Tim Hortons Gambles With Major China Push 

(Bloomberg) -- Tim Hortons, the Canadian coffee and doughnut chain, plans to open more than 1,500 restaurants in China amid a growing global trade war.

The restaurants will open over the next 10 years through a master franchise agreement with Cartesian Capital Group, Tim Hortons said Wednesday.

“We have two main priorities at Tim Hortons: building and strengthening our brand in Canada; and expanding our iconic Canadian brand to the rest of the world,” the chain’s President, Alex Macedo, said in a statement. “China’s population and vibrant economy represent an excellent growth opportunity for Tim Hortons in the coming years.

China may provide a boost for a brand that has struggled in recent quarters amid disputes between parent Restaurant Brands International Inc. and Canadian franchisees. Restaurant Brands wants to boost Tim Hortons’ sales by remodeling locations and revamping the menu with more espresso and lunch offerings. Last April, Chief Executive Officer Daniel Schwartz acknowledged results at Tim Hortons “were a little softer than we would have liked.”

Still, a move into the world’s most populous nation while a trade conflict escalates between the U.S. and China could be a risky move. Some U.S. brands are already having trouble gaining traction there. Pizza Hut has struggled to appeal to Chinese consumers, while Starbucks Corp. has cited a sales slowdown in the country.

“There is the risk that there will be more anti-Western or anti-U.S. sentiment in consumers that develops over time,” said Bloomberg Intelligence analyst Jennifer Bartashus. “If that happens, same-store sales could come under severe pressure.”

Canadian icon Tim Hortons has pushed into new international markets under Restaurant Brands, which also owns Burger King and the Popeyes Louisiana Kitchen chain. Tim Hortons has locations in the U.K., Spain and Mexico now, and Schwartz has said its global expansion “is still in its early days.”

In 2012, Cartesian teamed up with Restaurant Brands to bring Burger King to China, where there are more than 900 outlets of the fast-food chain.

To contact the reporters on this story: Lisa Wolfson in Boston at lwolfson@bloomberg.net;Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Jonathan Roeder

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