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TIM HORTONS ADDING FOUR AREA OUTLETS

Tim Hortons plans to bring more coffee and doughnuts to the Buffalo market in 1999 as part of a larger effort to expand its U.S. retail base.

Chris Laganos, vice president/U.S. business development, confirmed Tuesday that the Canadian-born restaurant chain, which is now owned by Wendy's International Inc., will open four more stand-alone locations this year.

Oakville, Ont.-based TDL Group Ltd., which now operates 102 Tim Hortons in the United States, expects to add as many as 30 new stores to its stable by the end of the year.

"Buffalo was our first U.S. market and continues to be a very strong market for us," Laganos said. "At our maturation point, I expect we'll have 30 to 40 units in the Buffalo area and we could reasonably achieve that in the next five years."

In addition to Buffalo, Tim Hortons can be found in the Detroit and Columbus markets, and as of December, in Maine. All of those markets will see additional stores this year.

In Canada, where the chain dominates the coffee and doughnuts market, Tim Hortons operates more than 1,500 stores.

Tim Hortons, which carries the name of the late Buffalo Sabre defenseman and hockey Hall of Famer, opened its first coffee and doughnut shop in the Buffalo area in 1985. By 1992, Tim Hortons had three running here, a number which has swelled to 17. Those included 12 stand-alone restaurants and five kiosk locations in local Mobil gasoline stations.

The four new stores, all full-scale with drive-thru service, will be located at: 7890 Transit Road, Amherst; 3816 Union Road, Cheektowaga; an as-yet undetermined site on South McKinley Parkway, Hamburg, and 3012 Route 417, Olean.

In addition, the company recently closed one of its oldest local stores, on Bailey Avenue near the corner of William Street, to make way for a new Tim Hortons, which is slated to open in mid-February.

The company is also considering adding a few new kiosk sites, with the possibility of bringing one of the scaled-down Tim Hortons to downtown Buffalo. Currently, only two of the company's 17 area stores are within city limits.

"We've looked at a number of sites in downtown and that could be something that comes together in 1999," Laganos said. "The challenge with downtown is that we like to see heavy traffic very early, by 6:30 a.m. Your downtown isn't really going at that hour."

Tim Hortons customers also tend to buy their coffee and breakfast pastries closer to their homes at the start of the morning commute, not in the middle or at the end of the journey, according to Laganos. But despite the risk of losing customers to other coffee sources before they get downtown, the company is still interested due to the local popularity of the Tim Hortons brand.

"Buffalo is just a great market for us. You know our name and have made us a solid part of what is a pretty mature coffee and baked goods segment," Laganos added.

While local Tim Hortons are enjoying healthy sales, its overall U.S. operation is continuing to lose money. Wendy's said its U.S. Tim Hortons had lost about $12 million through the end of the third quarter of the current fiscal year.

That red ink is not a reflection of sales, according to Laganos.

"We are doing very well at the store level. We're making money," he said. "But we are operating at a loss, which we expected, due to the overhead of building up the U.S. organization and growing it into a brand."

One of the avenues Tim Hortons is considering to increase brand identity is to get its special blend coffee onto the shelves of supermarkets in its primary markets. Food industry sources indicated that the company is exploring options with both Tops and Wegmans to reach a new audience.

"We've been in grocery stores in Canada for a while and found that coffee consumed at home doesn't really compete with coffee purchased when you're on the go. But, if you're going to brew coffee in your own kitchen, it may as well be our coffee," Laganos added.

Long-term, TDL Group would like to operate as many as 3,500 U.S. stores by 2010, all clustered east of the Mississippi and north of the Mason-Dixon Line. Growth into new markets in that region will begin in 2000, with new stores in Rochester, Erie, and Toledo and Dayton, Ohio.

"Coffee sells best where the weather is cold, snowy, chilly or raining a number of months of the year. Look at Buffalo, so far in January our sales are up 10 percent over January '97," he said.

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