Burger King announced Monday that it was in talks to buy Canadian coffee chain Tim Hortons.
The move is certainly a curious one, leaving some to wonder why the talks are happening in the first place. The combined company, according to the companies' statement, would be headquartered in Canada, suggesting that part of the benefit would be the lower tax rate north of the border. Some observers suspect that the chains might offer some cobranded items, given both have breakfast offerings, although Burger King currently has a coffee deal with Seattle's Best. Other analysts were skeptical that the joint company could cross-market its brands successfully, given failed cobranding efforts of the past. But plenty of Americans, at least, might mostly have wondered just what Tim Hortons is.
The first thing to know is that it's one of the largest chains in Canada, with 3,400-plus stores. According to Euromonitor International, Tim Hortons accounts for more than 25% of all foodservice transactions in Canada. Here are a few more facts about the chain:
Tim Hortons was founded in 1964 in Hamilton, Ontario, by the late Canadian hockey player of the same name. Mr. Horton played for hockey teams including the Toronto Maple Leafs, the New York Rangers, the Pittsburgh Penguins and the Buffalo Sabres, and died in a car accident in 1974.
In Canada, Tim Hortons is positioned as a premium brand, somewhere between Starbucks and Dunkin' Donuts. That wasn't always the case. It has gone from a no-frills doughnut shop to a chain that seeks to be seen as a "comfortable bakery cafe," according to Euromonitor.
When it opened, it offered only coffee and doughnuts, though it expanded its menu over time. In 1976, it introduced Timbits, bite-sized doughnuts similar to Dunkin' Donuts Munchkins, and they're considered one of its signature items. It later moved beyond doughnuts and began offering sandwiches for breakfast and lunch, soup, yogurt and Cold Stone Creamery ice cream.
Despite its premium positioning, it markets itself as having lower prices. "Whilst a mid-sized cup of cappuccino costs between C$3.00 and C$5.00 at other coffee chains, the same product is sold for approximately C$2.00 at Tim Hortons," according to Euromonitor.
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For all that about Canada, however, Tim Hortons has a growing U.S. presence. At the end of last year, it had nearly 860 locations in 15 states, with another 300 slated for opening by 2018. It exists primarily in the Northeast and Midwest, though it does have locations peppered throughout the U.S., as far west as California. The first U.S. location opened in 1984 in Tonawanda, New York.
Burger King is also not the first fast food chain to own it (or enter talks to own it, anyway). In 1995, Wendy's International bought it for $400 million. Ten years later, the chain spun Tim Hortons off along with its other ancillary business, Baja Fresh, at the urging of investor Nelson Peltz. In 2008, Wendy's merged with Mr. Peltz's company, Triarc Cos., which also owned Arby's. (Arby's and Wendy's later split.) Some locations had joint Wendy's and Tim Hortons offerings, though after the spinoff those dissolved.
In the U.S., Burger King spent about $257 million on measured media in 2013, according to Kantar Media. U.S. measured media spending for Tim Hortons was $11.3 million in 2013.