UPDATE 2-Tim Hortons aims to improve returns, add 800 Canada, U.S. stores

Tue Feb 25, 2014 2:53pm EST
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By Susan Taylor

TORONTO Feb 25 (Reuters) - Canadian coffee and doughnut chain Tim Hortons Inc said on Tuesday that it will open at least 800 new restaurants over the next five years under a strategic plan to secure its dominance in Canada and boost returns in the United States.

Facing mounting competition from tough rivals such as Starbucks Corp and McDonald's Corp, the company said it plans to reduce capital intensity while improving returns to shareholders and on assets.

"They certainly are addressing competitive and market dynamics head-on, which is a change, or shift, in strategy," said Raymond James analyst Kenric Tyghe. "The message going forward is they're going to (leverage) that strong brand through more deployment of an analytics-rich, loyalty program."

Tim Hortons, which boasts that it sells nearly eight of every 10 cups of coffee bought in Canada, said its plan reflects the use of technology and data to drive marketing, menu and loyalty programs along with changing consumer preferences for healthier food and a shift in demographics.

The company said it will open 500 more restaurants in Canada by 2018, including new formats in offices, sporting venues and healthcare settings.

Tyghe said that target exceeds market expectations.