Tim Hortons’ new coffee cup: why the supersize?

How Tim Hortons is tricking us into buying more coffee.

James Cowan 0

(Photo: Natalie Castellino)

The new, extra large Tim Hortons coffee cup holds 24 liquid ounces. How big is that? Big enough to accommodate two whole cans of Coke. Big enough for 16 shots of vodka or a bottle of wine, minus a glug or two. Big enough for 99.9% of your daily coffee allowance, according to Health Canada. In short: big enough. Certainly big enough to incite countrywide wonder when the company announced the upsizing on Jan. 16. Unintentionally summarizing the national mood, a customer told a Halifax TV reporter: “You might as well order the pot.”

The reaction was surprising given the fast-food industry’s long-standing fondness for behemoth beverages. These days, fast-food joints are vigorously pushing larger portions as recession-stung consumers demand better value, but the super-sizing trend has been creeping ahead for decades. The Tim Hortons extra large is a teacup compared to forebears like the 32-ounce Big Gulp and the 31-ounce Starbucks trenta.

But it’s not really the size of the cup that merits scrutiny. Rather, it’s the semantic shuffle that accompanied its launch. To make room for the bigger cup, the company’s old 20-ounce extra large was rechristened as large, the 14-ounce large became medium and so forth, right down to the eight-ounce small, which became extra small. The new taxonomy demonstrates how arbitrary the sizing of consumer goods really is, from beverages and meals to jeans and cars. Moreover, it shows how companies exploit the psychology behind sizing to nudge consumer behaviour. An act as simple as renaming a cup size offers myriad ways to trick customers into buying more coffee, says Koert Van Ittersum, a Georgia Tech marketing professor who studies the behavioural biases that lead to overconsumption. “A bunch of things will kick in,” he says. “From a pure profitability point of view, this is a fairly smart strategy.” In the end, the issue isn’t how large something is, but what size—be it small or venti or 6—even means. It may seem like hair-splitting, but within the ever-hazy answer lies profit.

There are, of course, some fairly obvious reasons why a coffee chain might want to offer a larger cup size, starting with customer demand. Tim Hortons says focus groups and other consumer research found that its customers felt the old extra large wasn’t huge enough. Repeated requests for bigger servings led to trials in two mid-sized Ontario markets, Sudbury and Kingston. In Sudbury, the company also stopped offering its smallest size. The result? The response to the extra large “exceeded expectations,” according to David Morelli, Tim Hortons’ director of public affairs. But the testing also showed customers weren’t ready to abandon the eight-ounce size. To Morelli, this proves consumers aren’t blindly supersizing. A mother buying a hot chocolate for her child may appreciate the extra small option; the same mother shivering in the stands at a Saturday morning hockey practice might love an extra large. “People want more choice,” Morelli concludes. And by offering more choice, Tim Hortons adds a slightly larger, slightly more expensive option to its menu. While 19 additional cents for the extra large may seem marginal, it adds up when you sell eight out of every 10 cups of coffee served in the country.


 

And really, Tim Hortons was not launching a sizing revolution. The 24-ounce cup is a welterweight in the beverage world. Convenience chain 7-Eleven introduced the Big Gulp, containing 32 ounces of refreshment, way back in 1980; the 64-ounce Double Big Gulp—large enough to hold five bottles worth of beer—came eight years later. Then, in 1993, McDonald’s allowed customers to “dino-size” their drinks with a 32-ounce cup as part of a marketing push for the film Jurassic Park. The cross-promotion ended but the T. rex-sized portions stayed, evolving into the “super size” made infamous by the 2004 documentary. Just this past summer, Starbucks unveiled the 31-ounce Trenta, which the National Post noted was larger than the human stomach. Within days of the Trenta’s debut, Kentucky Fried Chicken suffered negative publicity when a Utah franchise, with presumably unwitting irony, promised to donate a buck to the Juvenile Diabetes Research Foundation every time it sold a Mega Jug—a half-gallon soft-drink receptacle.

It’s not just drinks that have been gradually upsizing. Food portions have expanded, too; a study by Van Ittersum found even the average size of a dinner plate has increased by 23% since 1900. The recent economic climate has likely given this trend a boost, says Kelly Weikel, a consumer research manager with consulting firm Technomic. “The ongoing economic uncertainty has made consumers in general very value-conscious,” she said in an e-mail exchange. “Offering a larger portion strengthens the value proposition.” Those perceptions linger, even if a bigger serving comes at the same per-ounce price as a smaller one. “A lot of this stuff is very primal,” says Van Ittersum. “Bigger is better.”

But “bigger” is a relative term. The labels applied to package sizes have become so meaningless that some companies have abandoned efforts to quantify them in any comprehensible way. If Starbucks hadn’t trained consumers, would anyone know what a venti is, or that “tall” is actually on the small side? In rare instances, consumers rebel against vague nomenclature; in 2006, Wendy’s abandoned its top-end “Biggie” size for cold drinks, saying the name confused customers. Intriguingly, what had been the Biggie size became not the large or extra large, but the medium. At the same time, the chain added a 42-ouncer—bigger than the Biggie.

The constant fussing with size definitions is on display everywhere from the grocery store to the car lot. The average size of a “compact” sedan in the United States increased by five centimetres and nearly 170 kilograms between 1997 and 2007, while the average SUV swelled by 25 centimetres and 215 kilograms, according to Edmunds, an auto-buying research site. The Honda Accord grew by 51 centimeters and 453 kilograms in the three decades since its introduction in 1979.

Sometimes, these size revisions come blatantly at the customer’s expense. For years, the Consumerist website documented instances of corporations reducing package sizes while maintaining prices in its popular “Grocery Shrink Ray” feature. For example, Oreo packages that were once 510 grams shrank to 470 grams, a loss of roughly four cookies, according to the website’s calculations. Similarly, Tropicana reduced its standard carton by five ounces in 2010. Nabisco used a package redesign to put 15% fewer crackers in its Premium saltines cartons.

Patrons often don’t notice the change, even with products they consume daily. Life is so complex that people make decisions on autopilot, says Van Ittersum. Rather than puzzle over soft drink sizes, many consumers simply pick a size and stick with it, ordering a medium or a large at every restaurant even though these words have different meanings depending on the establishment. A certain percentage of Tim Hortons customers will continue to order their usual size out of habit, hardly noticing that the corresponding cup size and price have changed. “Some people are very conscious about this stuff, and they’ll downsize, but the vast majority will stick to their [size] name,” says Van Ittersum. “They’ll pay more and get more. Effectively, their consumption rate goes up.”

The vagaries of sizing can also be used to flatter or reassure a consumer. Consider the trend among clothing retailers toward so-called vanity sizing. Men may think they are buying jeans with a 36-inch waist, but depending on the store, these pants may actually measure 37 inches (H&M), 39 inches (Gap) or even 41 inches (Old Navy). In women’s clothes, where arbitrary numbers rather than waist size or inseam length indicate size, the fit can be even more unpredictable. A size 8 at Banana Republic is equivalent to a size 2 at the Gap. In 2003, Tammy Kinley, an associate professor in the school of merchandising and hospitality management at the University of North Texas, measured 1,011 pairs of women’s pants, and found that high-end retailers’ clothes tended to fit more loosely than those in bargain stores. (Kinley hypothesized the variation was partly due to the fact that expensive labels can afford to use more cloth.) Perhaps in response to growing meal-portion sizes, clothing sizing has also become more generous over the decades. What was a standard size 10 in 1986 had become size 8 by 1997, according to one study. Expanding the clothing that comes under various size labels, experts say, is an effort to improve shoppers’ self image and thus make them more likely to buy.

While not as comforting as slipping into a seemingly smaller pair of jeans, coffee sizing has its own way to make us feel good about ourselves. Customers may avoid the temptation of the largest size on the menu, and pick the second-largest one as a reward. Restaurants often introduce a jumbo-sized offering not just to extend the portion spectrum, but to induce customers to move up to large and medium sizes, says Dennis Lombardi, executive vice-president of food strategies for WDP Partners in Columbus, OH. “That’s something the [convenience] store industry learned pretty early on. People might not be buying the 32-ounce size, but it encourages them to buy the 22-ounce or 16-ounce size.” The largest beverage on the menu seems taboo, but once something even bigger is introduced, it starts to feel like an acceptable option. “You’ve eliminated the feeling of, ‘Oh my God, I got the biggest one there is,” says Lombardi.

All these factors may push consumers to embrace Tim’s new extra large, but the payoff may still be relatively small for a company with net revenue of $2.54 billion in 2010. Still, every extra 19¢ in sales helps when you’re battling your own success. Having achieved significant growth over the past decade, the company has, in effect, limited its options for additional revenue. While Tim Hortons has averaged 6.1% same-store sales growth in its Canadian operations in the past 10 years, it only saw 4.9% in 2010 and 2.9% in 2009. “A company like Tim’s has shown increased sales year-over-year for many, many years,” says Douglas Fisher, president of FHG International, a Toronto-based food-service consulting firm. “And that increase is getting tougher to maintain as the company hits a certain point in sales.”

Offering the extra large size also protects Tim Hortons from losing customers to newly aggressive competitors like McDonald’s, which has targeted the coffee market by expanding its McCafé line. “It’s as much about what you could lose by not offering that size,” says Lombardi.

The response to the new size has been “pretty positive” so far, says Morelli. But the strategy is not risk-free. Some of the gains may prove temporary, thanks to the company’s own re-education campaign—only the most caffeine-deprived could miss the store signs explaining the size changes. Any consumption bump due to customers sticking with their usual size name “will be largely early in the life cycle of this new product,” says Lombardi.

There is also a chance the company will cannibalize its market. “Will people who used to come for two cups of coffee now get their fill in one shot?” wonders Fisher. Even if they don’t, taking the next step will be harder, as industry watchers believe we’re approaching the limit of how large a cup of coffee can get. “What are you going to do next year? Are you going to go to 30 ounces?” asks Van Ittersum. “In 10 years, will you create a backpack with 10 gallons in it?” Upsizing may have an upside for now, but the money to be made from ever-expanding cup sizes is not bottomless.

Leave a comment

Your email address will not be published. Required fields are marked *