Analysis of Tim Hortons

In this part we will show the coffee chain industry conditions in Canada, and analyze the coffee market structure to compare the several largest coffee chains, then analyze some significant data to check Tim Hortons’ operation situation.

Restaurant industries are very sensitive to the economic climate, so the Canada’s economy conditions have huge effect on the restaurant industry. After a recession in 2009, in 2010 receipts and employment started rising again, the restaurant industry should continue to benefit from the modest growth in the future years (Restaurant and food service managers, 2013). GE Capital Franchise Finance (2013) reported that: “Canadian foodservice industry sales represented approximately 3.6% of national gross domestic product in 2012, and industry sales are expected to increase by 3.6% to $67.9 billion in 2013.”

Canada is one of the largest coffee consumption country in the world, as over 64 percent Canadian adults drink coffee every day (Tenna. H. J., 2013). Euromonitor in 2014 reported: “The coffee category in Canada grew by 21% in retail value terms to reach $1.9 billion in 2013. Retail volume sales of coffee, however, saw a significantly slower performance, at 4%. ” The coffee market in Canada is highly competitive and fragmented. Tim Hortons now is the largest coffee chain in Canada, and also become one of the largest publicly-traded restaurant in whole North America based on its market capitalization. In 2013, Tim Hortons has a coffee market share which accounts 77% in Canada, slipped by 2% compared with 2009. However, McDonald’s currently has 11% of the market, up from 6% in 2009 (Shaw. H., 2013). For fiscal year 2013, Tim Horotons same store sales were 1.6 percent which decreased 1 percent compared ...

... middle of paper ...

... due 2017, the second is from the 2010 last quarter amounted to $100.0 million at 4.2% interest due 2017, and the third is from the 2014 second quarter amounted to $1.0 million at 2.85% interest due 2019. Looking at the common share of Tim Hortons, the price remain increasing from 2006 to nowadays.

During the fiscal year ended January 2012 (See Table 1), the company realized $2,855 million in revenue and $383 million in net profit. This represents a 12.5% increase in revenue but a 38.6% decrease in net profit of 38.6%, compared to 2010 (Tim Hortons: 2011 Annual Report). The company has a current ratio of 1.3, and holds $126 million cash on hand. This indicates that Tim Hortons has a strong cash position and thus has the ability to expand. In 2013, Total revenues increased 10.7% to $898.5 million compared to $811.6 million in 2012 (Tim Hortons: 2013 Annual Report).