Tim Hortons, the Canadian chain under pressure from activist investors, plans to use less capital and more franchises in a “must-win battle” for U.S. customers.
Tim Hortons plans to add 800 locations in Canada and internationally in the next five years, including 300 south of the border, the Oakville, Ont.-based company said Tuesday in a statement outlining a new five-year strategy.
“We are energizing the Tim Hortons brand in all of our geographic markets and we are focusing on driving long-term, sustainable, profitable growth,” Chief Executive Officer Marc Caira said in the statement.
The moves come after Tim Hortons faced criticism of its U.S. strategy last year from activist investors Scout Capital Management LLC of New York, and Highfields Capital Management LP of Boston, which hold 3 and 1.5 percent of the company’s shares respectively, according to data compiled by Bloomberg.
Scout pressured the company to scale back its U.S. expansion, and instead direct capital to share buybacks. The chain announced Feb. 20 it would repurchase up to $360 million in stock.
Tim Hortons said it will add healthy menu items and use technology more in marketing.
In the U.S., where Tim Hortons plans a “disciplined approach,” the chain has signed franchise agreements where partners deploy their capital and local market knowledge in St. Louis, Youngstown, Ohio, and Fort Wayne, Ind.
The company is aiming for earnings per share growth of 11 percent to 13 percent compounded annually from 2015 to 2018, operating income of $45 million in the U.S. by 2018 through a “less capital-intense model,” and to free up $1.8 billion in cash by the end of 2018.
Tim Hortons plans to add 800 locations in Canada and internationally in the next five years, including 300 south of the border, the Oakville, Ont.-based company said Tuesday in a statement outlining a new five-year strategy.
“We are energizing the Tim Hortons brand in all of our geographic markets and we are focusing on driving long-term, sustainable, profitable growth,” Chief Executive Officer Marc Caira said in the statement.
The moves come after Tim Hortons faced criticism of its U.S. strategy last year from activist investors Scout Capital Management LLC of New York, and Highfields Capital Management LP of Boston, which hold 3 and 1.5 percent of the company’s shares respectively, according to data compiled by Bloomberg.
Scout pressured the company to scale back its U.S. expansion, and instead direct capital to share buybacks. The chain announced Feb. 20 it would repurchase up to $360 million in stock.
Tim Hortons said it will add healthy menu items and use technology more in marketing.
In the U.S., where Tim Hortons plans a “disciplined approach,” the chain has signed franchise agreements where partners deploy their capital and local market knowledge in St. Louis, Youngstown, Ohio, and Fort Wayne, Ind.
The company is aiming for earnings per share growth of 11 percent to 13 percent compounded annually from 2015 to 2018, operating income of $45 million in the U.S. by 2018 through a “less capital-intense model,” and to free up $1.8 billion in cash by the end of 2018.