Oct. 13 (Bloomberg) -- Tim Hortons Inc., Canada’s largest fast-food company, is opening a coffee shop at Fort Knox, its first on an American military base, as it expands in the U.S.

The coffee-and-doughnuts seller won a 10-year contract to operate the café on the Kentucky base, 30 miles (48.3 kilometers) southwest of Louisville, David Clanachan, chief operations officer for the U.S. and international units, said in a telephone interview.

Tim Hortons is opening “nontraditional,” co-branded stores to extend its reach in the U.S., after closing 15 New England shops in 2008, Clanachan said. It established 12 cafés in New York City in July and teamed with ice cream seller Cold Stone Creamery in February, planning at least 100 stores featuring both brands by the end of this year.

“It’s been a pretty successful relaunch,” R.J. Hottovy, a restaurant analyst with Morningstar Inc. in Chicago, said in a telephone interview. He has a $29 target price on the stock. “It’s still going to be a struggle, but it did post positive results in the last quarter for the U.S.”

The chain’s U.S. division showed an operating loss of C$26.5 million ($25.5 million) in 2008 amid competition from Dunkin’ Donuts Inc., McDonald’s Corp. and Starbucks Corp. By contrast, the Canadian unit’s profit rose 8.4 percent, to C$507 million.

Tim Hortons, based in Oakville, Ontario, fell 6 cents to $29.08 at 4 p.m. in New York Stock Exchange composite trading. It has risen less than 1 percent this year.

Focus on Co-Branding

The Fort Knox site opened today. The company operates on seven Canadian military bases and at the Kandahar Air Force base in Afghanistan, Clanachan said.

Tim Hortons has been focusing its U.S. growth on co- branded stores, schools and hospitals in addition to military bases, rather than stand-alone stores, Clanachan said. It had about 3,000 shops in Canada and more than 500 in the U.S. as of June.

“We’re a smaller player in the U.S. and we need to be more nimble about some of the things we can do,” Clanachan said. “This allows us to garner momentum with U.S. customers.”

To contact the reporter on this story: Courtney Dentch in New York at cdentch1@bloomberg.net.

Last Updated: October 13, 2009 17:14 EDT