Tim Hortons Cancels Cold Stone Products in Canadian Outlets

Tim Hortons

A recent business decision to focus on classic Tim Hortons products has led the widespread coffee and baked goods chain to cancel sales of all products produced under the Cold Stone Creamery brand from its Canadian outlets. With the primary goal of menu simplification on the mind, Tim Hortons Inc. will be removing Cold Stone Creamery products from Canadian stores in order to allow franchise owners to instead place more importance on the company’s main products. Ease of service for storefront staff is an added benefit of the menu simplification, a benefit which will likely be much appreciated by the franchise’s staff. The pricey ice cream – although of premium quality – simply takes too long to prepare to properly fit in with the fast-service industry Tim Hortons is part of.

Due to lower than expected earnings in 2013, the decision to rid Canadian Tim Hortons outlets of the Cold Stone Creamery brand is one of several planned changes for the franchise, which include the closing of 11 weak U.S. locations and a trimmed menu of 24 fewer items for sale. Withdrawing from the company’s partnership with Cold Stone Creamery has cost the coffee giant a steep $19 million in the fourth quarter, which cut earnings per share down by 10 cents, leaving the value per share at $2.69 as of Feb. 23. Although their Canadian relationship went sour, the partnership Tim Hortons Inc. shares with Cold Stone Creamery will not be cancelled in the U.S., as sales are expected to remain on par with expectations due to the brand’s products being more widely advertised and known by consumers in its native country.

Cancelled menu items include several of the weaker-selling Tim Hortons products, such as the Dutchie Timbit, low-fat double berry muffin, mixed berry real fruit smoothie and blueberry danish. Apart from cutting down on unpopular items, the franchise is also experimenting with a sorely needed new soup-and-sandwich station, which focuses on less labor and faster build times with hopes of speeding along the morning and lunch rushes. “While it will take some time to see the full impact of these initiatives, I am pleased with the direction we are taking and the speed with which we are moving,” said Marc Caira, the newly stated president and chief executive officer of Tim Hortons Inc.

As one of Canada’s leading fast-food restaurant chains, Tim Hortons is a competitor in a harsh market. Along with the upcoming enforcement of changed business plans, the popular franchise has also released plans to open over 200 new locations in Canada and the U.S, along with roughly 35 international locations.

Despite the cancellation of Cold Stone Creamery products in its Canadian outlets, Tim Hortons will no doubt remain Canada’s place to go for coffee and baked goods, and with a little luck, the franchise’s new business decisions will begin to yield a higher revenue. So long as the core products Tim Hortons is known for don’t change too much, it seems unlikely that fast-paced customers will notice the lack of ice cream in their local fast-service coffee shop.

By Christopher White

Sources:

The Star

The Star

NASDAQ

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