What Do Tims China Closures Mean for the Coffee Market?

Tims Tianhao Coffee has closed its first Yinchuan store, the Xinhua Department Store location that also served as the brand's 700th store in China, after less than a year of operation. The shop opened on June 18, 2023, and sat within a commercial district surrounded by three Luckin Coffee, two Starbucks, and one Cotti Coffee outlet, reflecting intense competitive pressure.

Closures have also been reported in Beijing, Shanghai, Nanjing, and Dalian. Tims had set a thousand-store target in its financial reports, but Narrow Door Restaurant Eye counted 885 stores, so the expansion path faces clear challenges. Known for its breakfast bagels as much as its coffee, the chain now confronts a crowded Chinese market led by Luckin Coffee and other rivals.

Tims Tianhao Coffee has always been a unique presence in consumers' minds—many people remember it not because of the coffee, but because of the bagel during breakfast hours. However, this chain brand, known for its bagels, has recently been frequently reported to be closing stores. The first Tims store in Yinchuan, which was also the brand's 700th store in China, the Xinhua Department Store location, quietly closed after less than a year of operation, drawing regret from local consumers. Looking at the entire commercial district, this store was surrounded by 3 Luckin Coffee, 2 Starbucks, and 1 Cotti Coffee locations, showing the intense competitive pressure. More notably, Tims stores in Beijing, Shanghai, Nanjing, Dalian, and other places have also been announcing closures one after another. From the thousand-store goal in its financial reports to the 885 stores counted by Narrow Door Restaurant Eye, Tims' expansion path seems to be facing severe challenges. This article will start with the withdrawal of the first Yinchuan store and analyze Tims' current operating situation and market challenges.

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Among the many chain coffee brands, Tims is a relatively unique one—consumers often remember it not because of the coffee itself, but because of that morning bagel. Whenever Tims opens a new store in a city, the first thing everyone thinks of is that breakfast now has one more option.

However, recently, netizens in Yinchuan discovered that the Tims store located in Xinhua Department Store has closed. This store was not only Yinchuan's first Tims, but also the brand's 700th store in China. Its closure means that Yinchuan has seen its first Tims withdrawal.

According to netizens' recollections, the store opened on June 18, 2023. In order to secure the title of "first store" before the other two stores in Yinchuan, it even opened earlier than the Xinhua Department Store where it was located. After opening, relying on its superior location and the "first store" effect, this store attracted many customers. But no one expected that after less than a year of operation, it would quietly exit.

Loyal customers who learned the news expressed their regret one after another: "This store was pretty good, how could it just withdraw like that, and it even hired deaf-mute employees," "Every time I got tired shopping on Xinhua Street, I would go eat a bagel and enjoy the air conditioning, why did it close," "Such a good store also withdrew, my bagel," "The service at the Xinhua Department Store location was really good, when ordering takeout I loved ordering from them."

The reasons for the closure of Tims' first Yinchuan store are not singular. From the perspective of the entire commercial district, this store's location could be described as "attacked from front and back"—surrounded by 3 Luckin Coffee, 2 Starbucks, and 1 Cotti Coffee. For price-sensitive consumers, Luckin and Cotti are the first choice; while customers who want to enjoy the store atmosphere and service find Starbucks "more able to hold up the occasion" compared with Tims.

From this perspective, Tims, surrounded by Starbucks, Luckin, and Cotti, is indeed "under enormous pressure." In terms of coffee products alone, Tims' advantages are not prominent. Only by relying on tasty bagels, farmer rolls, and other food items can it maintain a bit of presence within the encirclement.

On the other hand, Tims occupies relatively good retail space within the mall, so the rent is naturally not low. Therefore, it cannot be ruled out that the store's revenue and expenditure were difficult to balance and could not cover rent and operating costs. Coupled with the mall's own operational adjustments, the brand ultimately gave up the first Yinchuan store after weighing the options.

It is worth noting that Tims has recently closed more than just the Yinchuan store; stores in Beijing, Shanghai, Nanjing, Dalian, and other places have all announced closures.

In April of this year, Tims announced its full-year 2023 financial report, which mentioned that the total number of Tims Coffee and Popeyes stores nationwide reached 912, and in January of this year it even exceeded one thousand, showing an overall thriving development momentum.

But data from Narrow Door Restaurant Eye shows that Tims' store growth rate has slowed noticeably this year, with the total number not rising but falling. As of April this year, Tims had 885 stores, with the number of openings and closings almost equal, equivalent to the brand "opening one and closing one" over the past four months, with a closure rate of 16.84%.

(Image screenshot from Narrow Door Restaurant Eye)

Although Tims partnered with Sinopec EasyJoy to launch Tims Express, using a lower-cost store-within-a-store model to maintain its offline store scale, in the broader environment of economic downturn, competition among brands is becoming increasingly fierce. If Tims, carrying heavy pressure, wants to break through one thousand stores in the first half of the year as originally planned, it may not be as easy as expected.

Image source: Internet

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The above content is compiled by CoffeeHunters, a coffee news website.