Tim Hortons in Egypt

Group Country Project

Industry Sector:
Accommodation & Food Services

Tim Hortons in Egypt

Prepared For: Jean Eid

November 25, 2015

Prepared By:

Ahmed Abouelenin

Patti Broughton

Jen Cooper

Kerri Culver

Amy DeHeer

Olivia Reed

Executive Summary

This analysis demonstrates that Tim Hortons can expect success in locating franchise operations in Egypt. Egypt has the largest population in the Middle East and the third largest in Africa, with a relatively low poverty ratio at 25%. Youth aged 20-30, including students attending Egypt’s 45 universities, form 20% of the population and a strong target market for take-away coffee. Other reasons for locating Tim Hortons in Egypt are: familiarity with Tim Hortons products and branding, preference for Canadian over American products, high tourism, and low labour costs.

Egypt is a large consumer society with a population of 88 million. Approximately 44% of Egyptian household consumption is food. Politically, Egypt has experienced five changes of government since the 2011 revolution, but is beginning to stabilize. Egypt’s economy is predicted to expand, but inflation to stabilize at approximately 10% through 2019. Due to recent government legislation and investment, Egypt’s traditionally high unemployment rate has begun to fall. The GDP growth rate is now trending upwards, with tourism and foreign investment rebounding. Egypt had a successful economic development conference in March, signaling that Egypt welcomes more foreign investment. The World Bank has identified Egypt as a priority country and is in the process of preparing a new Partnership Framework with the Government of Egypt for the next five years. New investment laws also signal that Egypt is open for business.

Although traditional coffee shops are popular in Egypt, Tim Hortons’ competitors will be modern coffee shops like Starbucks and Cilantro. Tim Hortons take-away focus and strong Canadian branding will differentiate it from other firms, and the target market will be youth, including students, and morning workers.

The strengths of Tim Hortons current strategy are market dominance, brand recognition, distribution network, and financial resources. To maintain its profitability, Tim Hortons will need to address market saturation and continue product innovation. Risk factors for Tim Horton in Egypt include: political instability, a history of corruption and regulatory uncertainty, competition from other modern coffee chains, and the cost of investment. However, as the financial analysis demonstrates, Tim Hortons has the liquidity and cash to launch operations in Egypt, particularly if premises are rented.