This is an English adaptation of a FoodBud historical article originally published on October 13, 2022.
FoodBud noted in October 2022 that another major coffee-chain player had reached the public markets.
On September 29, 2022, Tim Hortons China, referred to here as Tims China, listed on Nasdaq under the ticker “THCH”. The company said the financing would be used to expand the business and deepen its presence in China’s coffee market.
Tims China traces back to Tim Hortons, the Canadian coffee brand founded in 1964 by hockey player Tim Horton. At the time of the article, Tim Hortons had a 58-year history, seven years longer than Starbucks, and was described as one of the world’s largest coffee, donut and tea restaurant chains.
Tims China was established in 2018 as a joint venture between Tim Hortons parent company RBI and Cartesian Capital Group. In February 2019, Tim Hortons opened its 4,850th store globally in Shanghai, its first in China.
The company then attracted several rounds of capital. In May 2020, Tims China received an investment of more than RMB 100 million from Tencent. By October 2020, it had opened 100 stores across six Chinese cities. In February 2021, it raised another round led by Sequoia China, with Tencent increasing its stake and Eastern Bell Capital participating. In March 2022, Tims China announced another US$194.5 million in financing.
The central operating question was whether Tims China had enough differentiation to support its stated plan to open at least 2,750 profitable stores by the end of 2026. FoodBud discussed that question with Tims China CEO Lu Yongchen.
Lu Yongchen described one of Tims China’s main differences as its “coffee + hot food” model. The beverage range centered on freshly brewed coffee, while also covering specialty coffee, cold brew, “Tims Ice Capp” products, non-coffee drinks, bagels, Timbits, donuts and other warm food items. The brand focused particularly on breakfast and afternoon tea occasions.
Freshly brewed coffee was already a core Tim Hortons product in North America. Tims China carried that forward, even though its flavor profile differs from the espresso-based coffee that is common in China. FoodBud noted that this can polarize consumers, but also creates differentiation: fans of the product have few similar alternatives outside Tims China stores, which can support repeat purchase.
At the time, Tims China’s coffee-and-breakfast combination was resonating with many customers. Individual coffee drinks were priced mainly at RMB 15-30, while breakfast hot-food-and-coffee sets started from RMB 19.9. FoodBud framed this as the price of one Starbucks coffee buying a “coffee + bagel” set at Tims China.
For afternoon tea, Tims China had observed from store sales data that traffic for coffee was lower around 2-3 p.m., partly because customers worried coffee would affect sleep. The company was therefore developing lower-caffeine drinks.
Lu said repeat purchase was the most important product metric, and that products with high repeat rates usually combine strong value for money with flavors that fit mainstream demand. Beyond its core brewed coffee, Tims China localized many products independently for Chinese consumers, including coconut cold brew, lemon cold brew and lychee cold brew.
The hot-food side was also a key operating distinction. FoodBud noted that many coffee chains in China sold bakery or light-meal items that were semi-finished, microwaved or frozen-baked. Tims China’s Gold Maple and Red Maple stores had full back-kitchen equipment, allowing in-store preparation of hot food. This supported food quality and created infrastructure for future food innovation.
Tims China also adapted food products locally. One example was a product that in North America usually used a cake or bread base; in China, it added a mochi texture and reduced sweetness to better match local preferences. At the time, Tims China had more than 40 food SKUs and planned to continue increasing the share of hot food while making fuller use of existing equipment and space.
To cover different customer needs, Tims China used several store formats: flagship Gold Maple stores for brand expression, standard Red Maple stores for core demand, and smaller Tims Go stores for grab-and-go occasions.
Flagship stores were generally first stores in a city, often above 150 square meters, and could include co-branded stores. Standard stores were usually 130-150 square meters. Tims Go stores were 60-80 square meters and mainly located in office buildings, near subway exits and similar high-flow points.
As of the first half of 2022, Tims China had 31 flagship stores, 296 standard stores and 113 Tims Go stores, for a total of 440 stores.
FoodBud argued that this format mix gave Tims China flexibility. It could serve a Starbucks-like “third place” business audience while also offering a convenience-driven coffee stop similar to Luckin’s urban white-collar use case.
The difference, in FoodBud’s view, was that Tims China’s third-place positioning leaned warmer and more energetic. This linked back to Tim Hortons’ Canadian positioning as a “national coffee” brand associated with affordable coffee and donuts for everyday consumers.
FoodBud’s own store visits found the overall store palette soft, relaxed and warm, suitable for casual meetings, social use or working without feeling oppressive. In China’s coffee market, FoodBud saw this spatial positioning as differentiated.
The article also noted the scale gap with Starbucks China, whose business was described as more than RMB 20 billion. Tims China was still far from that level, but FoodBud saw room for it to win share in a relatively certain coffee segment over time.
Following several funding rounds and its listing, Tims China was expanding stores quickly as a core strategy to build scale and brand influence.
At the time, its store network was denser in Shanghai and the coastal provinces and cities of Jiangsu, Zhejiang and Guangdong, while Chengdu and Chongqing were also being expanded inland. Stores were mainly in first- and second-tier cities, concentrated in shopping centers, large department stores, residential communities and office buildings.
Lu said Tims China cared more about store-level profitability than simply opening stores quickly. The company planned different store mixes by city and customer maturity. In first-tier cities, where coffee demand was more rigid, it opened more stores in office buildings and shopping districts, often with smaller formats. In second-tier cities, where occasion-driven demand could be higher, it considered more large-format stores.
To maintain food safety and management standards, Tims China would continue to focus on directly operated stores. In third-tier and lower-tier cities, and in surrounding cities where directly operated stores had already entered and developed smoothly, the company would experiment with franchising. In the near term, however, direct operation remained the main expansion model.
For site selection, Tims China used a location evaluation system to assess potential sites case by case, while matching store formats to customer consumption habits.
In a crowded coffee market, Tims China saw team capability as a major source of confidence. The company was led by industry veterans with global development experience. Lu Yongchen and the management team had previously expanded Burger King in China from dozens of stores to more than 1,000 stores and turned the business profitable. FoodBud saw that experience as relevant to the challenges of each stage of chain-restaurant development.
Tims China had faced external questions about high rent and labor cost ratios. Lu argued this was a stage-specific issue. Under a directly operated expansion strategy, the company needed to prepare a large talent pipeline, and new stores required a ramp-up period. As brand effects strengthened, rent ratios were expected to decline.
As of the end of 2021, Tims China had 3,291 full-time employees and 1,634 part-time employees. Lu said the higher full-time employee base was intentional because the company wanted to prepare talent for future store openings and valued employee loyalty. Later, once the business stabilized, it planned to use more part-time labor to reduce the labor cost ratio.
The prospectus showed that rent as a share of company-operated store revenue improved significantly, from 39.0% in 2019 to 24.0% in 2021. In the first half of 2022, under pandemic impact, the ratio was 26.1%. FoodBud interpreted this as evidence that store growth and brand awareness were improving operating leverage.
Tims China also used automated scheduling systems to improve labor allocation. The system could assign staffing based on store traffic by time period, such as adding more staff during the two-hour morning peak.
The same operating system also supported more scientific forecasting, including daily revenue and product mix by time period, and could use those forecasts to place automated logistics orders. Lu said the goal was to let systems handle standardized tasks, while store partners focused more on customer service and team culture.
Tims China’s prospectus showed progress in both e-commerce and convenience-store channels.
The e-commerce business began in 2021. Among Tims China’s four business lines — product sales from self-operated stores, franchise fees, other franchise-related income and e-commerce — e-commerce revenue was RMB 14.32 million in 2021, or 2.2% of revenue. In the first half of 2022, e-commerce accounted for 4.9% of revenue.
From July 12 to August 10, 2022, Tims China and Douyin Local Life launched a campaign around coconut-themed products. Through short videos, creator livestreams and corporate livestreams, the campaign generated 720 million topic views on Douyin and more than RMB 20 million in gross transaction value over 30 days.
Lu said that as Tims China’s digital ecosystem expanded and community users increased, online revenue would grow further. FoodBud suggested that interest-based e-commerce could become a new growth path for the company.
In retail, Tims China reached a strategic partnership with Metro China in November 2021, becoming Metro China’s exclusive coffee-brand partner in the country. Metro China was described as an omnichannel retailer with 99 stores in 60 Chinese cities and more than 20 million members. The partnership was intended to use Metro’s retail network, membership base and channel resources to broaden Tims China’s product and service reach.
In July 2022, Tims China also announced a strategic partnership with Easy Joy Coffee, under Sinopec’s Easy Joy convenience-store network. Under the agreement, the two sides would explore opening Tims Express stores inside selected Easy Joy Coffee locations and jointly develop co-branded ready-to-drink coffee for sale in Easy Joy convenience stores nationwide.
At the time, the companies were planning store locations and intended to gradually serve Easy Joy’s 200 million loyal members over the following quarters. FoodBud saw the Sinopec partnership as a way for Tims China to reach more target customers through gas-station locations and increase brand recognition. It was also Tims China’s first move into ready-to-drink coffee, though the company had already developed retail products including freeze-dried coffee, drip coffee, coffee concentrate and freeze-dried tea.
FoodBud viewed Tims China’s China entry and expansion path as a useful reference case: a mature global brand entering a large market through regional master franchise-style operations, then building a foothold through localization, capital support and experienced local management.
On product, the company retained its brand-defining brewed coffee while adding localized innovation. On capital strategy, it drew on investors including Cartesian Capital, Tencent, Sequoia China, Eastern Bell Capital, and, within the SPAC structure, PAG and Ascendent Capital. On management, it brought in operators with long experience in China’s local chain-restaurant market.
As one person close to Tims China told FoodBud, the listing was only the beginning. The harder task was still to build a sufficiently solid business.
Note: IPO, financing, store-count targets and forward-looking figures are historical as reported in October 2022.