Coffee No.2 Tim Hortons Launches Franchise Business in Korea... Challenges Starbucks

Tim Hortons to Launch Franchise Business in Korea
Two Years After Starting with Company-Owned Stores
Currently 16 Stores... Aiming for 150 Within Three Years

An outdoor advertisement announcing the opening schedule of Tim Hortons Sinnonhyeon Station branch located near Sinnonhyeon Station in Gangnam-gu, Seoul. Provided by Tim Hortons

Tim Hortons, known as the 'national cafe of Canada,' will launch a franchise business starting next month. This comes two years after beginning operations focused on company-owned stores. With Tim Hortons currently operating 16 stores, the company has announced a goal to increase that number to 150 within three years, drawing attention to its competition with Starbucks, which has firmly established roots in Korea.

On the 27th, Maeil Business Newspaper reported that Canadian coffee specialty chain Tim Hortons will announce franchise recruitment in Korea next month and start a franchise business to overcome the slow expansion of stores under its company-owned store model.

BKR, the food service brand operator managing Tim Hortons in Korea, has set a goal to increase the number of stores from the current 16 to 150 within three years. An industry insider said, "Considering the early stage of the business, franchisees will be recruited mainly in key metropolitan areas with high foot traffic," adding, "Subsequently, they will expand to metropolitan cities and provinces in response to market demand."

Tim Hortons, a Canadian multinational coffee specialty and restaurant chain, is loved worldwide for its philosophy of 'always fresh.' Each store has a 'Tim's Kitchen' where donuts are baked fresh every morning, and melts and sandwiches are prepared immediately upon order. Starting as a small coffee shop in Canada in 1964, it has grown into the world's second-largest coffee franchise, with over 6,000 stores in 19 countries. Starbucks leads with 40,576 stores, followed by the UK coffee brand Costa with over 4,000 stores, placing Tim Hortons third.

Tim Hortons entered Korea in 2023 by opening a flagship store in Gangnam-gu, Seoul, and set a record by selling about 300,000 donuts and over 100,000 cups of coffee within a month. A Tim Hortons representative explained, "On average, about 10,000 donuts are sold daily, which is 416 donuts per hour," adding, "There are times when customers have to wait due to high demand."

Exterior view of Tim Hortons Sinnonhyeon Station branch in Gangnam-gu, Seoul. Photo by Tim Hortons

Maeil Business Newspaper cited the limitations of the company-owned store model as the reason Tim Hortons is moving into franchising. While company-owned stores are easier to manage, rapid simultaneous expansion like franchising is difficult. The strategy is to increase the number of stores through collaboration with franchisees and secure a solid foothold in Korea. Currently, Tim Hortons operates 16 stores in Korea.

Another reason for launching the franchise business is that the strength of 'on-site preparation upon order' resonates well in Korea. The company operates a spacious kitchen (Tim's Kitchen) inside its stores, which is rare among franchise coffee brands. Donuts are baked and sandwiches are prepared fresh daily in each store's Tim's Kitchen, contrasting with competitors like Starbucks, which receive fully prepared food products.

With Tim Hortons entering the franchise business, attention is also focused on competition with Starbucks. Koreans have a particular affection for Starbucks, with an overwhelming number of stores compared to other countries. This is evident in Starbucks USA's 2022 annual report. The number of Starbucks stores operating in Korea reaches 1,750, second only to the United States (6,608) globally. Industry watchers are paying close attention to whether this will impact the market.