Tim Hortons' profit up 8 percent, chain eyes more than coffee

Thu Nov 7, 2013 3:16pm EST
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By Solarina Ho

TORONTO (Reuters) - Canadian coffee and doughnut chain Tim Hortons Inc THI.TO THI.N, which is exploring ways to expand in an intensely competitive market, reported an 8 percent rise in quarterly profit as same-store sales improved slightly in the United States.

Shares of the company, which says it sells nearly eight of every 10 cups of coffee sold in Canada, edged higher following the results, which included a 3 percent rise in revenue.

Tim Hortons reported that U.S. same-store sales grew by 3 percent, while Canadian same-store sales rose 1.7 percent.

"The third quarter was one of progress and improved momentum for us. And our key indicators are moving in the right directions," Chief Executive Officer Marc Caira told analysts in a conference call.

"However, while encouraging, we know that we have a lot of work more to do. Last quarter, I spoke to you about a new reality facing the food service industry."

Caira, a long-time Nestle SA NESN.VX executive, said the company has the capacity to expand the brand beyond the traditional restaurant into alternative channels.

Tim Hortons needed to "set the agenda on coffee" in Canada, Caira said, but also attract new and younger consumers looking for more than black brewed coffee. The younger demographic looks for specialty drinks like other milk-based beverages, juice blends and alternative coffee roasts.

The chain is facing intense and growing competition from U.S. competitors such as McDonald's Corp (MCD.N: Quote) and Starbucks Corp (SBUX.O: Quote), who have also ramped up their offerings and promotions to attract new customers.   Continued...