Will Tim Hortons Go All Starbucks on Us?

Tim Hortons is moving in the right direction with technology.

Jun 23, 2014 at 5:30PM

Banner
Source:  Tim Hortons

There is a great potential opportunity for Tim Hortons (NYSE:THI), the "other" publicly traded coffee and pastry chain that you don't often hear being talked about in the media. It seems to always be Starbucks (NASDAQ:SBUX) this, and Starbucks that. Hopefully Tim Hortons is paying attention to Starbucks' latest move because it can be a game-changer for Timmy too.

First Timmy's results
On May 7, Tim Hortons reported fiscal first-quarter results. Total revenue popped 4.8% to $766.4 million. Same-store sales lifted 1.6% in Canada and 1.9% in the U.S. Earnings per share soared 16.9% to $0.66. Tim Hortons stated that this was "despite ongoing challenges relating to macro-economic and competitive environments, which have carried over from last year, and unfavorable weather conditions."

Marc Caira, president and CEO of Tim Hortons, credited the positive results to simplified operations, new menu items, and "enhancing" the restaurants. He stated in the press release:

Our organization has mobilized quickly to begin executing on the strategic plan we announced in February. We will see further progress this year in key areas of our strategic road map as we seek to drive sustainable long-term growth.

Mobilized? Interesting choice of word.

Timmyme

Source: Tim Hortons

Going mobile
One key strategy for Tim Hortons is in the area of technology, specifically mobile paying like Starbucks has. On May 22, Tim Hortons announced the launch of mobile payment with its TimmyMe app. Starbucks already attributes 14% -- and growing -- of its domestic transactions to smartphone payments, so we know the idea works.

Tim Hortons is hoping that the mobile barcode payment-scan app will allow customers "faster" service. Again, interesting word choice. Probably more so than Starbucks, Tim Hortons has a line problem. It's probably due to its more complex menu and food choices. On previous conference calls, Tim Hortons executives mentioned that the company was looking to use technology to get the line moving more quickly.

Caira believes this will help. He stated during the May 7 call:

We believe this new payment option will improve speed of service for our guests, which is always a key concern for us in locations where capacity is stretched.

The mobile-payment app is a great step in the right direction. But Starbucks has a far better idea.

Images

Source: Starbucks

The Starbucks idea
During a recent presentation, Starbucks unveiled a pilot program that takes its mobile app to the next level. Scott Maw, CFO of Starbucks, pointed out that the company is the No. 1 payment app out there, making Starbucks a market leader in this space. Assuming the tests are successful, Starbucks expects to launch by the end of next year the ability to order in advance using your app.

This means no line. Your specialty beverage is ready for you and waiting as you walk in. Nothing kills a line faster than people who don't even need to be on it. Now imagine if Tim Hortons follows in the same footsteps.

On an operational and service level, the ability to order in advance could be even more meaningful for Tim Hortons than it is for Starbucks. Tim Hortons sells much more line-stalling food on a percentage of sales basis. The result is the average order is slower as well.

Caira stated in an interview late last year, "People are not prepared to wait in lines anymore." He said then that Tim Hortons was looking for ways to shave off its wait times as much as possible. It needs to jump on Starbucks' ordering-app bandwagon as soon as possible even though Starbucks itself still hasn't launched it.

Individuals

Source: Tim Hortons

But maybe Tim Hortons is already working on that and just hasn't made any announcements yet. Back in February, Caira had some words that sort of hinted at such. He stated: "Any time you make it easier for your guests to order, reduce complexity for the restaurant team members[,] or decrease the time it takes to execute an order, it makes a difference when you multiply it across the millions of transactions we complete every day."

A mobile-ordering app will be coming to Tim Hortons in this Fool's opinion. Watch for it.

Will Timmy be next?
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Nickey Friedman has no position in any stocks mentioned. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers