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As U.S. cafe chain Dunkin’ brews up a comeback north of the border, experts say they suspect the American brand will have a hard time luring Canadians away from the Tim Hortons menu they’ve come to know so well.
Montreal-based restaurant operator Foodtastic announced this week it had inked a deal with Dunkin’ owner Inspire Brands to bring one of America’s largest coffee chains back to Canada, starting with locations in Toronto and Montreal before expanding elsewhere.
Its menu of coffee, doughnuts and breakfast sandwiches puts it squarely in Tim Hortons’ territory.
Even though they offer similar products and quality, University of Guelph food economist Michael von Massow said he thinks it’s unlikely Dunkin’ will be a direct competitor with Tim Hortons.
Whether you love Tim Hortons or not, the brand has established “that you know what you’re going to get” in the minds of Canadians, something he said gives them a huge advantage over Dunkin.
“So unless you come in and say this is profoundly better or this is more convenient or this is cheaper, I think it’s going to be hard to knock them off that perch,” von Massow said.
Private equity firms based outside Canada hold significant shares in Tim Hortons’ parent company Restaurant Brands International, but the chain originated in Canada and RBI trades on the Toronto Stock Exchange.
In an interview with CBC News this week, Foodtastic CEO Peter Mammas said he’s confident Canadians are ready for a new coffee chain.
“It’s a younger, cooler brand. And I think it’s something that’s missing in the landscape.”
American doughnut chain Dunkin’ is set to return to the Canadian market after reaching a deal with Montreal-based Foodtastic, which owns chains including Milestones and Second Cup.
Von Massow said he thinks where Dunkin’ could have success is with customers looking for some of the specialty drinks the U.S. chain has become known for.
“Perhaps what they’re seeing is an opportunity to go into markets … where Starbucks doesn’t exist right now. So maybe that’s their objective,” he said.
“I think one of their challenges will be overcoming the brand perception of what Dunkin’ Donuts is. You know, will people think of Dunkin’ as a premium customizable coffee place, or will they think of them as historically sort of your run-of-the-mill coffee with doughnuts kind of place?”
Nostalgia factor
While specialty coffees have risen in popularity over the years, the standard cup of coffee with cream and sugar “tends to still be a really dominant preference in the industry, more so than it would be in the U.S.,” said Trent Rollings, CEO and lead educator at Timberline Coffee School in Calgary.
“And I think we can attribute that to the presence of Tim Hortons shaping how we drink and consume coffee.”
Rollings said the nostalgia factor is also hard to beat.
“It’s something that I grew up with. I grew up in small-town Alberta where my friends at the end of every day, you didn’t even need to call or text anyone, you could just show up at Tim Hortons and you knew that your friends were there,” he said.
“And so Tim Hortons has been very effective in becoming this kind of community or this neighbourhood hub that people gather in.”
