[INTERVIEW] How Tim Hortons plans to succeed in Korea's overcrowded coffee scene

Home > Business > Industry

[INTERVIEW] How Tim Hortons plans to succeed in Korea's overcrowded coffee scene

Published: 17 Dec. 2023, 06:00

SEO JI-EUN
seo.jieun1@joongang.co.kr

Rain didn't deter the crowd that lined up ahead of the grand opening of Tim Hortons' first Korean store in Gangnam District, southern Seoul, on Thursday. [TIM HORTONS KOREA]

Korea's coffee scene is saturated: It is already packed with more than 800 brands and nearly 100,000 stores. Nevertheless, Canada's Tim Hortons is trying to break in.

Despite concerns about how well Canada's Tim Hortons will fare in this fiercely competitive market, the Thursday opening of its first Korean store drew around 200 eager customers who braved the early morning chill and rain to wait for the doors to open. Some even waited overnight for a taste of “Canada's favorite coffee.”

BKR Chief Business Officer Hwang Mi-yeon, who oversees Tim Hortons' Korea operations, stated that “Korean customers are eager to try new brands,” expressing confidence in the brand's differentiating qualities, including its rich 60-year heritage and unique Canadian identity.

Tim Hortons was established in 1964 and currently operates 5,700 stores across 16 countries. Korea has become its seventh Asian market.

Its pricing strategy, on the other hand, has sparked controversy in Korea. The company is renowned for its competitive pricing, but popular offerings cost more here than they do in Canada. A Black Coffee that costs $1.70 in Canada is priced at 3,900 won ($3.01) in Korea, while an Americano is around 30 percent more expensive here.

In response, Hwang emphasized “the consideration of market conditions, operating costs, and customer needs,” highlighting that Tim Hortons' decisions are “reasonable” when compared to its pricing in other Asian countries.

Prior to Burger King, BKR had already introduced Restaurant Brands International's (RBI's) Burger King brand to Korea.

In an interview with the Korea JoongAng Daily on Wednesday at BKR's headquarters in central Seoul, Hwang discussed the brand's decision to enter the Korean market and its future strategies.

Below are edited excerpts from the interview.

Hwang Mi-yeon, chief brand officer of Tim Hortons Korea at BKR [TIM HORTONS KOREA]

Why did Tim Hortons decide to enter the Korean market?

Korea is among the top three markets globally in the coffee industry with fierce competition. Despite this, Tim Hortons made a bold decision based on the market's inherent appeal. Korea stands out for its dynamic and vibrant nature, marked by the rapid emergence of new brands and ever-changing trends. This dynamism is distinct, even when compared to the growth stage of the coffee market in China.

Furthermore, Korea showcases both quantitative and qualitative growth, with consumers displaying a strong interest in exploring new offerings. Notably, we've observed not a small number of individuals in Korea expressing a desire to encounter the Tim Hortons brand within the country, having experienced it elsewhere.

Considering these factors, we believed our entry as a global brand into the Korean market holds significant meaning.

Some people say Tim Hortons Korea prices are too high compared to local options.

Price variations are not exclusive to Tim Hortons, as many other global dining chains show slight differences [between their home country and international markets.] Determining prices involves a comprehensive analysis of factors such as market conditions, economic situations, operational costs and customer preferences — and Tim Hortons is no exception.

In Canada, Tim Hortons boasts a rich history and operates over 4,000 stores. It is deeply rooted as a “neighborhood cafe” with widespread distribution. Although Tim Hortons in Korea may eventually achieve a similar status over time, initial pricing decisions were made considering the intricacies of the domestic market.

Comparisons with other key Asian countries [where Tim Hortons has expanded] indicate that some nations actually have higher pricing than in Korea.

Recognizing cafes as establishments offering an overall experience beyond beverages, we have focused on enhancing the value provided at our stores, taking into account factors like store locations and spatial investments. We are also gearing up to offer various promotions and additional benefits.

Plans have been announced to open more than 150 stores in Korea in the next five years. Couldn't this be seen excessively ambitious, given the market's saturation?

Tim Hortons aims for the broad mainstream market. Considering the scale of Korea's coffee market and the overall landscape of various players, the plan to open 150 stores within five years may not seem overly aggressive. I heard China, for instance, with its expansive market, opens two stores a day.

BKR possesses operational expertise from managing brands like RBI's Burger King, demonstrating a track record of successful and long-standing operations. Leveraging this accumulated capability, we are confident that achieving the 150-store goal is not only feasible, but also a natural progression.

Thirty-nine-year-old Shim Jae-ho, left, became Tim Hortons Korea's first customer, placing an order at the inaugural store on Thursday. Shim had waited for 23 hours, starting from 11 a.m. the day before, to secure the coveted position of being the first customer. [TIM HORTONS KOREA]

Can you share how Tim Hortons' recipes are put into practice in Korea?

The methods for crafting items like doughnuts are part of Tim Hortons' global assets and are consistently applied in Korea. We prioritize using the same ingredients whenever possible.

[For Korea-exclusive menu items,] we use Tim Hortons' main platform and then develop unique recipes to introduce a distinctive touch. Even for a consistent item like the Maple Latte, we customize the recipe to cater to local preferences. For instance, in Singapore, where there's a demand for cinnamon, we offer a Maple Cinnamon Latte. Acknowledging the preference for cream among Koreans, we incorporate it into the Maple Latte.

The approach is similar for items like the Melt sandwich. While the Cheese Melt is a common offering, we internally developed the Maple Spread to achieve the balance of sweetness and saltiness favored by Koreans, thereby enhancing the overall flavor profile.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]