Tim Hortons Inc., the No. 1 quick-serve chain in Canada, and Kahala Corp., parent company of Cold Stone Creamery and 11 other brands, announced February 6 that 100 existing Cold Stone and Tim Hortons stores will enter into a co-branding initiative. Fifty stores from each brand will add the other chain's menu to its own by spring 2009. To kick off the initiative, an Ohio Cold Stone store opened this past Saturday with the addition of Tim Hortons' complete menu.
As opposed to some co-branding efforts that end up taking away from one brand's business, Cold Stone and Tim Hortons executives say their partnership is complementary because the two chains serve different dayparts: Cold Stone does most of its business in the evening, while Tim Hortons' offerings of coffee, doughnuts, sandwiches, and soups make it a more natural choice for breakfast and lunch crowds.
“We're very excited about the complementary daypart piece,” says David Clanachan, chief operations officer of Tim Hortons. “It's something unique in what we see from a co-branding perspective: It's not cannibalistic, and it leverages existing assets and people and resources.”
The co-branded stores will be located in Michigan, Western New York, Ohio, Rhode Island, Maine, and Connecticut, all of which are states where both companies already have a strong brand presence.
The decision follows a successful test run, launched in November, of Cold Stone sections in two Rhode Island Tim Hortons stores.
Lee Knowlton, chief operating officer of Kahala Corp., says both stores experienced incremental sales increases and that the initiative didn't suffer from any of the trade off effect that can occur when customers opt for new menu items at the expense of existing ones.
“You could really see the synergy between the two brands,” Knowlton says. “It's exceeded both of our expectations.”
The co-branded stores will offer both restaurants' full menus and digital menuboards with video graphics to familiarize customers with each brand. To accommodate the new traffic patterns, co-branded Cold Stone stores will extend their hours to open at either 6 or 7 a.m. (from 10 or 11 a.m.), and some Tim Hortons locations will stay open until midnight on weekends (instead of their previous close time of 10 or 11 p.m.).
Participating stores will feature new co-branded menu items, as well, something Clanachan says came at the request of customers.
“You see a customer come in [who is] a Tim Horton's customer and say, 'Can I get a scoop of that ice cream in my coffee?'” Clanachan says. “There's product creation that's happening.”
New menu offerings will include muffins a la mode and coffee floats. Other than that, the stores will operate the same as the two Rhode Island test locations.
When customers enter the store, they can order from Cold Stone's menu on the left or from Tim Hortons' on the right. All customers then move to a register in the center of the restaurant. Knowlton says even small details such as the two brands' coordinating color schemes made the collaboration seamless.
“They fit together really naturally,” Knowlton says. “If you were to walk into one of these stores, you would say, 'Wow, that's always been there.'”