Typical income of tim hortons? alot or a little?

[trixstar]

after expenses, labour costs etc... What is the average expected income for the owner from opening up a tim hortons? considering business is smooth?

[grant]

we cannot know what you personally think is "a lot or a little" so it's an impossible question to ask.

Income can vary a LOT between stores, a 30% increase in business after a certain threshold can double your income. How much you make mostly depends on your sales, lease rate, and expenses in particular LABOUR. You'll pay a lot more for labour in alberta than you will in nova scotia!

Most business owners are a little coy about how much money they actually make. if you are seriously interested in opening a franchise though you should approach owners directly and ask them how business is for them.

If they give you a ballpark on their sales, tell you their lease rates and labour/food costs, then you can get a good estimate on the profit they're making.

[TridentSplash]

Sales, lease rate and expenses all depend upon one thing, LOCATION.
Good location = more sales, more expensive rent, more expenses in general.
Bad location = crappier sales, less expensive rent, less expenses in general.
Plus there really isnt much besides location that allows one Tim Hortons to make more money then the other since there are extremely strict guidlines that franchisees must follow, which in turn doesnt allow one Tim Hortons to be dirtier then the other, have better service then the other etc etc. So to answer the OP's question, what they make all depends on the location so the range is probably as huge as 2 or 300k-1mill a year.



How much you make mostly depends on your sales, lease rate, and expenses in particular LABOUR. You'll pay a lot more for labour in alberta than you will in nova scotia!

[CheapScotsman]

It will costs over $420,000 to get a franchise

They don't release projected revenue statement to a franchisee until they are almost hooked but you could probably look at other franchises and figure out what a "reasonable" rate of return would be

It is almost impossible to get a franchise in Canada outside of Quebec (http://www.timhortons.com/en/join/franchise_ca.html)

[trixstar]

It will costs over $420,000 to get a franchise

They don't release projected revenue statement to a franchisee until they are almost hooked but you could probably look at other franchises and figure out what a "reasonable" rate of return would be

It is almost impossible to get a franchise in Canada outside of Quebec (http://www.timhortons.com/en/join/franchise_ca.html)

damn that sucks.

[grant]

It doesn't really suck, I wouldn't want to throw away my life on a TimH's franchise. They (like subway) are the ultimate in "buy yourself a job" franchises... definitely not a very likely way to get rich.

[Jon Lai]

It will costs over $420,000 to get a franchise

They don't release projected revenue statement to a franchisee until they are almost hooked but you could probably look at other franchises and figure out what a "reasonable" rate of return would be

It is almost impossible to get a franchise in Canada outside of Quebec (http://www.timhortons.com/en/join/franchise_ca.html)

$420K? It'll cost you over $1mil for a Timmy's franchise...

[Spidey]

$420K? It'll cost you over $1mil for a Timmy's franchise...

Yep. We looked into it a few years ago. Plus they tell you were to put it, you cant just say it would work great somehwre, they have that decision. Plus the people that have the Tim Hortons in that are or city have first choice if they want to start another.

I have a friend in Regina who started one. After the first year or so it was paid of. He hired someone to manage the place, he come sin occasionly. He walks home with over $300K a year after all that.

[CheapScotsman]

$420K? It'll cost you over $1mil for a Timmy's franchise...$1mil is over $420k and while some MIGHT get this high, most are probably quite a bit less (not that the OP can afford either anyways)

From the Tim Hortons website: http://www.timhortons.com/en/join/franchise_ca_faq.html#one


How much does it cost to purchase a Tim Hortons franchise?

The cost of a full Canadian franchise varies from $420,000 to $450,000* (CDN$) (plus all applicable taxes). At least $135,000 of the franchise cost must be unencumbered (cash or liquid assets), in addition to $50,000 in working capital (also unencumbered). The remaining amount may be financed through the chartered banks, upon 'approval' of a franchise.

* The cost of a Tim Hortons license may exceed $450,000 in certain locations due to higher development costs.

[grant]

The figures on franchisors sites are all WAY out of date. Maybe in 1998 you could open a TimH's for $420,000, but in the past 5-6 years construction costs have nearly DOUBLED, and that's the bulk of your start-up costs.

Also as real estate + construction costs have risen, leases have risen significantly too. I guess maybe up 50% in the same time? At least here in the lower mainland.

Spidey, your friend must be in a very lucky situation... I do know that TimH's has no protected radius, so they will happily open more and more stores near the successful ones, eating into your profits. (just like subway).

They don't care if their franchisees make a lot of money... they only care that they make enough not to go out of business... the more stores they open, the more total sales they make.

[CheapScotsman]

A friend contacted them about 6 months ago about starting a new franchise here in the lower mainland. He was told; there aren't any available

Here are some interesting tidbits from the "franchise" in Afghanistan: http://blog.trainofthoughts.ca/2006/11/4m-for-tim-hortons-franchise.html

It cost a 1million to get setup (Tim Hortons waived the franchise fee, royalties and provided free training, etc)
Its available to 2300 CDNs and 5000 personel from other countries
Profit is $5000 per day ($1.8 million per year)

[Jon Lai]

A friend contacted them about 6 months ago about starting a new franchise here in the lower mainland. He was told; there aren't any available

Here are some interesting tidbits from the "franchise" in Afghanistan: http://blog.trainofthoughts.ca/2006/11/4m-for-tim-hortons-franchise.html

It cost a 1million to get setup (Tim Hortons waived the franchise fee, royalties and provided free training, etc)
Its available to 2300 CDNs and 5000 personel from other countries
Profit is $5000 per day ($1.8 million per year)


$5000 profit per day? Wow! That's like selling 2000+ cups of coffee...

If it really was that high, you could get all your investment back within the first year.. not bad.. plus also the potential of the value of the franchise to rise and make more money when you resell it..

[ab20]

A friend contacted them about 6 months ago about starting a new franchise here in the lower mainland. He was told; there aren't any available

Here are some interesting tidbits from the "franchise" in Afghanistan: http://blog.trainofthoughts.ca/2006/11/4m-for-tim-hortons-franchise.html

It cost a 1million to get setup (Tim Hortons waived the franchise fee, royalties and provided free training, etc)
Its available to 2300 CDNs and 5000 personel from other countries
Profit is $5000 per day ($1.8 million per year)


wow, so opening a tim hortons in one year would allow you to profit... outrageous.
if this is true i gotta save up for a tim hortons...

[Frankie3s]

damn that sucks.

There are way too many of them anyways. Eventually something will one day concur them just like how the telephone did in the morse code business. But it will be tough, no doubt.

[HopeItHelps]

From the posts above I gather that an owner would make anywhere from $200K to $1m per year. I think that's a decent return on an investment of $500K.

I recall looking into this issue a few years ago. You have to check their site to see in which areas they're offering franchise opportunities. Last time I checked there were none in my city.

[Firebot]

$5000 profit per day? Wow! That's like selling 2000+ cups of coffee...

If it really was that high, you could get all your investment back within the first year.. not bad.. plus also the potential of the value of the franchise to rise and make more money when you resell it..

I don't think a subsidized shop in the middle of a desert, with no competition and a unique clientele, should be used as a basis for the average profit a franchise can make.

[grant]

From the posts above I gather that an owner would make anywhere from $200K to $1m per year. I think that's a decent return on an investment of $500K.
I really don't think $200k is the floor on your expected return. Honestly I think a store could very easily end up just breaking even if you have a bad combination of high rent, quiet business, and the labour market stays tight, i.e. more than min wage for your lackies + decent pay for your managers.

If TimH's is like any other franchisor, they will have no problem letting you buy into a situation like that. They don't care if you make money, as long as you can stay in business & sell product which increases their royalties. Their reps may "hint" that you can hire managers for $40,000/yr and will show you fantastic proformas based on $2.0m/yr in sales... but when you actually get down to it you find out you need to pay $60,000/yr for a manager who will reliably show up, and your sales only are $1.4m or $1.6m.

have you seen TimH's advertising on TV just to HIRE PEOPLE? That obviously means a LOT of franchisees are hurting to hire people, they must be offering higher wages which comes directly off their bottom line. Beware!

I'm not saying that someone shouldn't buy a TimH's, and i realize a lot of owners make a lot of money... but "up to 1 million/yr" is a totally unrealistic profit expectation for anywhere in Canada, honestly i would be surprised if any new location profits more than $200,000/yr (unless they are fortunate enough to end up in a new expansion market, where they get prime location, enjoy being the "new guy in town" and don't have to share customers with other franchisees 6 blocks away).

[siriuskao]

Most of franchise owner I know manage the franchise themselves (none operates Tim Horton though), because you are already running a "franchise", to them hiring a manager is a waste of money.

As for salary, they still offer their employees <$10 hourly, and this is in Calgary. I keep hearing crazy wages for fast food restaurant workers in this town, and yet after asking everyone I know, both owner or worker, they are either offering/getting <$10/hour. All of these owners work at their franchise full-time to save on salary, one of them simply imported foreign workers (at close to Alberta minimum wage) to staff his franchise.


200k profit sounds about right, 1 mill........not likely IMHO (unless you own several).

[grant]

Most of franchise owner I know manage the franchise themselves (none operates Tim Horton though), because you are already running a "franchise", to them hiring a manager is a waste of money.
Being a business owner and managing a business are 2 distinct jobs, and if you decide to manage you're making a mistake if you don't budget your own salary as an expense.

I pay my manager ~$50,000/yr to spend 50 hours/week to run my restaurant, while i earn $60,000/yr working 35 hours/week on my day job. I'd be a fool to take over that position.

[siriuskao]

Being a business owner and managing a business are 2 distinct jobs, and if you decide to manage you're making a mistake if you don't budget your own salary as an expense.

I pay my manager ~$50,000/yr to spend 50 hours/week to run my restaurant, while i earn $60,000/yr working 35 hours/week on my day job. I'd be a fool to take over that position.

Asian owners are hands-on :)

So essentially you are making 10k on your 35 hours/week job? most of the owners I talked about operate single franchise. Spend 50K on a manager does not make sense as owning a franchise already simplify various aspect of running a business such as equipment, purchase, marketing/promo. Obviously it's a different story if you are running a real restaurant.

[Jon Lai]

Asian owners are hands-on :)

So essentially you are making 10k on your 35 hours/week job? most of the owners I talked about operate single franchise. Spend 50K on a manager does not make sense as owning a franchise already simplify various aspect of running a business such as equipment, purchase, marketing/promo. Obviously it's a different story if you are running a real restaurant.

+1

If you're running a newly start up business, it's a big NO NO to leave it all to your employees and not look after it yourself. At least get your wife to go in a few hours a day to make sure they're not misbehaving.

[ab20]

+1

If you're running a newly start up business, it's a big NO NO to leave it all to your employees and not look after it yourself. At least get your wife to go in a few hours a day to make sure they're not misbehaving.

misbehaving....at tim hortons:confused:

[george benjamin]

misbehaving....at tim hortons:confused:

ie; stealing too many donuts.

[Jon Lai]

ie; stealing too many donuts.

Eating, drinking on the job, etc...

[KingdomCome]

Interesting, anyone know any information in regards to McDonald's?

[grant]

So essentially you are making 10k on your 35 hours/week job? most of the owners I talked about operate single franchise. Spend 50K on a manager does not make sense as owning a franchise already simplify various aspect of running a business such as equipment, purchase, marketing/promo. Obviously it's a different story if you are running a real restaurant.
No, I make $60k/yr at my day job. If i quit my job to manage my restaurant, I would work 50% more hours and take a $10k/yr pay CUT.

Why would I want to take a pay cut to work a harder job? It'd be foolish.

Operating a franchise requires just as much daily management as a non-franchise. It's mostly about hiring, training, and herding your staff... watching quality control... keeping customers happy... managing inventory... watching the paperwork.

Yes a franchisor typically handles the menu and much of the promotion + supply chain, which is a great reason to own a franchise, but that doesn't stop management from being more than a full-time job.

I know a previous TimH's manager from calgary and you bet he earns over $50k/yr, the owners begged him not to leave, but they also ran him ragged with ridiculous hours. Of course they wanted him to stay, because now THEY are stuck with 60hour work weeks.

[mooga]

What about a Tim Hortons in the financial district in Toronto, such as the one in the side of the Royal York Hotel... that would be a prime location right? How much would one like that take in?

[Jon Lai]

What about a Tim Hortons in the financial district in Toronto, such as the one in the side of the Royal York Hotel... that would be a prime location right? How much would one like that take in?

More like, how much would you be paying to take over such a location?

[baz5]

God, it's amazing all the people giving bad advice just so it looks like they know what they are talking about, when in reality all they are basing their numbers on, are because it's busy. lol.

Tim Horton's does not do nearly as well as some of you think.

[DSTU]

This is what I suspect.

There are no available franchise's since all of the present franchisee's get first dibs on any new ones and they snap them up pretty darn quick.

Its extremely lucrative for the franchisee's.

[grant]

Its extremely lucrative for the franchisee's.
Maybe, maybe not so lucrative.

Existing franchisees have a huge incentive to open new locations:
1) efficiencies with staffing, professional services
2) no learning curve
3) If someone else opens a franchise next door, they lose business... so they may as well try to retain their business

Of course they won't open a location expecting to lose money, but their standards could be lower than a newcomer.

[HunkaHunkaBurningLove]

I've heard of the $1 million dollar cost to open up a Timmy's as well several years ago. I don't know what the going rate in Calgary would be today! Not all Timmy's apparently do well. Here's one for lease:

Sunridge Timmy (http://www.colliersmn.com/prod/cclod.nsf/publish/9FE296E27FEB062D852572830075A85F/$File/3210+-+32nd+Street+NE+May+2,+2007.pdf)

[CheapScotsman]

I've heard of the $1 million dollar cost to open up a Timmy's as well several years ago. I don't know what the going rate in Calgary would be today! Not all Timmy's apparently do well. Here's one for lease:

Sunridge Timmy (http://www.colliersmn.com/prod/cclod.nsf/publish/9FE296E27FEB062D852572830075A85F/$File/3210+-+32nd+Street+NE+May+2,+2007.pdf)sorry but that is the building for lease, not the store/franchise.

[grant]

sorry but that is the building for lease, not the store/franchise.
that's his point... the previous TimH's decided not to renew their lease there... the only good reason for that is it's not making profit.

rent is $114,000/yr. If you budget 10% of sales to rent (personally i think 8% is a comfortable amount) then this restaurant couldn't meet a sales target of only $1,140,000/yr... by a large margin!

No one throws away ~$3-500,000 of investment unless they're losing money & don't think things will change within the next few years.

[Jon Lai]

that's his point... the previous TimH's decided not to renew their lease there... the only good reason for that is it's not making profit.

rent is $114,000/yr. If you budget 10% of sales to rent (personally i think 8% is a comfortable amount) then this restaurant couldn't meet a sales target of only $1,140,000/yr... by a large margin!

No one throws away ~$3-500,000 of investment unless they're losing money & don't think things will change within the next few years.

The previous owner could also be moving, retiring, or want to pursue a different field of work. Who knows?

[grant]

The previous owner could also be moving, retiring, or want to pursue a different field of work. Who knows?
Then he would sell it of course! A tim hortons that's just breaking even ought to sell for $200,000 - $400,000 or more.

[PCDawg]

Some little info that i found out a while back.

The Timmies location in Toronto (midland-steeles) the owner brought the franchaise at that time for $500,000. He made back his money in 6 months.

I knew of someone that was looking at getting a Tim hortons franchaise last year. They were asking $1 million. Dont know what it is now.

Tim Hortons has really skyrocketed in the past decade. They were heavily competing with Country Style back then, but look at where Country style is now.

[HunkaHunkaBurningLove]

sorry but that is the building for lease, not the store/franchise.

Even better! No franchise fees! Change the sign to "Jim Jordan's" Usually Fresh Donuts, and away you go! :cheesygri

[CheapScotsman]

ah ... finally got it ... franchise ready and waiting to move into ... nice idea. Go for it.

[mushrooms]

i used to work at TDL (Timmy's head office).and i can tell u guys that the store with the highest sales across the chain is the store at lakeshore and leslie.and their sales are a bit over $3mil...that was the number from last year i believe..

[Jon Lai]

Then he would sell it of course! A tim hortons that's just breaking even ought to sell for $200,000 - $400,000 or more.
Isn't that what they're doing?

[grant]

Isn't that what they're doing?
No, the linked ad showed space for lease.. by the property owner.

Obviously the landowner isn't going to the advertise space for lease if Tim Hortons already is leasing it. That means Tim Hortons either broke or declined to renew their lease.

Therefore, the Tim Hortons in the picture must be non-operational.

[bullet]

God, it's amazing all the people giving bad advice just so it looks like they know what they are talking about, when in reality all they are basing their numbers on, are because it's busy. lol.

Tim Horton's does not do nearly as well as some of you think.

i agree with you man, most of you guys should really consult with other KNOWLEDGEABLE people about a timmies franchise before throwing out numbers. ive heard from many people, including professors, a timmies franchise does not make what it used to. you can obviously make coin, but dont expect to become rich the next day. or dont expect that it will run itself just because its a timmies. a wife wont fix your problems.

[grant]

An article in Wednesday's national post ought to be a wakeup call for people who blindly believe Tim Horton's are all automatic huge money makers:



"Ten years ago, the family bought into the dream of Tim Hortons expansion across Canada, only to see it turn into a financial and personal nightmare, lawyer Gene Zazelenchuck said.
...
In court document, Cheryl Zaborniak said she first wanted a Tim Hortons franchise in British Columbia, but was convinced by company officials at TDL Group LTd., Tim Hortons' parent company, to buy a franchise in Winnipeg first. Cheryl Zaborniak agreed, and pooled money from family members and the bank to pay $290,000 for a Tim Hortons license and location.
...
Mr. Zazelenchuk said they thought each store would gross $700,000 [...] but instead, the franchise operated at a loss at all times.
Cheryl Zaborniak claims TDL Group Ltd. then convinced them to ope na second location. They did, and this one, too, operated at a loss.
...
By 1998, TDL Group had sued the family for about $105,000 for non-payment of Tim Hortons products, service fees, and advertising costs.
The family counter-sued, claiming Tim Hortons is entitled to nothing, as they were misled about how profitable the doughnut chain was as it competed against a rival doughnut shop.
...
"My people were never told it was a tough market," Mr. Zazelenchuk said

[demrea]

No, the linked ad showed space for lease.. by the property owner.

Obviously the landowner isn't going to the advertise space for lease if Tim Hortons already is leasing it. That means Tim Hortons either broke or declined to renew their lease.

Therefore, the Tim Hortons in the picture must be non-operational.

i cant speak for the owner of that Tim's, but I work down the block and can say a few things.

1) the owner of that Timmies also owns two others in the general area.
2) there are literally 7 Tim Hortons within about 6 minutes driving time in that area
3) this is the only one with out a drive thru, its very old and probably the least likely to be chosen as it is not that easy to get in and out of.
4) there is a strip bar next door. this has nothing to do with anything, but thought I would mention it!

[nyererei]

From an economic standpoint
you'll earn zero profit in the long run. 10 years ago entering the coffee market would have produced large profits since there was high demand and relatively few coffee shops but once the market has matured (I believe its very close to that point) virtually zero profits will be gained. This is because the industry is a monopolistic competitive industry.

People realize there is potential profits to be made by entering the market, thus more firms enter the market which increases supply and drives down price, up until there is no more profit to be had. No more firms will enter the market since there is no longer any profit to be made and the firms already in the market would hover around where their costs equal their benefits.

In the short run though you can earn profit, though only for a while. Through marketing you can achieve product loyalty or brand differentiation. IE: starbucks differentiates themselves from other coffee shops by using different terms regarding sizing, like tall or grande. BUT in the long run firms will copy your marketing techniques and your profits will diminish.

So if your looking for a long term investment which will continually produce profits a coffee shop might not be the best choice.

[grant]

From an economic standpoint
you'll earn zero profit in the long run.
I'm not sure where you learned your "economic standpoint", and i seriously doubt you have any real experience with owning a restaurant.

The simple fact is: Most businesses you see in the street, including tim hortons, make money. Not "zero profit". Businesses which make "zero profit" stop operating. (some sooner than later, but hardly ever more than a few years).

[CSR]

I'm not sure where you learned your "economic standpoint", and i seriously doubt you have any real experience with owning a restaurant.

The simple fact is: Most businesses you see in the street, including tim hortons, make money. Not "zero profit". Businesses which make "zero profit" stop operating. (some sooner than later, but hardly ever more than a few years).

Economic profit is not the same as accounting profit.

http://en.wikipedia.org/wiki/Economic_profit

[nyererei]

I'm not sure where you learned your "economic standpoint", and i seriously doubt you have any real experience with owning a restaurant.

The simple fact is: Most businesses you see in the street, including tim hortons, make money. Not "zero profit". Businesses which make "zero profit" stop operating. (some sooner than later, but hardly ever more than a few years).

Please brush up on your economic theory. Generalizing by saying "most businesses" is very inaccurate, I'm strictly talking about monopoly competitive firms. As well thinking in simplistic terms by saying "the simple fact is..." is very ignorant, there are many underlying effects and variables that need to be accounted for.

"and i seriously doubt you have any real experience with owning a restaurant"
This is a red herring fallacy and does little to disprove or at the very least provide some evidence against this theory.

[BillyParadise]

Cool RedFlagonomics

[Grassgreen]

From an economic standpoint
you'll earn zero profit in the long run. 10 years ago entering the coffee market would have produced large profits since there was high demand and relatively few coffee shops but once the market has matured (I believe its very close to that point) virtually zero profits will be gained. This is because the industry is a monopolistic competitive industry.

People realize there is potential profits to be made by entering the market, thus more firms enter the market which increases supply and drives down price, up until there is no more profit to be had. No more firms will enter the market since there is no longer any profit to be made and the firms already in the market would hover around where their costs equal their benefits.

In the short run though you can earn profit, though only for a while. Through marketing you can achieve product loyalty or brand differentiation. IE: starbucks differentiates themselves from other coffee shops by using different terms regarding sizing, like tall or grande. BUT in the long run firms will copy your marketing techniques and your profits will diminish.

So if your looking for a long term investment which will continually produce profits a coffee shop might not be the best choice.

Wow, you took really good notes in class today.

[nyererei]

Wow, you took really good notes in class today.

Actually I'm on reading week therefore could not have been in class today. Yes, I understand sarcasm. No, I don't think highly of myself although it may seem that way through how I convey my posts. Which is why I believe you posted your lame attempt at insinuating insult, that or you wanted to bump your post count. I am still learning as is everybody and just wanted to be helpful because so many posts here (cough, cough) add little value to the thread.

[boyoflondon]

From an economic standpoint
you'll earn zero profit in the long run. 10 years ago entering the coffee market would have produced large profits since there was high demand and relatively few coffee shops but once the market has matured (I believe its very close to that point) virtually zero profits will be gained. This is because the industry is a monopolistic competitive industry.

People realize there is potential profits to be made by entering the market, thus more firms enter the market which increases supply and drives down price, up until there is no more profit to be had. No more firms will enter the market since there is no longer any profit to be made and the firms already in the market would hover around where their costs equal their benefits.

In the short run though you can earn profit, though only for a while. Through marketing you can achieve product loyalty or brand differentiation. IE: starbucks differentiates themselves from other coffee shops by using different terms regarding sizing, like tall or grande. BUT in the long run firms will copy your marketing techniques and your profits will diminish.

So if your looking for a long term investment which will continually produce profits a coffee shop might not be the best choice.


Seriously though! Not meant to 'insult' you or anything, but it looks like you took that chunk of text out of my first year econ book on perfect competition and SR & LR theories!!

Anyways, after 4 years of econ courses, I will disagree with you!!

What made me laugh the most was the following comment; "BUT in the long run firms will copy your marketing techniques and your profits will diminish."

I would really like you to copy timmies/starbucks/mcdeez/etc product, enter the market and be successful! Over the years, these coffee shops have established themselves well, and the demand shall never slow down (unless they somehow discover coffee can kill you).

Just as an example, I live in London, and we only had 2 Starbucks locations (both in chapters). However, in the last few years, that number grew drastically. Just from the top of my head, I can count at least 10 locations!

Then, you move on to say that "more firms enter the market which increases supply and drives down price, up until there is no more profit to be had". Please tell me which coffee shop would have such an impact on any of the above to make them decrease their prices?!?!? You really need to brush up your economic theory if you believe this would be the case.

As you mentioned, product differentiation is the key to success!! For the most parts, companies take a product, change the appearance of it and introduce it as new (perfect example is Gillette with their Fushion razors). Same goes for coffee places. If you look at Timmies/Starbucks/Second Cup/Timmothy's, they all offer different products, thus attracting different clientèle. At the same time, it is about the 'social status' as well.

Just for the record, Tim Hortons has increased their prices at least 3 times that I can remember.
On the other hand, Starbucks has just increased their prices last year as well.



In the end, if you theory that in the LR, economic profits will diminish and go below the equilibrium point, why is it that more and more of these coffee shops keep popping up and run successfully?

[nyererei]

Firms do copy each other, but rehash their product through marketing to make it look different. Firms profits will diminish over the LR. ie. Mcdonalds came up with a new marketing strategy involving products for $1.39 they called it the value menu, what did wendys, burger king, etc do? They followed suit. The King Deals, Wendys 99cent value menu. They compete for consumers that are in the market for cheap $1 menu food, and as more firms start up a value menu it takes away the overall profit from all the firms. IE. a firms demand and MR lowers to the point where its average costs equal the market demand.

What I think you and the above poster are not getting is that they CAN earn profit. But it's for a little while only. How? by what you said, brand differences, advertising and marketing gimmicks. This entices more/new consumers to your business and you earn profit. But sooner or later other firms will do the the same thing or similar thing that attracts that new found consumer market that the original firm had founded and in doing so competes with the original firm in hopes of grabbing some of that profit.

As well I never said the market was mature yet, I though it might be close. Meaning coffee firms still have room to expand and increase prices. BTW did you account for inflation in your personal estimates? Firms can continue to play around with prices as long as they can effectively advertise, and market new products which can possibly attract new consumers to the market which increases the market size.

I don't get your last statement as you read something in my posts that was not there. I never said ever, that in the LR econ profits would fall below equilibrium. If it did, why would new firms start "popping" up in the market when they would end up losing money?

I'm really sorry but you actually laughed at one of my sentences? and you took 4 years econ?
Thanks wikipedia!
"In the long-run, however, whatever distinguishing characteristic that enables one firm to reap monopoly profits will be duplicated by competing firms. This competition will drive the price of the product down and, in the long-run, the monopolistically competitive firm will make zero economic profit (i.e. a rate of return equal to the rate required to compensate debt and equity holders for the risk of investing in the firm)."

[boyoflondon]

First of all, what do McDeez and Wendy's have to do with this? They are selling the same product, hence the competition through their 'deals' and what not. We are here talking about Timmies for the most part, with the inclusion of Starbucks. 2 totally different market segments that have nothing in common. Are you telling me that if Timmies all of a sudden dropped their coffee prices, Starbucks would follow? Each one of the coffee franchise's have established themselves through product differentiation. Although each one of them offers the same essential product (coffee), that product still differs. This is not to say that any coffee shop will be successful anywhere, especially when it comes to Starbucks/Second Cup/Timothy's.

Moving on ....
Yes, key word being ECONOMIC profit ... revenues > TC of inputs (INCLUDING labour) and the owner of a store in this case would fall under labour. Now, his 'wage' might vary based on the revenues - all other inputs. Having said this, it is obvious that economic profit will be ZERO once the owner takes his cut. Nobody will operate a business only to break even.

Just as an eg. .. Lets say the Revenues are $200,000 and TC of inputs (excluding the owners wages) is $150,000, leaving $50,000 which will obviously go into the owners pocket. After all this, economic profit is ZERO as the theory states.

You have clearly moved away from the core of this discussion by looking at the bigger picture.


What I think you and the above poster are not getting is that they CAN earn profit. But it's for a little while only. How? by what you said, brand differences, advertising and marketing gimmicks. This entices more/new consumers to your business and you earn profit. But sooner or later other firms will do the the same thing or similar thing that attracts that new found consumer market that the original firm had founded and in doing so competes with the original firm in hopes of grabbing some of that profit.

This comment alone would apply to new firms entering the market. Besides Tim Horton's, how many times have you seen any ads for Starbucks? On the other hand, who would be Timmies' competition?

[grant]

All theory aside, there is concrete evidence that a Tim H's franchise can be profitable, and it can go broke. There are no guarantees.

[boyoflondon]

All theory aside, there is concrete evidence that a Tim H's franchise can be profitable, and it can go broke. There are no guarantees.


Location location location :D

[bcfranchisee]

I am trying to find out more info on an opportunity to open a TH store. Looking at the FAQ on TH.com I see that there are
3% Licensing Royalty
4% Advertising Royalty
10% Monthly Rental Fee (what is this??)

So, basically there is 17% total royalty fee associated with running a TH store??? This doesnt' make sense to me.

Also, I've found out that 2007 total revenue in canada is around $1.9B and there were about 2520 stores. That equates to avg annual store rev at $698K and monthly Rev of $58K. At 18% profic margin ( I read somewhere that TH averages about 15~20% operating profit - but not sure if the cost includes manager's salary), it's about $10,500/month...

How does this sound to you??

[grant]

First off, 4% advertising is *NOT* a royalty. It is money that is spent on ADVERTISING. (developing + airing TV commercials, newspaper ads, etc.).

Royalty fees go into the pockets of the franchisor. That is the money they use to develop products & systems, not to mention their profits.

No idea what a "monthly rental fee" is but obviously it's to RENT something, possibly equipment or premesis. Again that is not a ROYALTY although it could be another profit center for the franchise, where they collect profits that might otherwise end up with a landlord or a 3rd party equipment leasor.

15-20% operating margin is very high; most franchised restaurants target 8-10%. This either means the owner-operator salary is not included, or that TH has a particularly efficient system (e.g., food costs < 20%). Either is possible.

[heavyweight]

The expected total annual sales for a Tim Horton's is $1-3 Million. The top Tim Horton's in most cities will earn close to $4 Million in annual sales. (This all depends but that is a very close estimate)

You certainly would become rich by investing into Tim Horton's.

I personally know an owner of 6 Tim Horton's franchises and his yearly sales are in excess of $13 million. I cannot comment on profit, however it is managed extremely well and I would expect it to be very attractive.

Some things to keep in mind:
1) The rights to operate a Tim Horton's restaurant are most likely already assigned for essentially every desirable region in Canada. You would have to find a location that you feel will experience large population growth in the future and acquire the Tim Horton's rights to that region NOW, and then just hope you made a wise decision.

2) Tim Horton's also leases there buildings, they do not own most of their locations. So you would also have to have a developer take on the risk of building the restaurant and leasing it to you. (This shouldn't be that large of an issue, however it is still a source of problems).

There is still opportunities here, but they are quite rare to come by, and you would have to be very proactive and have strong business knowledge to enter this market now. There are no easy, guaranteed opportunities anymore.

[Acuratl]

Yes in a growing city like Calgary it's almost impossible to find a timmies franchise, everyone wants in...however you can find a mcdicks franchise,

we looked into it a while ago and mcdick will cost you like 900K to open, im sure you can eek out a profit of 200-300k a year on it which is a really good profit.

Im sure with timmies you can break even in one year and the rest is profit on top of that, it is truly one of the greatest franchises !

[Kuurgen]

I don't think a subsidized shop in the middle of a desert, with no competition and a unique clientele, should be used as a basis for the average profit a franchise can make.

+1

I had to LOL at your comment. True True!

LOL

[T-Man]

Theres a Tim Horton's near where I live that closed down. That location did not have a drive through. I know that sometimes, when I look for a Tim Horton's, I look for convience (drive through).

But yeah at this point in the game, I'd look at a spot where there are either no Timmy's anywhere nearby (good luck) or build in an area of development that is expecting a population boom within a few years.

[needfranchise]

Can anybody advise if they put you on the waiting will your turn ever come for a franchise. I Am desperate for their franchise but cant get around it.

Regards
:|

[Noobzilla]

Just don't let any gluttonous inclinations cloud your judgement when making investment decisions.

You must come to terms with the fact that, deep down inside, one of the reasons for this investment is the opportunity to eat unlimited free donuts.

[bruizeman]

lol.. i, and i'm sure, lots of others chuckled at the economics student's rehash of monopolistic competition, and zero economic profit...

good regurgitation of theory kid, now just need to apply it better.

[ferkel]

Timmies franchises are available.. but you have to be have a big family before TDL talks to you. If you don't have 500k liquid, forget about it.

[needfranchise]

I have gone through their forms and also communications and also have enough liquid capital its just the wait time that I was wondereing if someone can talk about through experience of getting one.

[grant]

I have gone through their forms and also communications and also have enough liquid capital its just the wait time that I was wondereing if someone can talk about through experience of getting one.
Only an existing franchise can & will accurately "talk you through it" and as you've figured out, no one on RFD is a franchisee.

The best way to short-circuit the wait time for a popular franchise is to purchase an existing location from someone who wants to sell. Of course how do you find someone who wants to sell? How do you get them to want to sell to YOU? That probably will take some hard work and some luck.

Be careful if Tim Horton's suddenly wants to bump you up the list for a particular location. That probably means they've shopped it around to all the people ahead of you in line and they've decided to pass... Why would all these people who are just as enthusiastic to own a TH's letting an opportunity go by? Ostensibly because they think it will fail. Now maybe you're smarter than them, or maybe they're smarter than you. Just have an extra think about all the details before diving in.

A restaurant franchise kept trying to give me the bad deals that no one else would take... luckily i ran into a few of them who put a few words in my ear before I made the mistake of taking one of them on.

[ecobuilder]

Theres a Tim Horton's near where I live that closed down. That location did not have a drive through. I know that sometimes, when I look for a Tim Horton's, I look for convience (drive through).

But yeah at this point in the game, I'd look at a spot where there are either no Timmy's anywhere nearby (good luck) or build in an area of development that is expecting a population boom within a few years.


You hit the nail square on the head!!

[nbshukla]

With an investment of over $750,000 you will have to wait next 10 years to pay off your debts alone and work like crazy in your franchise. Again, unless you are linked up with an existing TH owner, your application will not be considered even. I know of people that have paid TH a deposit of $50,000 and are still waiting for the "process" to get their franchise approved.

Its time to wake up and dessert such franchises with attitude. Its all in consumer's mind, consumers will only buy things that are readily available to them at the most convenient method.

I think people should divert from getting TH's franchise and get other franchise like Coffee time etc. Its just a useless big craze about TH coffee and how it makes a franchise owner rich.

[King of Clones]

I have a little bit of money kicking around...wanted to be a franchisee...a Tim Horton's be my first choice. But sounds tough to get in. What are some other top franchises too look into?

[adeel]

Not speaking from experience, but I think that McDonalds is probably the second safest franchise in canada

[grant]

Not speaking from experience, but I think that McDonalds is probably the second safest franchise in canada
Any of the large restaurant franchises is safe ... if you know what you're doing.

Just like any restaurant franchise can leave you bankrupt if you don't.

[ferkel]

Buy a Boston Pizza franchise if you have enough $

[grant]

Buy a Boston Pizza franchise if you have enough $
It'll run you about $800-$1m cash these days for a new one, and another 1.5 million in debt. They're a pretty good franchisor though.

[user01]

My GF's parents want to open a Timmies, well they have the money but they just don't know how to start. Are there application forms in which I can get for them? I will be calling their headquarter tomorrow morning. As well, since you can't pick a particular location. Can you buy someone else's Timmy?

[grant]

My GF's parents want to open a Timmies, well they have the money but they just don't know how to start.
Neither they nor you can operate google.com, but they want to try to operate a full restaurant? uhh ok...

http://www.timhortons.com/ca/en/join/franchise_ca_faq.html


As well, since you can't pick a particular location. Can you buy someone else's Timmy?
You can pick whatever location you want... except it has to be somewhere they're willing to open... and somewhere where no one else has priority to open before you.

Certainly you can buy someone else's franchise. Good luck finding one for sale though.

[Flyhigh]

ROFL enough said.


Neither they nor you can operate google.com, but they want to try to operate a full restaurant? uhh ok...

http://www.timhortons.com/ca/en/join/franchise_ca_faq.html


You can pick whatever location you want... except it has to be somewhere they're willing to open... and somewhere where no one else has priority to open before you.

Certainly you can buy someone else's franchise. Good luck finding one for sale though.

[Kuurgen]

I think people should divert from getting TH's franchise and get other franchise like Coffee time etc. Its just a useless big craze about TH coffee and how it makes a franchise owner rich.

I have seen people try to go against Tim Horton's in their area and fail miserably. I can't think of many examples where a coffee shop that is not Tim Horton's survive after a Timmies opens near them.
(which always happens if the place is doing well)

[Acuratl]

I have seen people try to go against Tim Horton's in their area and fail miserably. I can't think of many examples where a coffee shop that is not Tim Horton's survive after a Timmies opens near them.
(which always happens if the place is doing well)

same with me, of every single timmies i can think of right now none has a different coffee shop near it, discounting of course McDs or BK which do serve coffee...only exception is here at the u of c where the timmies in the food court has a coffee place near it which is still good after 1-2 years lol

[IFRS]

same with me, of every single timmies i can think of right now none has a different coffee shop near it, discounting of course McDs or BK which do serve coffee...only exception is here at the u of c where the timmies in the food court has a coffee place near it which is still good after 1-2 years lol

Nice, I go to U of C as well. What you studying?

[Ebtek]

Go check out the site www.thetdlgroupltd.com this is the second attempt after being shut down to tell the ACTUAL TRUTH of what really goes on in this company. If every one who leaves the chain signs a confidentiality agreement how will people know what the truth is vs. what the company spends to portray the truth. Very excellent site as I was interested in purchasing a store and never heard a bad word about this company besides a employee being fired for giving a timbit to a customer. This is what really happens and thank god for people willing to risk everything to expose the truth.

can you throw together some cliffs on this? theres a lot of reading there....

[grant]

can you throw together some cliffs on this? theres a lot of reading there....
It's just poorly written, period.

The old web pages, if i recall, had 2 firsthand accounts from siblings who invested in a TH. At least those old blogs were readable.

[OnFiYa]

Not speaking from experience, but I think that McDonalds is probably the second safest franchise in canada

I don't know but one thing is for sure I've yet to see a Tim Hortons close, every other franchise I've seen at least one closed down.

Tim Hortons, the name itself is amazing, coffee/donuts applies to all ages and of course it has fair prices. When Tim Hortons hits America hard not the few tens-hundreds, as Drake says it, It's over. I follow my dad's renovation business a bit and every contractor no matter race, Tim Hortons is vital to any construction site in any weather. Honestly, people will feel sick if they don't get their "Tim Horton" coffee, there's an inelastic demand on those bad-boys.

Also, even with the numbers there's more to just having money than you think. Honestly, opening the next Tim Hortons is like getting an alcohol license in New York, you need a lot of extra "help".

[Gofishus]

Has anyone tried opening a Tim Hortons in the US? I think they're better than Starbucks and can compete for sure !

[Kuurgen]

Has anyone tried opening a Tim Hortons in the US? I think they're better than Starbucks and can compete for sure !

Funny you mention this, my wife was over in Buffalo about a month ago and they are going gangbusters over there.

Their large is huge from what she says, and a lot of them have the Cold Stone Creameries incorporated with them.

I asked her about the morning line ups and yes, they have the same morning lineups in drive-thru that they have here.

I don't know if they are franchises or corporate owned. I just found it interesting that they are doing so well.

Also, I understand that Tim Hortons was one of the few businesses to survive fast food shutdowns on the bases in Afghanistan.

http://www.ledger-enquirer.com/2010/04/16/1089578/bye-bye-fast-food-troops-in-afghanistan.html

[grant]

whether you see stores shut down or not is completely meaningless to trying to judge if they're good investments or not.

As you all know there's a huge lineup of people eager to buy franchises, because they think they're sure moneymakers. Now if an existing franchisee is losing money, what do you suppose they're more likely to do:

1) shut down their store, losing all of their investment, throwing away the rest of their franchise term, and having to pay out lease & severance penalties, or

2) sell their franchise to the next sucker, so they at least walk away with some cash in their pocket and no obligations?

answer is pretty clear isn't it? The only time ANY franchise shuts down is when there are no more suckers lined up, or the owner is too obstinate to sell at a loss so he loses the opportunity and is forcefully shut down.

[Kuurgen]

A bit off topic, got sidetracked and ran across this interesting thread about how bad Quizno's is:

http://franchisepundit.com/index.php/2005/04/10/what-a-quiznos-franchisee-makes/

Not Tim Horton's related I know, but interesting at how bad it can get.

[bayleehot]

Before you decide to own a Tim, you have to think about yourself. Are you normal person? Are you cruel and greedy? Being a boss is not that easy. You have to be a normal person.

I am a female night shift baker (4am to 12pm) and going to quit this job next week. I have told the owner already. I told him I found a another job. So many restaurants in Toronto, so it is very easy to find those jobs which Canadians do not like. But, I have right to pick one I like. I quit current job because my owner is cruel and greedy.

My friend is also night shift baker but he got Tim Horton benefit after he worked there for 6 months, also he got higher pay than me. In our store, I am working busier than all managers, all supervisors and all other storefront staffs. My salary is lower than supervisors and no benefit. This is unfair. Is the owner blind? He does not know who is making money for him. Many night shift bakers left, the owner has to keep hiring and training new bakers. He lost a lot money but he still does not want to improve the situation. I can not work for such idiot. When I leave here, he have to hire three more bakers to replace me. He tried to save money, but he actually lose a lot of money. He deserve it.

Think about yourself, are you normal person?

[ali123]

I'm normal. Can I own a Tim Hortons now?

Thanks

[saad5]

I was night shift baker of a store in downtown of Toronto. So busy in that area. I was so tired, but my salary is so low. I lose my health because I often got cold (going to the freezer many many times each day). I also can not fix the biological clock. Modern medicine told us this is really bad for health if working at night. Who is working at night? The police offices occasionally works at night, but they make 100k a year. Truck drivers works works at night, but they make at least 20 dollars each hour. A lot of them make 70k a year. Who else? The TTC drivers occasionally have night shift rotation. They also make at least 70k a year. The security guards work at night, they don't make much, almost same as us, but they have nothing to do, they just walk around a little bit or standing there. Who else working at nght? Hooker? They make 200 dollars each hour. Who else? As a night shift baker, I was so busy, kept walking and cleaning, raised heave boxes......so many jobs. Unfortunately, we had no Union. We should have one. If you are also working in downtown area, and you salary is lower than 17 dollars each hour, you should quit the job right now, or you can work in other tim horons (not in downtown area).

[chris2000cms]

tim hortons is not always fresh.. use to be but not anymore.

[baz5]

tim hortons is not always fresh.. use to be but not anymore.

Great reason to pump this 8 month old post.
Spam bot? Or just really needed to share that?

[MrKap]

I don't know why Tim Hortons doesn't push selling the beans. Their coffee is flat out the best. If the beans were anywhere near as good as thier fine grind I would never buy coffee anywhere else.

It's better than getting the beans from Starbucks and fine grinding. Its even better than the Pike Place roast.

[Swilt]

I don't think a subsidized shop in the middle of a desert, with no competition and a unique clientele, should be used as a basis for the average profit a franchise can make.

Interestingly enough, in the recent lawsuit filed they disclosed the average franchise earned $265k with the lowest average in NS earning $200k in profits. (look it up inyahoo finance or Mcleans article)


That puts the average profits around $7200 per day....pretty darn good return, for allot of work mind you.

[Sanyo]

Probably not worth it anymore and virtually impossible now to get in since most of the current franchisees take up new locations.

Its probably worth trying to discover the next timmies...tons of franchises were available in the 80's and early/mid 90s but not too many people were interested, now people want to buy but none left.

[sumchat]

franchisees make on an average 17% net profit after all expenses (anything you can think of) ..
Average sale for a free standing store is around $2.5 million.. so you can calculate the net profit.
Even the gas station stores with limited offering make over a million dollars in sales ..