Tim Hortons China Edges Closer to US Listing

Canadian coffee chain Tim Hortons has recently made further progress in plans to list its Chinese business division in the US. Silver Crest, a special purpose acquisition company (SPAC), will hold a general meeting regarding the matter on August 18. After gaining approval in the general meeting, Silver Crest and Tim Hortons China plan to merge and list shares.

At least two-thirds of the common stockholders must vote in favor of the merger at Silver Crest’s stockholders’ meeting in order for the proposal to pass. If the merger with Tim Hortons fails, Silver Crest will continue to look for suitable targets, and the deadline is January 19, 2023. If it fails to merge with Tim Hortons or other businesses, it may face dissolution and liquidation.

Tim Hortons entered the Chinese market in 2019. In May 2020, it received hundreds of millions of yuan of strategic financing from Tencent. Nine months later, it announced that it had obtained second-round financing, led by Sequoia China, with additional investment from Tencent and followed by Zhongding Capital.

In additional to conventional coffee products, Tim Hortons has also made localization attempts including milk coffee, fruit flavored coffee, with prices ranging from 15 yuan ($2.23) to 30 yuan ($4.45), situated somewhere between Starbucks and specialty barista coffee. Apart from drinks, Tim Hortons China’s products also include warm food and bagels.

Tim Hortons China has three main store types: flagship stores, standard stores and “Tims Go” stores. Flagship stores generally cover an area of more than 150 m², standard stores usually cover an area of 80-150 m², while Tims Go stores cover an area of 20-80 m². Customers mainly order by smartphone, food delivery or self-collection. The firm’s stores tend to be distributed in office buildings or near subway exits.

By the end of 2021, Tim Hortons China had 30 flagship stores, 275 standard stores and 85 Tims Go stores. The firm has also said that besides standard stores, express stores may become an important store type for the brand to try in first-tier cities in the future.

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According to Silver Crest, Tim Hortons China’s revenues in 2019, 2020 and 2021 were 57.26 million yuan ($8.50 million), 210 million yuan ($31.18 million) and 640 million yuan ($95.02 million) respectively. However, overall net losses have been expanding, with a net loss of 87.83 million yuan ($13.04 million), 140 million yuan ($20.79 million) and 380 million yuan ($56.42 million) respectively in the past three years.