Where You Live Impacts Where You Go For Coffee

Where You Live Impacts Where You Go For Coffee

The Competitors

The Quick Serve Restaurant (QSR) giants are going toe-to-toe for Canada’s Coffee dollars. McDonalds has joined Tim Hortons and Starbucks competing to provide our morning wake-me-up jolt of caffeine. Whose unique strengths will win in this $13.3-billion dollar global market.

Tim Hortons has the home field advantage. Founded in Hamilton, ON in 1964, Tim Hortons has over 3,600 locations across Canada, making it larger than McDonald’s and Starbucks combined. Its annual Roll-Up-The-Rim campaign is as much a sign of Canadian spring as maple syrup. Can Tim Hortons maintain their homegrown advantage against two global giants?

Starbucks, with over 18,000 locations worldwide, is the undisputed heavy weight. Founded in Seattle, WA in 1971, Starbucks entered the Canadian market in late 1980s. In Canada there are just fewer than 1,200 Starbucks locations in Canada – a third fewer than the number of Tim Hortons. Can Starbucks parlay their global market dominance into a domestic advantage?

McDonalds, the largest QSR in the world, has only recently entered the Coffee wars. Over the last few years, McDonalds Canada has been adding McCafé’s to their 1,400 restaurants across Canada — effectively making them larger than Starbucks. Will this translate into a dominance in Canada?

Urban v. Rural

William Wolfe-Wylie compared the location of Tim Hortons and Starbucks across Canada[1]. He uncovered and interesting geographic trend: Tim Hortons owns the highways between major cites while Starbucks owns the urban core.

This analysis was based on counting restaurant density by postal code. Outside of the urban areas, large postal code regions favor Tim Hortons over Starbucks, frustrating provincial comparison. Plus the analysis neglected the newest 100-lb gorilla in the space: McDonalds.

How does QSR preference map onto geographic and cultural boundaries? Does Central Canada or The Maritimes like Tim Hortons as much as Eastern Canada? Which regions have decidedly similar preferences?  With these questions in mind, I used Twitter to look deeper into Canada’s coffee choices, province-by-province.

Twitter Analysis

In August 2013, I used online social media sampling[2] to collect 14,195,003 tweets from 57,867 Canadians spanning January 15, 2013 – May 31, 2013. The tweets were analyzed for mentions (including common nicknames and aliases) of Tim Hortons, Starbucks, McDonald’s, and many other Canadian QSRs.

The sampled time frame had many interesting and important events for each QSR. Starbucks ran several Daily Deal campaigns, including the Canada’s largest Living Social campaign. Tim Hortons’ Roll-Up-the-Rim campaign ran during this period. McDonalds ran a nationwide Free Coffee campaign as well as their popular McHappy Day campaign benefitting local charities. These campaigns all generated substantial social traffic. Each QSR had roughly similar numbers of tweets and authors to analyze.

Within this time period, I collected unique authors mentioning Tim Hortons, Starbucks or McDonald’s. The Twitter author’s province was determined from information in their location field. Results are summarized in Table 1.

Tim Hortons62064221711911629629973062295542

Table 1: Summary of QSR Twitter mentions by Province

The QSR preferences have a statistically significant (99% confidence) dependence on the Province. Viewing the counts on a map of Canada shows clear regional boundaries (Figure 1).
Figure 1: Top QSR by Province

Atlantic Canada: I’m Loving It

Atlantic Canada (New Brunswick, Newfoundland and Nova Scotia) prefers McDonalds to Tim Hortons or Starbucks. Each province’s preferences are statistically similar with a 99% confidence. Based on this similarity, New Brunswick (which had a raw count putting Tim Hortons ahead of McDonalds) was adjusted in favor of McDonalds.

McDonald’s dominance in this region is interesting. The Atlantic region is among the most rural in the country. Halifax, the largest Metropolitan region, ranks 13th overall in Canada based on population. Being among the smallest provinces by area, there are fewer miles of highway than the rest of Canada. Both of these factors seem to hinder Starbucks’ and Tim Hortons’ respective strategies (Starbucks focuses on Urban Centers; Tim Hortons focuses on highways between major cities). It looks like McDonalds wins by default.

Eastern Canada: Always Fresh

Eastern Canada (Ontario and Quebec) are home to the nation’s two largest cities: Toronto and Montreal. But Ontario and Quebec are also the traditional market center for Tim Hortons. This is where the battle royal is being fought. Here we see that Tim Hortons is the clear winner in both provinces. Despite the strongest urban centers, Starbucks is a distant 3rd (behind McDonalds) in these regions. Starbucks has a long battle here to upset Tim Hortons.

Western Canada: Life Happens

Western Canada (British Columbia) prefers Starbucks by nearly a 50% margin. This is most likely due to Starbucks early expansion into Vancouver. Having long established itself in British Columbia, the coffee brand has set in and seems to be unassailable. It is surprising that both Tim Hortons and McDonalds are (within statistical significance) tied for third place. Starbucks is clearly winning in Western Canada.

Central Canada: The Swing Provinces

Central Canada (Alberta, Saskatchewan, and Manitoba) is the most interesting battleground in these coffee wars. There is no clear pattern to any of these provinces. Manitoba is statistically the same as Atlantic Canada, reflecting a similar pattern of small urban centers (Winnipeg, the largest city in Manitoba, is eighth overall) and minimal connecting highways.

Saskatchewan and Alberta, where Tim Hortons leads, are extremely different. Saskatchewan follows nearly the same pattern as Eastern Canada. Here, Tim Hortons leads third place Starbucks by a wide margin. In Alberta, with its booming economy and proximity to Western Canada, Starbucks is a strong second place. Expect to see Starbucks steadily gain ground in Alberta.

And The Winner Is…

While Twitter authors clearly prefer Tim Hortons across Canada, the story is more complex. Starbucks has a strong showing in Western Canada that will continue its migration east across Alberta, Saskatchewan and Manitoba. Meanwhile, outside of natural transportation corridors between metro centres — Tim Hortons’ traditional location — McDonald’s is gaining a dominance that will be hard for the other QSRs to challenge.

In my next paper, I will analyze specific marketing campaigns from Starbucks, Tim Hortons and McDonald’s, and what impact they have on their brand in Canada.

Featured Image courtesy of Wikimedia Commons, the free media repository


Footnotes    (↵ returns to text)

  1. http://o.canada.com/business/tim-hortons-might-control-the-highways-but-starbucks-rules-the-city
  2. K. White, J. Li, N. Japkowicz, “Sampling Online Social Networks Using Coupling From the Past,” 2012 IEEE 12th International Conference on Data Mining Workshop on Data Mining in Networks, pp. 266-272

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