The Upsides of Competition
Kevin West will tell you he’s been working in the coffee industry since he was 10 years old, when he would spend free time at a coffee roasting plant with his father, watching, learning, and tasting. Now, as director of coffee operations for Tim Hortons, West tastes more than 300 cups a day to ensure the concept serves consistently high-quality brews. Here, he discusses the increasingly competitive nature of the coffee game—and how spikes in coffee bean prices will affect all its players.
Why have big “coffee wars” developed between quick-serve chains recently?
What we’re seeing as a market trend in the past few years is a shift from in-home consumption to out-of-home consumption. Because of that, you’re seeing a lot of coffee shops and cafés—both big-branded organizations like Tim Hortons, as well as small mom-and-pop shops—where it really becomes about the experience and convenience. We all have busy lifestyles, and good-to-go coffee is something that I think you can count on every day in today’s market place.
Who does Tim Hortons consider its biggest competitors right now?
In Canada, Tim Hortons is the No. 1 market placer. We have seven out of 10 cups of coffee in the marketplace. Our competition at times is really ourselves. We’ve got to be able to maintain that consumer promise, deliver on execution, and offer quality value. Certainly you’re seeing other players coming to the Canadian market, and we have to defend against that. The U.S. is a completely different marketplace where it’s very regionalized. You have different consumer preferences, and I would say that anybody that sells coffee is really a competitor in the U.S. marketplace.
What does Tim Hortons do that’s different from other coffee quick serves?
In the Canadian marketplace, we’re looking to enhance that customer experience all the time. We’ve got the digital menuboards, we’ve got a lot of great regional marketing, and that community work is allowing us to keep our Canadian roots. And, of course, it really is about the coffee that our customers can count on.
In the U.S. marketplace, we’re looking to evolve the business and adapt a little more. We just opened up a few concept stores in the U.S. that have a broader offering of products the consumer is looking for. I like the fact that our business is very diverse. We’ve got coffee, we’ve got baked goods, and we’ve got a lunch program.
Tim Hortons has to compete with other quick serves for coffee beans as well, correct?
We’re seeing a very tight supply of high-quality coffees. When you look at what we’re purchasing within our blend, the premium coffee or the specialty coffee that we have is what you call a strictly hard bean coffee; it’s the highest altitude that you can buy in any region. Although we offer a great price value, we are competing against the likes of Starbucks for this style of coffee, so it’s highly competitive in the marketplace, particularly now that we’ve got a shortage or supply issue in high-quality coffees.
How does Tim Hortons stay competitive on that front?
It’s really about relationships. We’re not an opportunistic buyer; we like to build relationships with vendors that are really an extension of our business, down to the farmer and back up. What we like to call it is linkages along the supply chain.
Why are wholesale coffee prices going up so much?
There’s no question about it—we’ve had a supply shortage in high-quality coffees, and that’s played into the price. But we’re hopeful that that’s just a hiccup and that, now that we have the high prices and it’s very profitable for the producer, we can get more supply back into the marketplace into the short term and we can get back to normal business operations.
How will that affect coffee prices at Tim Hortons?
We’re a quality value company. We’ve been known in the past to hold price internally so we don’t have to raise our menu price to consumers. We’ve got a great relationship with our storeowners through our national advisory group. Between our storeowners and our national team, we make the decision collectively how we’re going to deal with the price.
Food & Beverage
Our Secret is Out
We never meant to keep it a secret. Truth be told, we’ve communicated it in not-so-subtle ways for many years. Perhaps we should have tooted our horn more or made a ruckus. But we had faith and knew you would see it too. The situation spoke for itself.
And now we’ve been proven correct.
It began with this year’s edition of the National Restaurant Association’s annual “What’s Hot” survey. Once again the results showed that American Culinary Federation chefs feel ethnic-influenced breakfast are “Hot.” That meant that eggs and their traditional home turf continue to be recognized as something alive and vibrant. Yes!
Then the brand and product consultancy Sterling-Rice Group (SRG) issued its annual “Cutting Edge Dining Trends” for 2014, naming one of its ten trends “The Year of the Yolk.” Although whole eggs remain in growth mode, in SRG’s view the yolk itself will be making news this year. The group’s belief is that the “creamy, decadent, golden globe will reign in 2014,” providing a richness to foods that might have been thought to be the sole jurisdiction of cheeses and creams.
Examples of operators chosen by SRG to show those currently using yolks in creative ways are fine dining operations, which are traditionally where trends incubate before moving on to other segments’ menus. Included among them are Blackbird (Chicago) and its Heirloom Tomato Salad with Cured Egg Yolk, and Blue Hill (NYC) with an Egg Yolk Carbonara in celery root and bacon.
To be sure, cured egg yolks are showing up on more and more menus, and the growing interest in Korean cuisine in which yolks are an integral part will also increase their visibility. We’re looking forward to seeing what else creative chefs do to prove the Sterling-Rice group right.
Then, in January, came this pronouncement from Restaurant.com: The #1 trend in 2014 for American eateries would be eggs. And not just in the morning.
“Overall, 2014 really will be the year of the egg,” stated Christopher Krohn, president and CEO of Restaurant.com, the largest restaurant dining deals website.
The organization reviewed thousands of menu items from more than 15,000 operations to prepare its 2014 trend predictions. The item that kept rising to the top? Eggs.
Krohn expects to see “an explosion of egg dishes in 2014.” Although breakfast is a given, he anticipates significantly more eggs on lunch and dinner menus as well. And the dishes won’t be only traditional egg salads or quiche, but also egg-topped salads, burgers, pizza and pastas.
The breakfast-for-dinner trend is expected to continue to grow, as will availability of ethnic egg specialties such as Huevos Rancheros. Eggs have a lot going for them. They appeal as a comfort food, are also extremely versatile and fit into a wide variety of cuisines.
So our secret is now out. Or had you already figured it out?
Yeah, I thought so.
For more, visit www.AEB.org.
Go to bit.ly/LidG5V to read our first three 2014 Incredible Breakfast Trends on Asian influenced breakfasts, the evolution of Latin-inspired breakfast cuisine, and the success of breakfast-focused food trucks.