Tim Hortons China to Debut on Nasdaq
The Chinese business division of Canadian coffee chain Tim Hortons will officially commence trading on the Nasdaq on September 29. Proceeds from the listing will be used to expand its coffee business in China.
Tim Hortons China’s merger with Silver Crest, a special purpose acquisition company (SPAC), was completed on September 28, and trades on the Nasdaq will begin under the ticker symbol “THCH” at 9:30 p.m. EST on September 29.
Tim Hortons was founded in Canada in 1964, while its China division was established in 2018 as a joint venture between Tim Hortons’ parent company Restaurant Brands International and Cartesian Capital Group. Its first store in China was opened in 2019. In May 2020, it received strategic investment from Tencent totaling hundreds of millions of yuan. Nine months later, it obtained a second round of financing led by Sequoia China, Tencent, and Eastern Bell Capital.
Making profits in China has not been easy for the coffee chain. From 2019 to 2021, its revenue was 57.26 million yuan ($7.94 million), 210 million yuan and 640 million yuan respectively. Although this revenue growth rate was fast, its net losses were also expanding. In the same three years, its net losses were 87.828 million yuan, 140 million yuan and 380 million yuan respectively, which was attributed to the impact of the pandemic and rising raw material costs.
Tim Hortons China provides freshly brewed coffee, as well as localized milk coffee and fruit coffee. Its beverage price range is 15 yuan to 30 yuan ($2.08 – $4.17), which falls between Starbucks and boutique coffee brands. The high-end positioning in China makes it less competitive.
In addition to drinks, Tim Hortons China has copied a strategy of “coffee + warm food” from the Canadian market. There are now more than 40 types of dessert available, and the proportion of warm food will further increase in the future. However, according to a Chinese commenting platform, apart from its bagels, other products have not been well-received by local consumers.
Another important reason for its widening losses may be the limitations of store types. Tim Hortons China has 30 flagship stores, 275 standard stores and 85 Tims Go, covering from 20 to 150 square meters in office buildings or subway exits.
In order to cater to the diversified interests of local coffee consumers, Tim Hortons China has chosen to associate with different brands. For example, it has partnered with Tencent Esports to open three e-sports-themed stores in Shanghai and Shenzhen to provide an immersive experience targeted at Gen Z consumers.
SEE ALSO: Tim Hortons China and Tencent E-Sports Open Joint Store in Shanghai
In China, boutique coffees are making inroads into the mass market with smaller, denser stores. Manner, which started with a small store of 10 square meters and a takeout mode, has accelerated its expansion pace with products of less than 20 yuan. Starbucks is also accelerating the expansion of its concept stores focusing on takeout services. Brands such as Luckin Coffee are using small stores to cram as much space as possible into office buildings. The trend behind this is mobile ordering, the development of food delivery, and the impact of the pandemic. It is also a sign that the coffee market in China is maturing.