McDonald’s (MCD) trying to deal blow to Tim Hortons (THI)

By: ispeculatornew
Date posted: 04.20.2009 (5:00 am) | Write a Comment  (2 Comments)

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mcdoTim Hortons is a major player on its own field in Canada and has slowly been gaining ground in the US since its recent spinoff from Wendy’s over a year ago. For those who do not know about it, they are basically similar to Dunkin Donut’s but they quickly crushed their competition. Basically, Tim Hortons is known for its coffee and for its healthy fast food, mainly around sandwiches and soups. They have dominated the market in Canada so much to even become a symbol of Canada and something that Canadiens are proud of. Of course, McDonald’s is a major player in the fast food as it is everywhere else. But it now seems ready to act on Tim Horton’s and is putting up a major offensive on two fronts.

First off, McDonald’s has started ad campaigns that look awfully like the ones Tim Hortons would look like, around Canadian themes like hockey, family, etc. You watch the ad and feel like it is Tim Hortons and then they break it that it is actually McDonalds. Agressive? Yes, but nothing that would not be expected.

The major difference of course is the 2nd part of this campaign as McDonald’s announced it would be giving out coffee for 2 weeks in the mornings, not with any purchase, free, plain and simple. That is what I would call a major move that will be costly but could actually change the marketplace as they will succeed in having clients taste their coffee. Of course the whole point of the game will be to retain the clients and keep them after the free period.. can they do it? Hard to say but I think most Canadians will give them a shot.

Think this is not critical for THI? Figure this.. 45% of sales by Tim Hortons originate from coffee, which holds 70% of the morning coffee market share with McDonald’s holding only 10%, a very very distant future…

It will be very interesting to see how the Tim Hortons stock reacts in the next few days. There had been rumors about this attack and so the THI stock had already suffered a bit, but with details coming out, it is clearly a dangerous campaign for Tim Hortons. And I would personally not want to hold any THI stock going into Monday trading…

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2 Comments

  1. Comment by OneDay — April 21, 2009 @ 3:30 pm

    Good post. I love Stardbucks coffee. I will pay a little more but I enjoy the taste!! McDonald’s also launched new offensive against Starbucks (SBUX) in the USA. When Starbucks multiplies closures and reduced its staff, McDonald’s wants to attract attention to his coffee. Cheap and Good Quality! Not too sure I will try their McCoffee. Tried once and didn’t like it…

    I agree that McDonald’s is being really aggressive. McDonald’s has always stayed close to its customers and is an Official Sponsor of the Olympic Games. We will see their results 🙂 Keep us updated!

  2. Pingback by Nice Weather Edition of Linkstuff April 27 — April 27, 2009 @ 3:08 am

    […] The Intelligent Speculator wonders if McDonald’s will deal a blow to Tim Hortons. […]

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