Tim Hortons goes upscale in London, England, with premium positioning — and up to double the price

When Tim Hortons opened its first branch in London, England, on Canada Day this year, it had the best opening day of any of the iconic Canadian chain’s U.K. locations.

The line up to grab a doughnut and a double-double was so long that “unless you were camping out, you couldn’t get in,” said Mohamed Habib, 30, of the opening weekend.

Habib, who lives a five-minute walk away in the same Park Royal neighbourhood, said the queue of vehicles went all the way to the gas station some 300 metres away.

Lineups at a Timmie’s drive-thru are not unusual in Canada, where the blue-collar brand is aimed at working-class families heading out to the local hockey rink.

But in the U.K., Tim Hortons is positioned as an aspirational brand, one that provides “functional and emotional positivity” to customers, said Kevin Hydes, chief commercial officer of Tim Hortons U.K. and Ireland. “It’s a place of great natural beauty and vastness,” Hydes said of the country’s appeal.

“A lot of guests are framing Canada from what they know through popular culture — Justin Bieber, Drake, Ryan Gosling, Ryan Reynolds. These are all mainstream popular culture figures who are hugely popular to U.K. guests, particularly younger guests,” Hydes said.

“Canadians have grown up with Tim Hortons — it’s a very everyday occasion. In the U.K., it’s much more of a treat for consumers. We’re pitching ourselves against brands such as Starbucks in terms of beverage quality and value for money.”

That aspirational positioning helps to explain the sky-high prices.

A box of 10 Timbits, which sells for $3.38 after tax in Toronto, costs £4.29 ($6.77) in London — about twice the price. A medium Iced Capp is $3.72 after tax in Toronto, and costs £4.09 ($6.46) in London — 74 per cent more.

Why the big price discrepancy?

London has a reputation for being expensive. The average rent for a one-bedroom apartment last year was £1,318 (about $2,100), or about 45 per cent more than the roughly $1,440 it would have cost in Toronto.

But there isn’t such a big price difference for items from other big chains: a tall caffè Americano at Starbucks costs eight per cent more in London, (£2.65 or $4.15) than in Toronto ($3.85), for example. Some items even cost less. A Big Mac, for instance, costs 22 per cent less in London (£3.59 or $5.62) than in Toronto ($7.22).

Despite its upmarket ambitions, the London Tim Hortons is located in Park Royal, a decidedly working-class neighbourhood. Single-parent families make up 26 per cent of households in the neighbourhood, compared to just 10 per cent in London overall, and the average salary is 20 per cent below that of the rest of London.

But the choice of location makes sense to Guy Holmes, director of Captivate Hospitality, a restaurant branding and marketing consultancy based in London.

“London is such a difficult marketplace to operate in,” said Holmes. “There is just so much competition there. People won’t go 200 or 300 yards if two or three other things are right in front of them,” he said.

“The restaurant business in London is almost a real-estate business. If you get everything right but you’re 100 yards away from the main road, then you’ll fail.

“It’s not really like that outside of London.”

The new Tim Hortons is located right off the A40, a major road leading out of central London westward toward Wales, and has a large drive-thru section.

“(Being Canadian) will help it to distinguish itself within that marketplace, but the market that it’s looking for is that high-footfall, high-turnover sort of place that I think is really geared toward that location. (Its Canadian heritage) is probably secondary,” Holmes said.

The relatively high prices at Tim Hortons in the U.K. don’t surprise Holmes, either. In fact, he’d recommend this strategy to his clients.

“It’s always a lot easier for a new restaurant coming in … to start slightly higher (with its prices) and then do special offers,” said Holmes. “You want to do the odd two-for-one or lunch-meal deals, and it gives you the margin in order to do the promotion.”

And Tim Hortons is still relatively new in the U.K. It’s only been operating in the country since 2017, opening its first store in Glasgow. It has since expanded to 65 locations throughout the country, with nine more opening soon.

Tim Hortons U.K. and Ireland is part of the U.K.-based SK Group, which purchased the master franchise rights to develop the Tim Hortons brand in the U.K. from Restaurant Brands International, the company founded from the 2014 merger of Tim Hortons with Burger King. The SK Group was also involved in expanding Domino’s Pizza throughout the U.K., where it now has more than 1,000 locations.

There is nothing else like Tim Hortons in the U.K. market today, said Hydes. McDonald’s, for example, has expertise in restaurant food but not in beverages or baked goods, while the opposite is true at Starbucks.

“The great opportunity that we saw with Tim Hortons was that it was a brand that could … trade all the way through the course of the day. It could serve coffee and beverages and baked goods and also could provide quick-service restaurant food,” said Hydes.

“We’re planning on being a leader in the marketplace.”

One way it is doing this is by expanding its menu and appealing to potential customers.

The U.K. takes Christmas very seriously and Tim Hortons has stepped in with a variety of seasonal items including yule log hot chocolate, bacon and cranberry hot dogs, and the Snow Place Like Home doughnut.

Permanent offerings that don’t exist in Canada include chocolate hazelnut and Oreo pancakes, a cookie dough doughnut and a smoky maple burger.

Tim Hortons’ initial U.K. expansion focused on Scotland and northern England.

“We were aware of high levels of brand awareness among people who lived in the north, particularly in Ireland and in Scotland,” said Hydes. “There were strong links across to Canada.”

Many of the customers who came from outside the neighbourhood had discovered the restaurant in other U.K. cities.

Others had eaten at a Tim Hortons in Canada — they often had family there — or while working or travelling in the United Arab Emirates or Saudi Arabia. Indeed, Tim Hortons is expanding internationally, with more than 100 outlets in Saudi Arabia, more than 80 in the United Arab Emirates and 19 in Qatar.

Mohammed Khan, 38, from North London, discovered Tim Hortons while working in Dubai, where he appreciated the long and convenient opening hours. He discovered the Tim Hortons in London by accident, while waiting to pick his wife up from a party.

“I was just trying to find somewhere to take the kids,” said Khan. “I would come back, but I would prefer to have one closer to me.

“The quality of the coffee here is the same as in Dubai. I actually prefer their coffee over Starbucks,” he said.

A week after the Park Royal location opened, staff were still directing traffic through the drive-thru. Four months later, however, the buzz had died down.

Habib was less ebullient than Khan about Tim Hortons’ food and drink. He said he heard the Tim Hortons hype from friends who’d been to Canada, but left disappointed.

“We had a burger, but it was too average for a big name (restaurant). With McDonald’s, you know what you’re getting — it’s consistent. Here, it’s never consistent. Sometimes, it’s too fried. The Timbits, they were dry.”

In response, Hydes said that Tim Hortons is “hugely guest-focused.”

“We listen to what our customers have to say about the business,” said Hydes. “Overall, we’re delivering a very high quality of products and service and that shows in all of the guest measures.

“But we’re a business that serves thousands and thousands of customers every day and occasionally, we get that wrong and we make a mistake … We’re sorry about that and hope that we’ll be able to make it right.”

Habib has his doubts that Tim Hortons will be a marketplace leader in posh London.

“Restaurants (should) be quite busy (on a Saturday night). It’s (still) busy, but not to the standard it was in July. I know, in a year’s time, you’ll be able to get something (and be) in and out in a minute.”

Still Holmes believes Tim Hortons has a strong chance of succeeding — if not in London, then in the U.K. overall.

“There’s a huge financial backing behind this. They will open places that don’t work and they will shut them,” Holmes said.

“You don’t know you’ve got a good business until you’ve got about four to five sites,” continued Holmes. “You’ll open one that’s amazingly good, you’ll open one that’s average, and you’ll open one that’s loss-making.”

Tim Hortons is a business in its infancy in the U.K., so it’s not necessarily showing great levels of profitability at this point, said Hydes. “But, in terms of trajectory, we’re very confident,” he said, basing his judgment on how well the location has traded to date.

“There’s a newness and a freshness for Tim Hortons here,” Hydes said. “The brand has got relatively low brand awareness in the U.K. and as we grow that awareness, I’m sure it will drive greater frequency of visitation into the restaurant.”