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Timssaʴý upscale cafe luring millennials with nitro brews, Instagrammable doughnuts

This younger group wants customizable drinks, in-store technology such as charging stations
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Consumer ambivalence is the reason Tims and many other quick service restaurants are rethinking how to reach millennial and Gen Z diners, say experts who point to similarly minded overhauls at McDonaldsaʴýs, Boston Pizza and Panera Bread. People walk past the newly renovated Tim Hortons in Toronto on Thursday, July 25, 2019. THE CANADIAN PRESS/Nathan Denette

Julia Hemphill is just the kind of customer that Tim Hortons would love to see more of: a professional, urban millennial.

But she admits shesaʴýs not one to go out of her way to visit the chain, noting her coffee purchases are largely driven by convenience: saʴýIf I pass a Tim Hortons, I pass a Tim Hortons. If theresaʴýs a lineup I wonsaʴýt go there. If there isnsaʴýt, I will.saʴý

Still, the 39-year-old and her three companions joined throngs of curious customers who lined up at the brandsaʴýs much-touted saʴýinnovation cafesaʴý this week to sample a line of specialty drinks and doughnuts more typically seen at higher-end eateries.

Hemphill ordered the nitro coffee saʴý saʴýItsaʴýs actually shockingly good,saʴý she says saʴý and approved of the modern decor of faux-marble tabletops, walnut wood accents and velvet bench seating.

saʴýIt had kind of stagnated before. Itsaʴýs nice to see it new,saʴý says Hemphill.

But while she would return for the menu, the coffee shop is not likely to become her hangout spot.

Hemphill, at the older end of the millennial cohort, says shesaʴýs more likely to meet friends for a cocktail than a coffee, which she generally brings back to her desk: saʴýCoffee is work.saʴý

Such ambivalence is the reason Tims and many other quick-service restaurants are rethinking how to reach millennial and Gen Z diners, say experts who point to similarly minded overhauls at McDonaldsaʴýs, Boston Pizza and Panera Bread.

The coffee chainsaʴýs experiment is billed as saʴýa modern interpretation of the Tim Hortons brand.saʴý Its 12 saʴýDream Donutsaʴý flavours include maple bacon, blueberry hibiscus, hazelnut butter cream and a brown butter and sea salt variety, each selling for $1.99 saʴý roughly double the cost of regular flavours.

Timssaʴý global marketing chief acknowledges the storesaʴýs clean design and Instagram-ready treats are tailored to young, urban professionals: saʴýThey look for a store like this, they look for a design like this,saʴý says Axel Schwan.

However, he insists the rest of the chainsaʴýs tried-and-true drip coffee and Timbits are not going anywhere: saʴýOur target group is Canada.saʴý

The specialty treats and premium sandwiches are only available at the King Street store, as are seven different brewing methods that include single-origin pour overs and cold brews. If theysaʴýre a hit with customers, they could be rolled out to other restaurants, says Schwan.

The tactic also allows Tim Hortons to test how far they can stretch a brand known for no-frills products with prices to match.

The quick-service market in general has been shifting upscale for a while now, leaving room for Tims to test more expensive items at prices that can still be considered relatively low, says food service industry expert Vince Sgabellone.

saʴýStarbucks (is) already arguably one of the more expensive beverage locations and then they came out with their saʴýreservesaʴý brand which is even more expensive saʴý I had a $9 coffee there not too long ago,saʴý says Sgabellone, of the NPD Group.

saʴýTheresaʴýs room for that premiumization. People are willing to spend a little more in quick service as long as they get the quality and the service that they expect with the premium pricing.saʴý

Timssaʴý saʴýinnovation cafesaʴý is clearly not about pleasing regular customers, but about luring people who otherwise donsaʴýt go to a traditional Tim Hortons, he adds.

Much like the urban-focused McCafe from McDonaldsaʴýs, the Tim Hortons experiment edges the brand towards the saʴýfast casualsaʴý tier, in which premium-quality food comes with fast-food service and better value, says Sgabellone.

This segment of the market is growing at about eight per cent, whereas quick-service restaurants as a whole are only growing at about two-to-three per cent, Sgabellone says.

Brand expert Susan Weaver adds that customers are increasingly saʴýtrading downsaʴý from full service, mid-tier eateries to these quick-service outlets as they seek better value for their dollar.

She points to upscale food courts that have reinvented mall food, as well as the McCafes, which each feature unique menus and artisan sandwiches.

Millennials are an especially sought-after market because of their size, their larger disposable income, tendency to eat out more and desire for convenience, says Weaver, managing director of Pearl Strategy & Innovation Design Inc.

But they are fickle, she adds.

This younger group wants customizable drinks, in-store technology such as charging stations, eco-friendly packaging and the ability to see their food being assembled and their drinks being made saʴý all features of the new Tim Hortonssaʴý venture.

The problem for Tim Hortons, she argues, is that itsaʴýs beloved by Boomers and regarded as saʴýyour parentssaʴý brand.saʴý

And the fact that saʴýTim Hortons makes probably 80 per cent of their profits from hot coffee and millennials do not drink that,saʴý says Weaver, whose Oakville, Ont., company has worked with Tim Hortons on their lunch menu in the past.

saʴýWesaʴýve done a lot of work for Tim Hortons and we always said to them: saʴýYou might have to rebrand if you want to get to (millennials).saʴýsaʴý

She mused on the possibility thatsaʴýs the future of Timssaʴý innovation cafe, suggesting the brand should expand the concept as a separate offering for millennials in every big urban city.

Sgabellone also wouldnsaʴýt be surprised if the experiment evolves into saʴýa small niche sub-brand of theirs.saʴý

saʴýTheysaʴýre stating right off the front itsaʴýs a one-off, but like with any brand, if itsaʴýs a success theysaʴýre going to make it a two-off and a six-off and theysaʴýll be opening more.saʴý

Cassandra Szklarski, The Canadian Press





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