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By Doug Fischer
Ottawa Citizen
Sunday, March 19, 2006
Also published in: Calgary Herald, Monday, March 20, 2006
Will Canadians buy the stock like they've bought the coffee -- and the myth?
- The number of Tim's outlets has jumped 50 per cent in five years
- 'It's a gold mine, pure and simple,' says one analyst
- Sale of stock expected Friday, but supply will be limited
- Some stock analysts say Tim's may have peaked
Adrian Mastracci, investment counsel at Vancouver’s ‘fee-only’ KCM Wealth Management, says, "I think there will be a lot more heart, a lot more more emotional attachment, than usual involved in people's decisions regarding Tim Hortons.”
Pretty much every day for the past 35 years, Carl Long's routine has included at least one visit to Tim Hortons. That's more than 12,000 cups of coffee, maybe half as many doughnuts and, he figures, an investment of close to $20,000. After all that caffeine and sugar, the retired Ottawa tool salesman doesn't even want to think about the cost to his health.
This week, though, Mr. Long will be looking for a little payback.
Shares of Tim Hortons, Canada's iconic and wildly successful fast-food chain, are expected to go on sale this Friday on the New York Stock Exchange.
It's a complicated stock offering, and, ironically, one not easily available to Canadians. But that's not likely to keep Mr. Long and thousands of others from trying to get in on what some financial analysts are already calling the country's investment event of 2006.
"It's time to make my money count for something that gives me more than a few minutes of pleasure," says Mr. Long, a double-double drinker who gets his fix at one of several Tim's outlets in west Ottawa. His anticipation is easy to understand. In addition to its near-astonishing status as a Canadian cultural institution, Tim Hortons remains one of the country's most amazing business growth stories.
In the past five years, the number of Tim's outlets has jumped by nearly 50 per cent to more than 2,600 in Canada and nearly 300 in the U.S. Over the same period, sales increased 62 per cent, so that by last year Tim's generated a staggering $1.2 billion U.S. in revenue for its American owner, Wendy's International.
"It's a gold mine, pure and simple," says Peter Oakes, a New York food industry analyst. "It just keeps humming along."
Not everyone is quite so optimistic about Tim Hortons' worth as a stock investment. Some analysts believe its growth has peaked, that the Canadian market is saturated and that the company will never achieve a high level of success in the U.S., where Tim's is just another fast-food chain and not a national symbol.
But such talk is unlikely to deter those Canadians who consider an investment in Tim Hortons to be a show of patriotism, says Adrian Mastracci, president of KCM Wealth Management in Vancouver.
"I think there will be a lot more heart, a lot more more emotional attachment, than usual involved in people's decisions regarding Tim Hortons," he says. "I'd never say it's a bad investment, but I'd advise people to have a coffee and doughnut and think things over before jumping."
Even so, it's easy to understand why owning a chunk of Tim's has a magnetic, almost mythological appeal for many Canadians.
"In so many ways the story of Tim Hortons is the essential Canadian story," the late writer Pierre Berton, whose annual garden parties were known to feature buckets of Timbits, once said. "It is a story of success and tragedy, of big dreams and small towns, of old-fashioned values and tough-fisted business, of hard work and of hockey."
It also a story of marketing genius, one that seemed even to seduce Mr. Berton, a Canadian legend himself, with its nostalgic appeal.
Tim Hortons, which is after all simply a fast-food chain that offers safe and reliable fare, achieved its iconic status in large measure through a careful application of down-home, folksy branding.
It's difficult to say which came first, the reality or the market image, but the company's "True Stories" ad campaign probably resonates with Canadians because the tales it tells contain the ring of, well, truth.
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