Tim Horton's Franchise Earns $305,000 (+Cost 2023) (2023)

Although originally from Canada, the Tim Hortons franchise has grown rapidly over the years: there are now 5,352 locations in 15 countries around the world. It is also popular with entrepreneurs and franchisees for many reasons (brand, training, support, etc.).

What about costs and profits? Is Tim Hortons a good investment? With average capital costs of $1,242,750, including the initial franchise fee of $50,000, you'll need to do your research before opening a Tim Hortons franchise.

To answer these questions, we must look to the franchise's disclosure document, which we discuss below. Specifically, we will see how much you can earn with this business and how much you will have to invest as a franchisee. Let's dive!

Tim Horton Franchises: Key Numbers

What is Tim Hortons?

Tim Hortons is a leading Canadian restaurant chain established in Hamilton, Canada in 1964. Based in Toronto, the menu is synonymous withCoffee, donuts, baked goods, soups and sandwiches.

It was founded by Canadian ice hockey defenseman Tim Horton and Montreal-born entrepreneur Jim Charade. A year later, in 1965, Tim Hortons began to franchise its coffee shops.

Wendy's, an American chain of fast food restaurants, acquired Tim Hortons in 1995 in a decade-long partnership. In 2014, 3G Capital, a Brazilian private equity firm, bought the Canadian fast food chain.

Today, Tim Hortons has 5,352 locations in 15 countries around the world.

Tim Horton Franchises: Pros and Cons

Benefits

• third party financing: The brand has built strong relationships withThird Party Financing Institutionsto provide financing to its franchisees
• World class support:The brand's 6 years of experience are dedicated to supporting new restaurateurs. The network provides ongoing support to help franchisees run and manage their business. This includes site selection, field service, online support, security procedures and lease negotiation.
• Education Franchise: The brand offers extensive training to help its franchisees start successful businesses. It starts with a7-week training program at Tim Hortons University in Oakville. The training emphasizes food handling, hygiene, equipment maintenance, safety systems and team member relationships. Upon completion of this training, new restaurant owners receive 179 hours of hands-on training from a full-service Tim Hortons.
• marketing support: The brand offers its franchisees detailed and helpful marketing support to promote their business. To maximize growth and attract potential customers, franchisees gain access to regional advertising, national media, email marketing promotions, ad templates, website development and social media.
• growth potential: The chain of restaurants presents severalgrowth opportunitiesfor franchisees who want to develop local and international markets

Disadvantages

• no exclusive territory: The brand does not offer exclusive territorial protection to its franchisees. This exposes franchises to stiff competition from other fast food chains.
• no foreign ownership: Tim Hortons does not offer passive investment opportunities. Franchise companies must be actively involved in ongoing business operations.
• Unable to operate at home or on mobile– Franchisees must operate the restaurant from a retail location (i.e. not a food truck) or from an office if back office functions are performed remotely
• Cannot operate part-time: Tim Hortons does not offer part-time business opportunities to its franchisees. The brand chooses hands-on owners who can commit to running their restaurants full-time.
• Competence:Tim Hortons faces stiff competition from other coffee chains:Dunkin Donuts,Krispy Kremeocinnamonjust to name a few

How much does a Tim Hortons franchise cost?

You would need to invest an average of $1,242,750 to open a new Tim Hortons franchised restaurant.

Note that this is the investment for a standard store. There are actually 2 restaurant formats to choose from:

• Standard trades (capital cost $1,242,750): This is the most common format (86% of the 633 franchised restaurants in 2021). The standard Tim Hortons store ranges in size from 1,000 to 2,300 square feet and includes a customer area and drive-thru.
• non-standard store (initial cost of $182,400): Whether it's a built-in kiosk or a full-service cart, non-standard stores tend to be much smaller and vary in size to fit the space they're located in. They may also have a limited menu to accommodate space and customer demand at your location.

The investment value is an average value: in fact, it varies depending on many factors, such as the size of the land and building, the location and development needs; Construction, equipment specifications, etc.

Here is the full breakdown of the cost of a standard Tim Hortons business:

How Much Income Can You Make From a Tim Hortons Franchise?

On average, Tim Hortons franchisees earn $1,188,240 per year.

To get this number, we annualized average monthly gross sales of $99,020 in 2021 based on the last franchise disclosure document. Note that this is the average revenue for a standard store restaurant (calculated based on 549 standard stores in 2021).

How profitable are Tim Hortons franchises?

Fortunately, Tim Hortons provides little information about the profitability of its restaurants. This allows us to estimate earnings.

Average,a standard Tim Hortons dealPS285.178profit per year.This representsan adjusted EBITDA margin of 24%.

It's important to note that the information below is an average of 549 restaurants in 2021 out of 633 franchise-operated Tim Hortons restaurants.

The adjusted EBITDA margin of 24%, based on our analysis, is slightly below the industry average for similar restaurant franchises (27-29% average profit margin).

Is a Tim Hortons franchise a good investment?

Now that we know how much revenue you can generate on average ($1,242,750) and the profitability of the business (24% adjusted EBITDA margin), we can easily calculate this.recovery period.

The payback period is a metric used by investors to evaluate the profitability of an investment. Dividing investment costs by annual benefits tells us how many years an investment will take to pay off.

However, for profit, we need to use net income here (instead of EBITDA) as it includes all other non-operating costs like corporate taxes, interest on debt, etc. So net profit is the actual profit you can make from this trade. after paying all costs.

we found itThe payback period for a Tim Hortons franchise (standard store) is 7 years. While not necessarily a bad thing, it's an average investment if you will.We believe that any number below 5 years is great and any number above 5 years is fair.

That means you would have to wait 7 years to recoup your initial investment ($1,242,750 in this case).

But again, remember that this is an average, and your franchised restaurant could become less (or more) profitable depending on a number of factors. For payback time, break-even and a financial plan prepared for your franchise application, download our business plan template below.

Download thetim horton business planand finance your franchise

including a5 year financial planbuilt with theLatest Franchise Disclosure Document Issues

see model

How does Tim Hortons compare to other franchises?