Tencent invests in PE-backed Tim Hortons China expansion

Tim Hortons China launched its first store in February 2019 and now has around 50 nationwide, although most are based in Shanghai. The goal is to open more than 1,500 outlets. Tencent’s investment will accelerate this expansion, which includes building the digital infrastructure that complements an offline rollout. 

Sami Siddiqui, president for Asia Pacific at RBI, which owns Burger King and Popeyes as well as Tim Hortons, said in a statement that global cross-border partnerships will continue to generate great value. He added that Tencent’s involvement in Tim Hortons China would be an excellent reference point for global digital cooperation.

Cartesian, which has $2.7 billion in committed capital, is headquartered in the US and operates out of offices in New York, Sao Paolo, Shanghai, and Warsaw. In 2011, it invested in Tab Food Investments, RBI’s master franchise partner for Turkey. A year later, Cartesian, Tab and RBI formed a joint venture to expand Burger King in China. There are now more than 1,200 Burger King restaurants in China, up from 63 in 2012.

Tab Foods is also RBI’s partner for Popeyes in China. Last year, the company signed its first lease in the country and announced plans to open 1,500 fried chicken restaurants, posing a challenge to incumbent giant KFC. Despite disruption caused by the coronavirus outbreak, the first Popeyes store opened in Shanghai this week.

RBI, which is majority-owned by 3G Capital, was a relatively early adopter of master franchise agreements for Burger King, whereby individual partners receive exclusive development rights for entire markets in Asia. It works with private equity partners in Taiwan, Japan, India, Indonesia, and New Zealand, as well as China. In select cases, including China, RBI comes in as a joint venture partner. It entered into such an arrangement with Cartesian for Tim Hortons in China in 2018.

Tim Hortons is Canada’s largest quick-service restaurant (QSR) chain. As of December 2018, there were 4,846 outlets globally – compared to 17,796 Burger King restaurants and 3,102 Popeyes establishments – selling a range of beverages, baked goods, sandwiches, and other food products.

Starbucks is already a well-established presence in China with 4,200 outlets in 177 cities. The US-headquartered coffee shop chain – which recently teamed up with Sequoia Capital China to make strategic investments in next-generation food and retail start-ups – aligned itself with Alibaba Group in 2018. The company started using delivery service Ele.me, opened storefronts on Alibaba e-commerce sites, and allowed digital payments through Alipay.

Yongchen Lu, CEO of Tim Hortons China, noted that the country’s coffee industry is in the ascendency, with rapid per capita consumption and sales likely to continue increasing at a double-digit pace. Luckin Coffee forced its way into the space two years ago, quickly growing to 3,600 stores by pursuing an asset-light, technology-heavy model. However, the company's future is uncertain following an admission that a large portion of its 2019 sales were fabricated. Earlier this week, Luckin announced the removal of CEO Jenny Qian and COO Jian Liu.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Consumer
• Expansion
• China
• Tencent
• Growth capital
• Cartesian Capital