Another Coffee Competitor for Canada

Does Canada need another place to get coffee?

Yesterday, I was asked for my thoughts on Canadian restaurant operator Foodtastic's decision to bring Dunkin back to Canada via a master franchising agreement with Dunkin's parent, Inspire Brands.

My immediate reaction was that the timing was "interesting".

First, because Canada has been all about "Buy Canadian" for the past two years:

"I've never seen a stronger buy Canadian effort in Canada ever in my lifetime and Dunkin' is quintessentially American."

Sure, Canadians currently support many US brands: Starbucks, McDonald's, Walmart, and Costco are a few of my favourites that continue to do well here.

And, yes, Tim Hortons hasn't been truly "Canadian" from an ownership perspective for a long time... although they do a great job of leaning into their Canadian heritage, and I'd argue more Canadians care about their heritage than their ownership structure.

But still, it's an interesting time to relaunch a US brand into the Canadian market.

And second, because of our market dynamics.

After Starbucks, Dunkin is the second-largest coffee chain in the US by number of locations. But these two players coexist because Starbucks is positioned as a premium coffee experience, and Dunkin has historically been the "every person brand". ("America runs on Dunkin".)

Which means, Dunkin isn't (and shouldn't be) targeting Canadian Starbucks drinkers: they're likely hoping to convert people who head to Tim Hortons and McDonald's for their morning caffeine (and sugar) fix.

But Tim's has been doing fairly well in recent years!

So this isn't an instance of a strong US player taking advantage of a white space market opportunity ("We're a pretty saturated coffee market... It's not like we're in need of another coffee place"), it's one where that US player will have an uphill battle to steal share against a much more established competitor.

But here's a quote that didn't make it into the article (and was only hinted at towards the end of it):

"Foodtastic has proven themselves to be strong operators". Plus, they already own the Second Cup chain, which presumably gives them a good understanding of the Canadian coffee consumer.

So if Foodtastic gives Canadians a few reasons to bring their current coffee routines (which will involve opening a lot of convenient locations and investing significantly in strategic marketing to push the benefits of the brand) AND if they continue to invest after the buzz of the initial launch inevitably dies down, I think they have a decent shot at success.

In any case, soon we'll see another coffee competitor in Canada.

I'll certainly go check it out... will you?