.5 The restaurant industry’s share of the overall
food dollar was up to 47 per cent, almost double the 25 per cent it held in XXXXXXXXXXIt was expected to
employ 13.5 million people in 2014. The industry was highly fragmented, with the 50 largest companies
accounting for only 20 per cent of the revenue.7
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Page 2 9B14M114
In Canada, revenues from commercial food service were projected to be $57.5 billion in 2014, an increase
of 4.7 per cent over 2013. Growth was expected to come from higher average bills rather than from
additional food traffic in restaurants.8 In 2012, there were approximately 1.1 million employees in the
Canadian restaurant industry at more than 81,000 restaurants, bars and catering businesses.9
The restaurant industry in North America was divided into two categories: full-service and limited-
service. Full-service included family, casual and fine dining where patrons would be seated and food was
ordered at the table. Customers paid after eating, and the average bill was the highest for any of the
segments at $13.66 in XXXXXXXXXXFull-service dining restaurants incorporated all types of cuisines and
included Boston Pizza, Red Lobster, and Ruth Chris’ Steak House, among others. However, the majority
of restaurants in this segment continued to be individual or family-owned establishments.
The limited-service restaurant sector differed from full-service dining in that consumers were not waited
on at the table. Instead, customers went to a central counter where they ordered, paid before receiving
their food and either ate in the restaurant or had it “to go.” The limited-service restaurant sector in the
United States was expected to post total revenues of US$195.4 billion in 2014, a 4.4 per cent increase
over XXXXXXXXXXCustomers in this category looked for good service, good value, convenience to their home
or work place, favourite types of food and healthy menu items.12 Limited-service restaurants were divided
into fast-casual restaurants and quick-service restaurants. While limited-service restaurants felt that
competition was most intense within their category, fast-casual restaurants also competed with full-
service restaurants, and quick-service restaurants competed with grocery and convenience stores.13
Fast-casual was a growing segment in the overall restaurant market, accounting for about 5 per cent of the
limited-service category;14 in 2013, it saw an 11 per cent increase in sales15 and was the only category to
experience an increase in customer visits.16 Fast-casual was differentiated from quick-service restaurants
in that menu items were higher priced based on a perceived value by consumers (e.g., higher quality,
customizability, handmade and/or locally sourced); as a result, average bills were higher than quick-
service restaurants at $7.40 compared to $5.30, respectively.17 Ninety-five per cent of the fast-casual
segment was made up of chains,