Retail in Asia


Is localization the answer to Tim Hortons China’s explosive growth?

Tim Hortons China, also known as Tims China, is one of Canada’s most famous restaurant brands. The company has plans to open nearly 3,000 restaurants in China by 2026, just seven years after entering the market. By leveraging technology to open and operate stores more efficiently, Tim Hortons, together with heavy-duty product localization, hopes to reach its near-term goal of 2,750 stores.

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A major milestone in the company’s China campaign was announced on July 20, when its merger agreement with Silver Crest Acquisition Corp. (SLCR.US), a special purpose acquisition company (SPAC), was approved by the U.S. Securities and Exchange Commission. The approval of the transaction means that Tims China would become a publicly-traded company on the Nasdaq and could begin trading as early as Aug 22. This development is expected to increase the company’s valuation to USD 1.4 billion.

At the beginning of March, Tims China had 410 stores in China and plans to nearly double that number by the end of the year. However, the company’s expansion is not without risk. There have been countless similar expansion plans that failed to materialize in China, most often because chains were too aggressive, opening stores in less lucrative locations with inadequate support. It is important for Tims China to come up with a feasible solution that matches with the company’s expansion goals.

Hence, the implementation of localization. Following in the footsteps of other restaurant chains, namely KFC – transforming western-style fast food familiar to most Chinese diners, and Starbucks – introducing coffee to average Chinese by filling up the drinking deficit in the country, Tims China’s brand’s donuts have been localized into something most westerners may not recognize.

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The company has replaced the normal flour used in the making of original donuts with a starchier, chewier base, along with a new cooking method – bake instead of fry, and last but not least, a salty egg yolk coating in a bid to localise its products in China and stay relevant.