A Shot from the Blue Line

Last month, we told you about Dunkin’ Donuts’ efforts to build its retail coffeehouse chain despite a name that associates it with the trans fat of sugary pastries rather than the aroma of fresh-brewed coffee.

It’s a competitive arena. And Dunkin’ Donuts’ challenges might not end with sophisticated Starbucks and drive-through McDonald’s. It may find some added competition from a wildly successful Canadian chain whose original name also contained the word “donuts.” It dropped the “donuts” from the corporate name but still includes the name of its founder-athlete, a hockey player whom fewer and fewer people remember anymore.

Such are the challenges of building a brand.

Last year, when I was in Vancouver to tape the TV reality show “Making it Big,” someone offered to make a mid-morning coffee run to Tim Hortons. As excitement buzzed around the room, those non-Canadians among us were assured, “This is the best coffee in the world!”

I remember Tim Horton as a defense-man on the Toronto Maple Leafs and other NHL teams in the 1960s. Like a lot of athletes, he invested in a business that might leverage his name – a coffee-and-doughnut shop in Hamilton, Ont., midway between Toronto and Buffalo, N.Y. By 1974, when Horton died in an auto accident, there were 40 Tim Horton Donuts shops. In another 17 years, the company had opened its 500th location. In the process, it became better known for its coffee than for doughnuts.

The chain boasts one outlet for every 12,700 Canadians. (By comparison, one McDonald’s exists in the U.S. for every 21,000 Americans; one Starbucks for every 50,300 Americans; one Dunkin’ Donuts for every 56,000.)

Tim’s sells 78 percent of the non-supermarket coffee and baked goods in Canada. Outside Canada, however, this has been a stale brew. There are only about 300 outlets in the U.S., most of them close to the Canadian border. But all that may be changing. Chairman, president and ceo Paul House, who has run the company for 20 years, has shown he knows how to grow a brand. He also knows how to tweak one. “[When I joined the company], we had smoky stores,” he told The New York Times recently. “We were male-dominated and strictly a coffee-and-doughnut offering. We primarily did our business in the morning. You either had to make it before noon or you were done.”

So the brand decided to make the stores more attractive to women. (Why does it take so many retailers so long to embrace that simple truth?) It replaced the iconic bar stool counters with family-friendly tables and chairs. It was among the first businesses in Canada to ban smoking. (Smoke is readily absorbed by baked goods.) It dropped the word “donuts” from its company name and added sandwiches, yogurts and soups. Today, in its home Ontario market, doughnuts make up less than 10 percent of sales.

But the company went public last year, and so continued growth is critical. And with its Canadian saturation, the next logical place for expansion is in the U.S., though past efforts have not done well. There seem to be too many coffee options here, and too many Americans don’t know the name “Tim Horton” – for coffee or for hockey.

Still, House promises to grow it to 500 locations in the U.S. by the end of 2008, adding 60 to 80 stores a year. “It took us 43 years to get where we are up here [in Canada],” he told The Times. “We’ve only been at the U.S. seriously for a few years.”

Hockey, the national pastime of Canada, is a tenacious sport. So, to use hockey parlance some Americans might find unfamiliar, Tim Hortons is digging in the corner now. But there’s a whistle on the ice and a power play is getting ready to begin.