How Tim Hortons will take over the world

Tim Hortons has its franchisees locked down, too…And there are the big things, like an ironclad franchisee agreement that maximizes profits flowing to head office in Oakville, Ontario. Store owners pay royalties of between 3.5% and 4.5% of gross sales, plus another 8.5% to cover rent. That’s on top of an average $450,000 franchise fee to get started…Cult, family, which is it?

Report on Business magazine
September 23, 2010

How Tim Hortons will take over the world
What are they putting in that coffee?
Dawn Calleja


There's all sorts of science that goes into keeping Canucks utterly addicted to Tim Hortons. Now to find a formula that will finally seduce pampered palates i the United States of Fast Food.

When the steaming brew has steeped for precisely five minutes, the ritual begins. The two men pick up their deeply curved “cupping” spoons and bend their heads low over the first cup.

They dip in their spoons and inhale deeply. Then they move on, rotating the table—a sort of giant stainless steel Lazy Susan— as they go. When they have “broken” each cup, a colleague skims off the grounds, and the cuppers noisily slurp a spoonful of coffee. This apparent outbreak of bad manners is purposeful: It exposes the brew to oxygen and unlocks its flavour. The two colleagues roll the coffee around in their mouths to ensure the liquid hits all of their taste receptors: sweet, sour, bitter, salty.

The first pair of cups contains a Guatemalan. Sluuuurp. “Do you feel that buttery mouth-feel?” says the older man, Don Schroeder, after spitting expertly into the small sink beside his stool. Next is a Kenyan. Sluuuurp, spit. Notes of fruit and wine. Sluuuuurp. The Sumatran is earthy, even musty. No. 4 has the mild, almost neutral flavour characteristic of the world’s coffee mecca, Brazil.

That’s right, all you latte-sipping snobs: This is a story about Tim Hortons(THI-T37.710.110.29%) . And Tim Hortons takes its coffee seriously. Maybe it has no Cinnamon Dolce Crème Frappuccino on offer, but java is, after all, the company’s stock-in-trade. Each of the two billion cups it serves annually, at some 3,600 restaurants from Victoria to St. John’s, south to Kentucky and as far away as the Kandahar Airfield, tastes the very same.

Don Schroeder is the guardian of that famous flavour, not just by virtue of being Tim Hortons’ CEO, but also because he’s the senior coffee expert in the executive ranks. Twice a week (if he’s not on the road), he sits down at this table for a cupping. The man to his side, similarly sporting a crisp, white, monogrammed lab coat, is Kevin West, Tim Hortons’ director of coffee operations.

The fifth pair of cups contains Tim Hortons’ secret blend—a mixture of beans cultivated in different regions around the world and shipped here, to Ancaster, Ontario. After taking a gusty sip of the flavour he knows by heart, Schroeder describes it thus: “Tim’s is a medium roast. It has a nice mouth-feel. There’s not too much acidity, but it’s there. It has a softness. Sumatran coffee, you might want to drink once a day. Tim’s, you want to drink three times a day.”

As for what’s in it, well, “You can’t leave if we tell you.”

That brew—whose nutty, citrusy finish is likely lost on most double-double devotees—has catapulted Tim Hortons to Canadian coffee supremacy. The company’s 3,040 stores nationwide—all but a few of which are owned by franchisees—account for a remarkable 77% of java poured outside the home. Starbucks, meanwhile, has just 3% of the market (McDonald’s has 7%).

This conquest, the elevation of the name of a long-departed NHL enforcer to the very definition of Canadian-ness, did not happen by accident. Tim Hortons attacks every facet of its business with the same precision as it does its signature brew. It blankets the country—small towns, big cities, highway rest-stops, hospitals, shopping malls—with stores, shutting out lesser chains and making it virtually impossible to avoid the place. The company continuously introduces new menu items that cater to every demographic—from doctors to hipsters—and every time of day.

Just as impressive as its share of the coffee market is the fact that Tim Hortons captures 67% of Canada’s quick-service restaurant traffic in the morning (compared to McDonald’s 11%), 17% of the lunch crowd and 57% of afternoon and nighttime snackers. And thanks to a new partnership with U.S.-based Cold Stone Creamery, it’s taking on the $1.2-billion Canadian ice cream market—the perfect way to bring in traffic during the slower evening hours.

Tim Hortons has its franchisees locked down, too. There are the little things, like surprise “Always Fresh” audits that grade franchisees on how long customers wait at the drive-thru, the amount of time a pot of coffee is allowed to sit around, and whether there are weeds in the parking lot or graffiti in the bathroom. And there are the big things, like an ironclad franchisee agreement that maximizes profits flowing to head office in Oakville, Ontario. Store owners pay royalties of between 3.5% and 4.5% of gross sales, plus another 8.5% to cover rent. That’s on top of an average $450,000 franchise fee to get started. The company brings in yet another steady stream of income as the exclusive supplier to its franchisees: coffee, cold cuts, soup, bagels, doughnuts, pastries and buns. All of which come at a markup that some franchisees claim borders on gouging—but more on that later.

Put it all together, and it adds up to corporate revenue for 2009 of $2.2 billion (on systemwide sales of $5 billion)—up by 9.7% over the previous year despite the economic downturn. As for McDonald’s and Starbucks, they were down 3.3% and 5.9%, respectively. In the second quarter of 2010, Tim Hortons’ earnings per share were up 25%. “I don’t think many investors lose sleep at night worrying about Tim’s making some sort of tragic operational mistake in Canada,” says Candice Williams, an analyst with Canaccord Genuity Capital Markets in Vancouver. (They may, however, wonder why the stock is sitting at $35—where it was back in 2007, a year after the company was repatriated following a period under the Wendy’s umbrella—and why its dividend yield is a measly 1.4%.)

Tim Hortons isn’t satisfied with mere domination of the market, however. At an investors’ conference this past March, the company laid out an ambitious plan to open nearly 1,000 more stores across the country, most of them in Quebec and the West. Its goal is a coast-to-coast Tim’s-per-Canuck ratio of 1:8,200—which is where it’s at in Ontario.

Williams questions whether B.C. can sustain that level of saturation. “There are a few East-West cultural differences that make that unlikely,” she says. “We’re Starbucks people.” Indeed, there are signs that Tim Hortons has reached a peak in Canada, period. Though same-store sales growth—a key metric in the fast-food sector—has averaged 6.6% over the past decade, it’s on a downward trend. In 2000, it was around 9%; in 2009, it was 3%.

Tim Hortons is also pushing ahead in the United States, where it has 587 stores. By 2013, it plans to build an additional 300 stores stateside, primarily in the markets it has already colonized: the Northeast and Midwest. CEO Schroeder points out that the 12 states in which Tim Hortons currently operates have a total market of 90 million people.

So the potential is huge. But there’s no getting around the fact that the U.S. has stymied Tim Hortons ever since it made its first foray south in the mid-1980s. Average same-store sales there are about $1 million, half of what they are here. And as of January, 2010, the company was subsidizing struggling U.S. franchisees to the tune of $50 million.

But then Tim Hortons was slow to catch on in Canada, too—Schroeder et al. like to say it’s a 46-year-old overnight success. It’s just a matter of time, they believe, before they perfect a formula that will decisively crack the U.S. market. They’re so confident, in fact, that they’ve already got their head of U.S. operations looking into opportunities even farther afield. For a company as relentlessly ambitious as Tim Hortons, it’s impossible to ignore the flowering fast-food markets in Europe, India and China, which are expected to be worth $88 billion this year.

Analyst Williams is doubtful. “If the U.S. opportunity is as big as they believe, there’s no reason for them to look beyond that in the next five years,” she says. “There’s no need to jump on your horse and gallop off madly in all directions to appease the investor’s appetite for growth.”

Don Schroeder’s weakness, he admits, is Tim Hortons’ sugary iced coffee. His assistant makes him a big pot of it every morning in the summer, and he keeps a jug of the sweetener at home for emergencies. As for the hot stuff, he drinks just one cup a day—black, of course—to make sure it’s up to snuff.

“I can tell you, that one cup is enough to get me in crap,” says Kevin West. “If he doesn’t like it, he calls me.”

Consistency is key—both Schroeder and West never tire of that axiom. Achieving it is tricky, since coffee from a particular mountainside will not taste the same from season to season. Flavours change depending on the weather: too much rain or too little, more sun or less. The mercurial nature of the bean means that Tim’s coffee team is constantly revising the secret blend to maintain its trademark flavour.

The biggest name in the history of the company is not actually Tim Horton, but his friend Ron Joyce, who was a Hamilton police officer when Horton was a star of the Toronto Maple Leafs. Schroeder met Joyce at the Quebec International Bonspiel in the winter of 1976. Just two years earlier, Horton had died in a car wreck, leaving Joyce in control of the chain. Horton had always been a better defenceman than businessman, and it was largely thanks to Joyce that the chain had grown to about 75 stores.

Schroeder and Joyce hit it off, and a month later, they drove to Joyce’s cottage near Owen Sound, Ontario. “We thought we’d have a glass of wine while the cottage warmed up,” says Schroeder, a lawyer by trade. “The next thing we know, it’s 8 in the morning, and we’ve been up all night talking about Tim Hortons. By the time I went to bed, I thought, ‘I have to get into this business.’ ”

That came to pass in 1978, when Schroeder and one of his brothers bought a store in Chatham, Ontario. Schroeder kept up his law practice, while his brother quit the army to run the franchise (Tim Hortons insists that owners also be operators). By 1991, they were running half a dozen stores. When Schroeder was hired that year as Tim Hortons’ VP of human resources and international development, he sold his stake to his brother.

If you were a Tim Hortons devotee back then, you might have noticed that the coffee in, say, Halifax didn’t taste quite the same as it did in the chain’s spiritual home base of Hamilton. That’s because the chain bought its coffee from third-party roasters. Then-CEO Paul House decided the company needed to take control of the consistency of its brew, and to that end built a lab at the firm’s Oakville HQ. “I was ‘volunteered’ to take cupping,” says Schroeder drily. “We needed someone in senior management who understood coffee and the tweaking we do of the blend throughout the year.” He spent four years working with consultant Joe Moenig—whom he describes as “the coffee guru of North America”—learning through blind tests to detect the earthiness of a shade-grown Sumatran and the caramel aroma of a Colombian.

In 2001, Tim Hortons bought a coffee plant in Rochester, New York, but it still didn’t have nearly enough capacity to cover the needs of the entire burgeoning chain. So, in 2009, shortly after Schroeder succeeded House as CEO, Tim Hortons broke ground on the 74,000-square-foot, $30-million coffee plant in the Hamilton suburb of Ancaster. It packs no less than 1,100 pots-worth of coffee every minute.

This is Kevin West’s realm. “On a good day on a blind test, I could tell you what country a coffee is from,” says Schroeder. But West—the son of a roast master—can tell, just by glancing at a handful of raw beans, what region they’re from, whether they were grown in sun or shade, and at what altitude.

The aroma of freshly roasted coffee permeates every corner of the plant. In the warehouse, skids are piled high with 132-pound sacks of beans from around the world. It is the job of the plant’s cupping team to sample beans from every shipment before they move on to the next stage of processing; the tasters each break, slurp and spit 25,000 cups a year.

“Central and South America are coming off the worst crop in 44 years,” West says as he slaps a sack of beans. And Colombia was deluged with rain for 16 months straight, diminishing crops. That has helped drive standard-grade coffee to a 12-year high of $1.75 (U.S.) per pound. The top-quality beans Tim Hortons buys—West says they compete with Starbucks for the finest Arabica beans on the market—are much pricier.

One of the plant’s 50 employees stands alone atop the giant hopper, ripping open sacks and pouring the beans into the machine for cleaning. The hopper separates out detritus—pieces of corn, sticks, stones, even the occasional bullet. Then the raw beans are drawn via pneumatic tubes into six vast silos—one for each bean that is currently being used in Tim Hortons’ blend—and then to the mixer.

From there, the beans are sucked into the roaster—which looks like something out of a 1950s sci-fi comic—and subjected to up to 19 temperature changes until they begin to pop, signalling that they’re done. “We took our taste buds and programmed them into the roaster,” says West proudly. “It’s like a fingerprint.” To lock in the flavour, the beans must then temper for two hours. “If they go through the grinder when they’re too soft, they won’t taste right,” says West, pointing to several bins that loom over the automated assembly line where the grounds are packaged. In short order, the beans are aboard trucks heading for Tim Hortons stores across Canada and the United States.

Besides the coffee lab, there is another top-secret facility—this one in Brantford, Ontario—dedicated to ensuring the uniformity of the Tim Hortons experience. It’s what BMO Capital Markets analyst Peter Sklar calls “the operational cornerstone of Tim Hortons’ ‘Always Fresh’ philosophy.” Inside the 400,000-square-foot Maidstone bakery, an army of bakers produce enough partially cooked and flash-frozen doughnuts, Timbits, pastries and buns to supply every Tim Hortons franchise.

The ascendance of this operation has required a slightly Orwellian redefinition of “fresh.” For 37 years, standard Tim Hortons stores were equipped with in-store kitchens, where staff bakers produced batches of fresh, hot doughnuts twice a day. Shortly after Joyce sold his Tim Hortons stake in 2001, the company brokered a deal with Ireland’s IAWS Group to build the $75-million Maidstone facility. Then-CEO House promised franchisees that the conversion—which cost store owners between $35,000 and $50,000—would boost their bottom line. Instead of letting unsold doughnuts go stale during downtimes, operators would be able to zap new batches as needed, in a glorified microwave oven. Voilà—“fresh-baked” in two minutes. And though the cost of producing one doughnut would change from eight or nine cents to 12 cents, that increase would be offset by a reduction in operating costs—no highly paid bakers on the payroll, less discarded product.

It would also guarantee a steady stream of profit for head office—$22 million in 2009.

Do franchisees have any say in such radical changes to their business? They do, through the 16-member Franchisee Advisory Board. And according to member Miles Mattatall, who owns 14 franchises in the Hamilton/Niagara area (and who is the son of the very first Hortons franchisee), they do sometimes express their opposition to head office, like when the company began to ban smoking in stores in the 1980s. “I thought it was going to kill the business,” says Mattatall, who received death threats from irate regulars. “Actually, the stores we took smoking out of increased in sales—they became much more friendly for everyone else.” But Mattatall insists that franchisees were universally on board with Always Fresh. “The product is better-quality,” he says. “I have been on the board a long time, and I never had anyone call me and say, ‘I didn’t want to do this.’ ”

Still, it’s clear some franchisees have become disillusioned with Always Fresh. Arch Jollymore, a former high-ranking executive at Tim Hortons (and Joyce’s cousin), is seeking certification of a class-action lawsuit against the company. At issue: the impact of the Always Fresh conversion on franchisee margins. Jollymore and his wife, Anne (who owns a store in Burlington in her own right), are alleging breach of contract, negligent misrepresentation, and breach of the duty of good faith and fair dealing. They are seeking damages of $1.95 billion.

According to the Jollymores’ statement of claim, franchisees got no compensation from head office for the outlay involved in converting to Always Fresh, and received “minimal compensation” for their existing kitchen equipment. And the cost of producing a doughnut climbed not to 12 cents but to 20 cents, “largely because of the inflated price at which the Brantford plant sells the frozen product to the franchisees.” Income as a percentage of sales, the plaintiffs claim, has decreased by 3.5%. The lawsuit also insists that margins on lunch items are virtually nil, yet franchisees are required to have more staff on hand during lunch hours.

None of the allegations has been proved in court. Tim Hortons has filed a mountain of documents disputing the Jollymores’ claims and is seeking to have the case dismissed at a hearing that is scheduled for next April.

Schroeder makes no apologies for the switch to frozen goods. “The business and how it operates today is different from how it operated prior to Always Fresh,” he concedes. But that’s a small price to pay for a steady stream of perfection: “The French crueller is the most difficult doughnut to make from scratch,” says Schroeder. “The product that comes out of Maidstone is outstanding, and it comes out the same every time.”

Yet the Always Fresh system itself is going through a major change. In August, Tim Hortons sold its 50% stake in the Maidstone plant to Swiss bakery giant Aryzta (which had swallowed IAWS) for $475 million. The news came as a surprise. When Arytza invoked the buy/sell provision in the joint-venture agreement back in May, most analysts figured Tim Hortons would have no choice but to buy Arytza out or risk ceding a crucial part of its supply chain to foreign owners. Instead, Tim’s has divested its share, though it will continue buying its products from Maidstone for the next seven years.

If the sign outside this coffee shop in Troy, Ohio, didn’t say Tim Hortons—or, more specifically, Tim Hortons Cafe and Bake Shop, as they call them around here—you wouldn’t recognize the place.

There’s no trace of the red-and-brown colour scheme so familiar to Canadians. This store is fitted with ultramodern stainless-steel fixtures and elegant wood veneer. There is a gas fireplace on one bricked wall, surrounded by four chic but comfy orange leather chairs, where patrons can curl up and take advantage of the free Wi-Fi. Above the fireplace hangs a flat-panel TV typically tuned to ESPN, so regulars can sit at the bar and watch the game while they eat. The menu is different, too: There is mac and cheese, grilled paninis with chicken and pesto or ham and cheese, mini-burgers, berry smoothies, hearty oatmeal, and shiny Delicious apples in a basket on the counter.

The Troy location, which dates back to 2004, is one of two Tim Hortons concept stores (the other is in nearby Bellefontaine) unveiled earlier this year. Together they’re a kind of market lab where Tim Hortons can experiment with a panoply of new initiatives designed specifically for the U.S. market.

In 2008, Tim Hortons undertook what David Clanachan, Tim Hortons’ jovial head of U.S. and international operations, calls “a deep dive,” surveying tens of thousands of people about what would get them through the door of a Tim Hortons. The company built a full-sized model store in a warehouse in Oakville, spending months testing and refining the concept before rolling it up, so to speak, to the gates of Troy.

The result is a cross between the likes of Starbucks and the Tim’s Canadians know. “Not that I’m gonna hang around, write poetry and sing songs,” says Clanachan, “but I am gonna feel comfortable.”

The buzzword here is “experiential.” It’s not about just the TV and cozy chairs. The counters are lower, and the coffee pots have been moved to create better sight lines, so servers can chat to customers while they pour. At the sandwich counter, ingredients are prominently displayed in a glass case, so customers can choose their own toppings, rather than being stuck with the standard two slices of tomato and a slab of iceberg lettuce. “It’s about customization,” says Clanachan, “especially with the younger generation. Everybody wants to be in control, part of the process.”

That even extends to the doughnuts. Every so often, a burly “baker” in chef’s whites (he’s really just nuking stuff back there) emerges from the kitchen carrying a tray of naked doughnuts, bound for the topping station. Customers can watch as he smothers the treats in fondant and sprinkles out of clear, teardrop-shaped dispensers. You want maple topping on your chocolate doughnut? Can do. Sprinkles on your fritter? You’re the boss.

Really, though, the fancy design is just a way of getting people to try Tim Hortons in the first place. Clanachan believes that Tim Hortons’ formula of quality food + good coffee + cheap prices will ultimately win over the U.S., as it did in Canada. But the company faces obstacles here that it didn’t back home—first among them that it has virtually no brand recognition. With the exception of a few hockey towns like Buffalo (the place where Horton finished his career is home to 100 stores), the name “Tim Horton” means zilch down here. And competition is fierce. At home, Tim Hortons has only one serious rival: McDonald’s. In the States, it is battling entrenched, all-American brands that have many more locations per capita there than they do in Canada, including McDonald’s, 7-Eleven, Starbucks and, most notably, the 6,400-strong Dunkin’ Donuts chain.

To compound the problem, “the company has had to be creative with the ad spend down here,” Clanachan says. Translation: Head office is being stingy with the cash, which means no TV advertising. Instead, Tim’s in the U.S. is all about grassroots marketing. Franchisees participate in community events and sponsor Little Leaguers (a key strategy early on in Canada). On the corporate level, the company courts media attention with stunts like parachuting “Roll Up the Rim” cups from the rafters during Buffalo Sabres games, or landing a store cameo on the hit sitcom How I Met Your Mother.

Tim Hortons’ policy of only expanding into territories that are adjacent to existing markets serves a double purpose: stretching the ad budget and building critical mass. “We can’t go into Cleveland and open one store,” says Clanachan. “We’re not destinational. We have to be convenient.”

And convenient is what the company is becoming in this part of Ohio. Tim Hortons has had stores here since the mid-1990s, when it was bought by Columbus-based Wendy’s. The owner of the Troy store, Ryan Holland—a former cop from London, Ontario—owns two other franchises nearby, with a total of 88 employees. “People here have embraced the product,” he says. “We’ve reached that relationship with customers where we are part of their day, their life. I think Tim’s does that better than anyone else.” When he was approached by head office to test out the concept store, he jumped at the opportunity. “It’s created a lot of buzz in the community,” he says. “It’s been a great success at bringing in new people.”

So, will we be seeing the new, upscale Tim Hortons in Canada? Miles Mattatall, who has toured the model store in Oakville, says the Franchisee Advisory Board is already discussing introducing free Wi-Fi at Canadian stores. “It all boils down to what can we do to make customers happy,” he says. But, he adds, “up here in Canada, I don’t know whether we’ll get to a place with fireplaces and lounge chairs.”

Stateside, Clanachan won’t rule anything out. And all franchisees are contractually bound to update their stores every 10 years (at their own expense), so it’s conceivable Canadians will start seeing elements of the new design soon. “The company has to constantly evolve,” Clanachan says. “If you don’t, you die.”

At 6 p.m. on July 10, 2009—a Friday—12 Dunkin’ Donuts locations in New York City shut their doors. Over the next 60 hours, a battalion of builders tore down every last pink-and-orange Dunkin’ sign, along with menu boards shilling Munchkins and Coolattas. They ripped out countertops, display cases and light fixtures. In their place, they installed Sure Shot cream dispensers, iced cappuccino makers, Always Fresh ovens and freezers, and signs heralding the arrival of Tim Hortons Coffee & Bake Shop. Much of the work was done at night, to avoid the logistical nightmare that is Manhattan traffic. “Try to get a lumber truck down Fifth Avenue at rush hour,” says Gary Trimarchi, the man who spearheaded the top-secret operation. “It’s not like pulling up to the back of a strip mall.”

First thing Monday morning, the 12 locations reopened as Tim Hortons. The switchover sparked a media sensation, complete with impromptu Tim’s-versus-Dunkin’ throwdowns on the streets of Manhattan—and generating tons of free publicity for the new kid in town.

NYC is not adjacent to any existing Tim Hortons markets, and the company’s foothold there is a long way from convenient—in a city of eight million, the company’s 14 stores (it has opened two additional ones since last year) work out to less than one Tim’s for every half-million New Yorkers, a notoriously cranky and habituated cohort of consumers. Here, it seems, Tim Hortons has thrown out much of its carefully crafted formula—which, one could argue, it will also have to do if it’s going to survive in markets as diverse as China and India. But opportunity knocked: When a 70-year-old restaurant company calls and offers to guide you into one of the world’s toughest markets, you do not say no.

It was in the fall of 2008 that Tim Hortons’ franchising department got a call from Trimarchi, the president and chief operating officer of Riese Restaurants, a family company that owns 110 stores across NYC, boasting banners such as T.G.I. Fridays, KFC and Pizza Hut. Riese had given Dunkin’ its entree to New York about 20 years before, but it was ready to part ways with the Massachusetts-based chain (by all accounts, the feeling was mutual). Trimarchi went looking for a new partner and stumbled on Tim Hortons. “I searched out the best and biggest franchisor I could find,” he says in a heavy Long Island accent. “I’m also a hockey fan, so I know the name Tim Horton very well.”

Trimarchi told the Hortons franchising department that he had some primo locations up for grabs, including Madison Square Garden, a spot across from Macy’s on 34th, and no less than five counters at Penn Station, which sees 500,000 commuters a day. “I got a call back from David Clanachan,” Trimarchi says. “That made me feel real good, that I had the boss of this $5-billion company on the phone.”

Over the course of eight months, Trimarchi and his team at Riese studied Hortons’ business plan and demographic data. A major selling point was a menu that covers off every “daypart” (resto-speak for time of day), unlike Dunkin’, which does huge business in the morning and at lunchtime but tapers off during the rest of the day. But what sealed the deal for Trimarchi was a vacation-time visit to a service centre with a Tim’s near Montreal. “The place had a line around the corner,” Trimarchi says incredulously. “They weren’t stopping for the gas—they were stopping for the coffee.”

But if the competition in small-town Ohio is stiff, in New York City it is mind-boggling. This is a coffee town. Every block is packed with java shops, from chains like Starbucks to thousands of independents, plus carts selling steaming cups of the stuff (not to mention moist, sugary doughnuts) on almost every corner.

Riese’s head of marketing, Joe De Nardo, believes Tim Hortons stands out, not just because of its coffee, but because of, well, its quaintness. “It’s full-service—they actually put cream and sugar in your coffee,” he says with a touch of awe. “You don’t get that in New York City any more. Everything’s grab and go. It’s refreshing.”

Every morning, the Queens native takes the train from Long Island to Penn Station, where Jimmy, a 50-something Tim Hortons employee, has his iced coffee (two Splendas) ready and waiting. On many mornings, De Nardo will wade into the commuting throng, approaching a Starbucks-sipper and saying: “Gimme your cup and lemme buy you a cup of Tim Hortons.” The thinking at Riese is that customers only need to try Tim’s coffee once to be hooked for life. “We need to be evangelists,” says De Nardo.

Jimmy has his own schtick. As De Nardo wanders away, he begins to yell: “Come to Teem Hooorrrrtons. Coffee! Doughnuts! Bagels!” Whatever works.

De Nardo leads a tour of Riese’s four other Tim Hortons counters at Penn Station, proudly pointing out the New York-only promotions—the only instance of non-standard advertising allowed in the chain. “It’s the New York mentality. We like to be a little on the edge.” Whenever he can, he steers clear of earnest in favour of funny. “Hell,” he says, “it’s doughnuts and coffee.” Hence Tea and Timbits (T&T—it’s dynamite!) and $5 dozens after 5. “And for New Yorkers, $5 is basically free.”

Sometimes, Clanachan needs to rein him in—De Nardo is the first to admit it. And it shows how much Tim Hortons cares. “The amount of interest they have in their brand is second to none,” says De Nardo. “The corporate culture is intense. It’s a cult. A lot of time, you see franchises that are very anemic—you don’t get support from the mothership. But they’re an awesome partner. They’re a family—that’s how they think of themselves.”

Cult, family, which is it? Another metaphor is probably more apt: an empire. In the end, the Manhattan project may be just a low-risk flyer for Tim Hortons that has to be abandoned. But rest assured that every bit of intelligence earned at this distant colony will enrich the institutional memory back in Oakville, deep in Tim Hortons heartland.

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Risks: Breach of contract, Centralized commissary, Company man, Cruellest lies are often told in silence, Cult-like activities, Economics of monopoly (not free market), Franchisee advisory group (lap-dog), Franchisor overcharges for required products, Good faith, fair dealing, Gouging on supplies, Hubris, Lawsuits, class action, Must buy only through franchisor (tied buying), National cultural icon?, National press coverage, Negligent misrepresentation, Tied contracting, Unjust enrichment, Veil of secrecy, Canada, 20100923 How tim

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