Dunkin' Donuts seeks to regain Quebec share

A coffee and doughnut war is brewing in Quebec with the announcement that Dunkin' Donuts will double its size in the province in a bid to reclaim the market-leading status snatched away two years ago by rival Tim Hortons.

The Financial Post
November 20, 2001

Dunkin' Donuts seeks to regain Quebec share
170 new outlets
Hollie Shaw

A coffee and doughnut war is brewing in Quebec with the announcement that Dunkin' Donuts will double its size in the province in a bid to reclaim the market-leading status snatched away two years ago by rival Tim Hortons.

Dunkin' Donuts, a subsidiary of British fast-food giant Allied Domecq International PLC, has 175 franchised outlets in Quebec, where it has operated for 40 years. Allied said yesterday it will invest $20-million to open 170 new franchises in the province over the next five years, while existing and new franchisees are expected to invest another $20-million.

Tim Hortons, the leading coffee and baked goods chain across Canada, has spread quickly throughout Dunkin' Donuts' stronghold in recent years and now operates more than 200 outlets in Quebec. Despite Allied's sizable global presence — it has 10,000 North American restaurants under the banners Dunkin' Donuts, Baskin Robbins and Togo's — Tim's poses a significant threat. Dunkin' Donuts, which has 3,900 outlets in the U.S., has just 30 Canadian outlets outside of the province.

"[The expansion] is a response not only to Tim Hortons' tactics, but to everybody else that is starting to grab market share in the coffee and baked goods category," said Pierre Moreau, head of marketing for Dunkin' Donuts.

"Everyone understands the potential in this business. We want to secure our market."

Second Cup Ltd. has had strong growth in the province, he noted, while other big players are expanding into the specialty coffee category including McDonald's, which is testing its "McCafé" concept in Quebec and Ontario.

In addition to the expansion, Dunkin' Donuts has improved its freshness standards and refurbished numerous outlets in an attempt to sell more starchy confections and regain its former glory in Quebec.

It is bound to be a fierce battle. Tim Hortons, which has 1,900 Canadian locations and is still growing, is also planning to "more than double" the number of its outlets in the province in coming years, said company spokeswoman Patti Jameson.

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