Marc Caira became the fourth CEO Tim Hortons has ever had less than a year ago, and he already faces a double-double challenge: grow sales in Canada while expanding into the U.S. He tells Canadian Business’s Bruce Philp just how he’s going to pull it off.
Bruce Philp: Tim Hortons has been named the Top Canadian Brand for the second year in a row in our brand survey—but what does the brand actually mean to Canadians? You used the phrase “honest dependability” in a recent memo. What do those words mean to you?
Marc Caira: Well, it’s who we are. And it’s who we were born to be. You know, Tim Hortons is an honest brand. It’s a true brand. We don’t pretend to be something we’re not. We’re predictable. And when you look at this brand, “loyalty” and “trust” are the two words that resonate the most.
What do you think has driven the success of the brand over the years?
We keep doing the same thing over and over, and we do it better than anybody else. And we demonstrate that we care every single day what our owners and franchisees do in their communities. That’s where it starts. You know, it doesn’t start here in Oakville, where the corporate head office is. It starts in each of our 3,600 stores across Canada, with what our owners and franchisees do every day within their communities. The floods in the West: we were there. The derailment in Quebec: we were there; we were supportive. That’s how you build this trust; that’s how you build this loyalty.
Do you remember your first visit to Tim Hortons?
Well, my first visit to a Tim Hortons goes back many, many years. Even before I joined Tim Hortons, I came to the restaurants often. My wife, Helen, and I have four children, and they’re all heavy users, even more so since I gave them all the “Timmy card.”
Someone once said that a company’s culture and its brand are two sides of the same coin. What’s Tims’ culture like?
Well, culture is something that evolves over time. Tim Hortons—in my view—has a fantastic family-oriented culture, and we’re not trying to change that at all. What we are focusing on is changing behaviours and on the type of behaviours I believe are necessary for us to continue to succeed in this environment. And I’ve called this environment the New Era: low growth, competitive intensity, consumers that are a bit anxious, consumers that are value-conscious, consumers that are connected from a technology standpoint so they have all the information instantly.
You’re marking Tim Hortons’ 50th anniversary in business this year. How does 50-year-old Tims operate in the New Era?
There’s an increased sense of urgency: getting things done, new product innovations, much more frequently and faster. There are many examples of companies that have been extremely successful over the years and then complacency sets in. I think that’s normal, but we can’t allow it to happen. It’s also why we’re renovating our restaurants. Over the next two years, we’ll renovate almost all our locations. We’re simplifying menu boards. You’re seeing a lot more digital, a lot more visuals and fewer numbers to make them easier to understand. We’re embracing technology, with the introduction of Tim TV and our Double-Double card with CIBC and Visa. We’ve really embraced technology to do two things: enhance the experience of our guests and influence the behaviour of consumers. So the changes at Tim Hortons are really about behaviours and not necessarily culture.
Some people, including Tim Hortons’ own management, have said the company’s biggest challenge is that it will run out of places to put stores in Canada. What does a mature Tim Hortons business look like?
You know, I don’t buy that. I’ve learned that there’s no such thing as a mature market. There are always ways to grow. There’s still room to build restaurants, though they may be different types of restaurants. We’re not happy with the number of restaurants we have in certain urban centres, like Toronto and Vancouver. And there’s an opportunity for Tim Hortons to be there in different formats—smaller boxes, kiosks. So you’re going to see that. There’s also room to grow traditional restaurants, and we’ve set a target of opening 500 to 600 over the next five years in Canada. So we will continue to build.
Where else will you find growth?
We will always be a restaurant brand, but there are opportunities to take the brand into new channels. We’re taking our single-serve coffee into the supermarkets. Coffee’s our heritage. We sell eight out of 10 cups of coffee—two billion cups a year—here in Canada. Why shouldn’t we be in supermarkets? We also do a good job on nutrition, health and wellness, but maybe there are some things we can do that are a little different. Maybe we can be just a bit more aggressive in terms of offering our consumers healthier options. There’s still a lot of new and exciting things to come from Tim Hortons in Canada.
It’s certainly true that anybody who wants to develop business in the coffee space is going to have Tim Hortons in their sights. Who makes you nervous?
Well, I try not to get nervous. Nervous is not a good quality in this job. The word I would use is “respect,” and there are a number of competitors I really respect. I respect McDonald’s very, very much: fantastic global brand, doing some good things, even here in Canada. But for me, it’s less about worrying about our competition and more about focusing on Tim Hortons, who we are and the strengths we have.
At your Investors Day in February, you were clear that making Tim Hortons a global brand is a top priority. It’s no secret the brand has had trouble gaining traction in the U.S. What’s it going to take to succeed?
I had said very early on that the U.S. is a must-win battle for us. People say, “Yeah, but it’s competitive.” Show me one market in the world that’s not competitive. While we do have a foothold in the U.S. with 850 locations, in the past we saw the U.S. as simply an extension of Canada and, in my view, that’s the wrong strategy. There’s no such thing as a global consumer. Consumers are local: local tastes, local traditions, local recipes. So we have to be able to adapt our offering to the American consumer.
How are you adapting the formula for the U.S. market?
Different flavours, bolder flavours and, in some cases, larger portions in some cases. We’ve put a strategic business unit right in the U.S. market. Whereas in the past everything was done out of the Canadian office, we now have a dedicated team, with Mike Meilleur heading up our U.S. business. His job is to really cater to the needs of the U.S. consumer. There are differences, even in the coffee profiles. If we think we’re going to sell the same coffee to Americans that we sell to Canadians, I think that’s wrong.
Somebody is obviously going to have to make room for you in the market. Whose lunch do you have to eat, so to speak?
It depends on where you go, but you’re always going to face the big three: McDonald’s, Dunkin’, Starbucks. We have to be able to compete with all these fantastic competitors, and I’m convinced that we can do that.
So much of the Tim Hortons brand is tangled up in our national identity—and with a hockey player that fewer and fewer people have heard of. How does that translate in the U.S.?
It’s funny, I was just in Buffalo this past week, where Tim Horton, the hockey player, actually played for a couple seasons—’72 through ’74—so his legacy is very much alive there. But you’re right, over time Tim Hortons will stand on its own for what it is, which is fantastic food, great quality, great value and great service. It was started by a couple of gentlemen—Tim Horton and later Ron Joyce—with tremendous vision for the company. My job is to ensure we live to that vision every single day and continue to build this brand.
You and Ron Joyce have something in common: no MBA. In fact, you come from community college background. How would you say it shaped you as a CEO?
Education is only part of who you are. It provides tools that you can use in your life to do certain things. I was born in Italy, and my family immigrated to Canada in 1960. It was my mother who really insisted I go to college. The best thing that happened to me there was that I met my wife, Helen. But because I don’t have an Ivy League education or an MBA or even a degree, I’ve always tried to work harder than anybody else, and that’s what’s driven me. There’s no reason you can’t outwork somebody and be better prepared. And that’s something I’ve always tried to do and that’s something I’ve tried to instil in my children and my friends.
How did you end up working in consumer packaged goods at NestlÃ©?
After I graduated from college—with honours, by the way, because my wife made sure I graduated with good marks—I was working part time in retail when I met this wonderful gentleman from NestlÃ©, a salesman. He introduced me to the HR department, and I was hired. But I was hired as an experiment because, even back then, most companies were hiring MBAs. The problem with hiring MBAs was that these people wanted to get promoted to presidents within five years. And when they didn’t get promoted, they left. So, NestlÃ© said, perhaps we should look at hiring somebody with a little bit less ambition, so they hired me.
When Tim Hortons announced your appointment last year, the media described you as a seasoned executive from the supply side of the food business. Was that a hint that we’ll see a growing focus on operations at Tim Hortons?
I don’t think you can isolate just one thing as more important than something else. I mean, they were right: I come from the supply side. I had never worked in the restaurant business, but I know the industry. As a supplier, I had been following Tim Hortons since 1977. Operations will always be an important element of the restaurant business because, at the end of the day, it’s about dealing with consumers. But it goes beyond that. It’s about understanding what motivates the consumer, trying to anticipate where they’re going and getting there before the competition. When you look at Tim Hortons over the past 49 years, we’ve been extremely successful, and driven operationally, to the extent that we’ve been driven by new restaurant development. That will continue. There’s lots of room to grow, but more of the growth will come from same-store restaurant sales. And that’s simply a better understanding of the consumer, their needs and where they’re headed.
Speaking of success, Tim Hortons jumped nine spots on our Top Brands Overall list this year (to 2nd from 11th), and it happened in the same year you took the helm. Should we draw any conclusions?
No, no, no. Absolutely not. If you look back at the history of Tim Hortons, I’m only the fourth CEO this company has had, and I’ve only been here nine months. We have about 4,300 restaurants system-wide in Canada and the U.S., and these types of recognitions, this type of trust, is built at the grassroots level. It’s built with every single employee, every single franchisee and every single store with every single transaction. So I have absolutely nothing to do with it. I’m very proud to be associated with it, and I take it very seriously, but I only hope to build on it.