TIM HORTON Franchise Startup Cost, Profit Margin, Revenue and Locations
The Tim Horton’s group of restaurants was established in Hamilton, Ontario, Canada, in 1964. The chain’s focus on premium quality, ever fresh product, value, tremendous service and community interaction and leadership has seen it to grow into the biggest quick service restaurant chain of stores in Canada.
Tim Horton specializes in serving freshly brewed coffee, pastries and home-themed lunches. Initially, the first Tim Hortons Restaurant served up only two meal types – coffee and donuts. The choice of donuts was underlined by two original Tim Hortons recipes- the AppleFritter and the Dutchie.
These variants became the most notable donut choices in the 1960’s, and remain just as popular today. In addition to our standard stand-alone Restaurants, Tim Hortons also operates from shopping malls, expressway outlets, colleges and medical facilities, assuring prominent visibility and brand reinforcement for the group.
Most standard Tim Horton’s sites offer 24-hour drive-through service, serving consumers on the move. Tim Hortons, at present, franchises only stand-alone Restaurants. As at June 30th, 2013, Tim Hortons operated 4,304 Restaurants, comprising 3,468 in Canada, 807 in the United States and 29 in the G.O.C( Gulf Cooperation Council)
The Franchising Program
Franchise Cost ranges from 480,000 to 510,000 USD plus all obligatory taxes. Additional Working Capital which covers startup costs starts at 50,000 USD (non-borrowed). At least 153,000 USD of the franchise cost must be non-borrowed (cash or liquid assets) as well as the 50,000 USD working capital that must also be unencumbered. The remaining sums may be sourced through various financing schemes offered by the investment banks, consequent upon the candidate meeting requirements for borrowing.
The specific cost of a Tim Horton’s franchise depends upon the building size and the standard furnishings and the machinery to be installed. Some times the cost of a Tim Horton’s franchise may surpass 510,000 USD in other locations due to steeper development costs. The cost of a franchise comprises the following:
•All equipment and machinery, furniture, display equipment and bill boards.
• A Seven (7) week training course in the Oakville, Ontario, at Tim Horton’s University
•A Restaurant launch crew/Manager of Operations Standards (MOS) to provide assistance and guidance with the opening of the Tim Horton’s Restaurant (for a maximum period of a forth night)
•The use of Tim Horton’s Manuals and instructional materials
• The right to use registered trademarks and trade names
•Support and consultancy from Franchise personnel, who will make at the disposal of the franchisee, their extensive knowledge of the food service sector
Not included in the cost of the franchise:
•The Physical structure
•The property that the Restaurant is constructed on
The duration of the License agreement runs for 10 years and there are clauses that allow for renewals of a further period of 10 years.
In addition to the initial investment costs, recurrent payments (plus applicable taxes) comprise the following:
• A weekly royalty fee of 4.5%, calculated on gross sales for the duration of the agreement.
• A monthly rental that is computed at 8.5% of monthly gross sales
• A monthly advertising levy of 4% on gross sales for the duration of the license
The awarding of a new Tim Horton’s Franchise is an important exercise involving a thorough and detailed interview/approval process. For the mutual benefit of both parties(Franchisor and franchisee) ,the selection process ensures that each Franchisee possesses the necessary entrepreneurial grit, management skills, financial wherewithal and the determination required in today’s competitive market place.
In the Tim Horton’s system, the selection of the most suitable people followed by a comprehensive training course, as well as recurring operational and marketing support, has enabled the chain to continue to expand its operations and retain the status as Canada’s leading coffee and baked pastries group.
New franchisees undergo an in depth 7- week training course at the Tim Horton’ s University, situated next to the head office, at Oakville, Ontario, Canada. The facility comprises classrooms and a fully fledged operational Restaurant, affording trainees with intensive and relevant hands-on experience in the preparation of all Tim Horton’s meals. Emphasis is placed on the handling of food and hygiene processes, Team Member work relations, maintenance of machinery and in-house security procedures.
With the head office located in Oakville, Ontario and regional offices situated at Nova Scotia, Quebec, Alberta and British Columbia, franchisees can access corporate support from on a network scale. The Canadian team n provides key functions such as operations, training, real estate development, construction, accounting, human resources, I.T, franchising dynamics and marketing.
Our Managers of Business Development (MBD’s) serve as the direct point to our franchisees through regular on-site visitations. In addition to their primary function of rendering experienced and insightful feedback and guidance, they also ensure that franchisees adhere to the Tim Horton standards of product quality and value, while observing hygienic procedures in meal preparation at all times, in their stores.
Tim Hortons is Canada’s biggest fast-food restaurant chain. It was founded in the year 1964 and started as a donut and coffee shop. The company has surely evolved to meet up with consumers’ tastes and desires, with a menu list that comprises premium coffee, special teas, flavoured cappuccinos, fresh sandwiches and baked foods.
Tim Hortons focus on high quality fresh products and they offer great services to their teeming customers. This is the reaon why a lot of business persons want to have information on how much is a Tim Hortons franchise?
HOW YOU CAN BECOME A TIM HORTONS FRANCHISEE
If you have made your home work perfect and have the desire to purchase the Tim Hortons Franchise opportunity, then you need to get yourself acquainted with all the information on the qualification the company looks out for in their prospective franchisee.
In order for both parties to achieve success and maximum satisfaction, the franchisee is expected to possess the adequate skills and commitment level, dedication, character, work ethic and strong people skills. These are the number of qualifications that Tim Hortons look out for in their applicants.
- You must be able to meet with the initial investment required of a prospective franchisee and must also be willing to commit yourself to the business full time.
- You must also be willing to divest of businesses that are in direct competition to Tim Hortons
- You are also expected to have prior management experience. This is preferable in food service delivery and restaurant operations.
- A prospective Tim Hortons franchisee is also expected to have good communication skills as well as sound leadership qualities.
- Perfect understanding of how to recruit manage and train employees
- You must be ready to work as partners with other personnel. You will both be hands-on operators and be willing to commit yourself to the demands and responsibilities of the restaurant full time.
THE TIM HORTONS FRANCHISE OFFER
The Tim Hortons franchise agreement gives permission to the franchisee to launch either of the following types of retail stores:
- STANDARD SHOP: This is a typical Tim Hortons store. It is involved in the production of merchandises, and also in the sales of a variety of baked products, which will include donuts, muffins, cookies, tarts, coffee and a range of other beverages. Standard shops can also involve in making a variety of soups, sandwiches and chill and most of the time includes a drive-through facility.
- NON-STANDARD/KIOSK: A kiosk, being versatile can be installed in any location and typically there are three types of kiosks.
- A built-in kiosk
- A full service cart
- A self-serve kiosk
These kiosks are most of the times located within another facility especially malls, universities, hospitals, gas stations and even airports.
The built-in kiosk in constructed in such a way that it could accommodate any products setting but it is best aligned to suit a full menu line which will include baked goods, coffee, soups, sandwiches.
The full service cart can be designed to suit the location, size and consumer demand of the location where it is going to be sited. It has the capacity to accommodate one or more coffee units, soups, chilli, full baked goods and a sandwich station.
The self-serve kiosk is most of the time located within gas stations and grocery stores. It can offer a wide range of menu from coffee and a limited form of baked goods and sandwiches. It can as well occupy an approximate space size of six feet.
WHAT IS THE COST OF A TIM HORTONS FRANCHISE?
As it is with most franchises, since the franchisee is involving himself in a business that has a good success story, there will surely be a cost implication to buy into the franchise. What is the cost of a Tim Hortons franchise? You might want to ask. This will be dependent on a lot of factors. As a franchisee with Tim Hortons, you will be expected to pay a weekly royalty, marketing fee which is paid monthly and then a monthly rent.
You also need to get this at the back of your mind that the start up cost is quite high. For your information, Tim Hortons will be responsible for building the location, but the franchisee will cater for the startup equipment and the initial Tim Hortons franchise fee.
LIST OF THE ON-GOING COST OF TIM HORTONS FRANCHISE
In order for you to open a Tim Horton store, you will need a minimum of $60,000 in available capital and the high end of the investment required to startup your franchise will be in the tune of $665,000.
And as it is the norm in the franchise business, you will be expected to make an initial franchise fee of $35,000.
- You will be expected to make a weekly Royalty fee of 4.55 of the gross sales for the period of the license, which is 10 years.
- A monthly rental fee of 8.5% of the gross monthly sales.
- You are also expected to make a monthly advertising fee of 4% of the gross sales.