Be 'daring,' Tim Hortons CEO tells business leaders

David Sali
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The head of one of Canada’s most iconic companies had a blunt message for the Ottawa business community on Thursday: stop being so darn nice.

Tim Hortons CEO Marc Caira (left) with Mayor Jim Watson

“The world loves Canadians,” Tim Hortons CEO Marc Caira told an audience of about 250 who attended the Mayor’s Breakfast at City Hall.

“But I would humbly suggest that maybe sometimes we’re a bit too nice. I’m not talking about rude or being arrogant or being disrespectful. I’m talking about leadership. I’m talking about being bold, being first, being proud. I’m talking about being daring.”

With more than 3,600 locations across Canada, Tim Hortons (TSX:THI)is the largest quick-service restaurant chain in the country and among the nation’s most recognized brands. The company, which celebrated its 50th anniversary last month, has made the term “double-double” an ingrained part of the Canadian vocabulary.

But the chain has had its share of stumbles, too, launching a series of alternative menu items over the past few years to mixed success. Tim Hortons dropped submarine-style sandwiches due to poor sales, and the company recently shut down its Stone Cold Creamery outlets in Canada after they failed to catch on.

Still, Tim Hortons appears to be gaining traction in other less traditional market segments. The company said recent research from NPD Group showed the restaurant has been generating lunchtime traffic that's comparable to McDonald's, its biggest competitor.

Tim Hortons had a 21.8 per cent share of quick-service restaurant traffic in the three months ended in February, just slightly above the 21.7 per cent share McDonald's had in the same period, the research found.

Mr. Caira said the minute any successful company starts to rest on its laurels, it’s in trouble.

“Don’t be afraid to take risks,” he told the crowd assembled in the council chambers. “It’s OK to make a mistake because you learn from it. Just don’t make the same mistake twice.”

Consumer tastes are changing, with customers increasingly calling for healthier food options and bolder flavours, he said.

“We have to be able to adapt to those in terms of menu innovation,” he said.

Tim Hortons continues to push ahead with an aggressive expansion plan in its fight to increase market share. Earlier this year, the company announced it would add 500 more stores across Canada along with 300 new locations in the U.S. by 2018.

“We need to defend what we’ve created and we need to find ways to grow,” said Mr. Caira, who took over as chief executive a year ago. “There’s still lots of room to grow. The challenge is to do things differently.”

In an interview with OBJ, Mr. Caira acknowledged the chain made a few missteps in its foray south of the border, misjudging what customers there wanted. It has now created a separate U.S. business unit that is developing products unique to that market.

Based on its consumer research, for example, Tim Hortons introduced frozen hot chocolate at its U.S. stores in April, Mr. Caira said, adding the drink has become “a phenomenal success.”

“We treated the U.S. as an extension of Canada,” he said. “It’s not. The U.S. is different. There’s no such thing in this world as a global consumer. Consumers are local. Some of the things that work well in Canada might work well in the U.S., but we need to take a different approach, develop a model that’s relevant to Americans.”

Mr. Caira also told the audience companies must stay on top of trends in technology or risk losing touch with the market. Tim Hortons customers can now pay with their smartphones, he noted, adding the chain has also introduced wi-fi and digital menu boards.

“This is one area that I think we were a little behind. But we’ve embraced it and we’re catching up quickly,” he said.

The company also plans to boost its presence in the Persian Gulf, where it now operates more than 40 locations, with an eye to further international expansion down the road.

“This brand can go across the world, and it will,” Mr. Caira said.

The Mayor's Breakfast is hosted by OBJ and the Ottawa Chamber of Commerce.

– With files from the Canadian Press

Organizations: Tim Hortons, McDonald's, TSX NPD Group Ottawa Chamber of Commerce

Geographic location: Canada, U.S., Persian Gulf

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