Tim Hortons outlines plans for Winning in the New Era

Company unveils five-year strategic roadmap designed to create long-term 
profitable growth and above-market returns 

        --  Significant room for growth in core Canadian business, plan
            focuses on accelerating growth over the life of the plan with
            new consumer and sales levers
        --  U.S. focus on driving profitable growth in core and priority
            markets designed to allow the business to be scaled
            aggressively by the end of 2018
        --  Future international growth will continue with pragmatic,
            disciplined approach
        --  Targeting a minimum of 800 net new locations across North
            America and internationally through to the end of 2018

OAKVILLE, ON, Feb. 25, 2014 /CNW/ - Tim Hortons Inc. (TSX: THI, NYSE: THI) 
will today outline at an investor conference our 2014-2018 strategic roadmap 
"Winning in the New Era" which will also include our longer-term financial 

"Consumers are highly inter-connected and have increasingly evolving needs.  
Our strategic roadmap is ambitious but achievable, and is designed to 
capitalize on our strengths while allowing us to rapidly adapt to deliver on 
those changing consumer needs.  We are energizing the Tim Hortons brand in all 
of our geographic markets and we are focusing on driving long-term, 
sustainable, profitable growth which we believe will return us to above-market 
total return to shareholders," said Marc Caira, president and CEO.

Key themes and trends shape the "new era" facing consumer companies and the 
direction of our new strategic plan:
        --  the evolution of consumer tastes and preferences, including new
            flavours and an increasing desire for balanced menu options to
            address interest in health, wellness and nutrition;
        --  a continued shift in demographics, including an aging
            population, increasing ethnic diversity and the growing
            importance of 'Millennials' as a consumer segment; and
        --  the emergence of technology and data to drive both consumer
            marketing and menu insights and to respond to increasingly
            inter-connected consumers.

Each of our geographic markets plays a different and important role in our 
strategic plan. We have defined a set of strategic pillars and initiatives 
within each business unit that are designed to deliver on our shareholder 
value creation commitments.

Canada: Lead, Defend and Grow

We believe that our enviable guest loyalty, strong restaurant base and 
differentiated brand position, coupled with initiatives planned in our 
strategic plan, will present significant opportunities to grow our Canadian 
business over the next five years.
        --  Delivering the ultimate guest experience:  defending our core
            business by delivering on the ultimate guest experience more
            consistently with a focus on flawless restaurant-level
        --  Leveraging technology:  embracing technology as a key business
            driver, and becoming one of the industry's most
            consumer-centric companies, enabling us to aggregate guest
            insights and connect and transact with them in new and
            innovative ways.
        --  Differentiated innovation / pursuing new occasions:  delivering
            differentiated innovation in products and services using guest
            insights to anticipate and act upon evolving needs and
            expectations.  Our focus includes new proprietary food
            platforms that transcend dayparts, coffee and food category
            leadership that responds to consumer demand spaces and
            occasions, and a focus on consumer interest in health,
            nutrition and wellness.
        --  Narrowing average cheque gap:  narrowing the gap between our
            average cheque and the sector average, while protecting our
            core value brand positioning. We believe we have significant
            opportunities to increase items per order primarily by focusing
            on combination product offers and evaluating size and premium
        --  Continued restaurant development / channel extensions: 
            developing approximately 500 net new locations by 2018, and
            additionally extending our brand reach through new restaurant
            formats and sizes that target under-represented captive
            audience settings such as office, sporting venue and health
            care settings.  We also see opportunity, working together with
            our restaurant owners, to go beyond our restaurant footprint in
            alternative channels.

U.S.: Must-Win Battle

As the largest quick service restaurant market in the world, and one that is 
still growing, we are committed to the U.S.  Our proprietary research 
demonstrates that we have made significant inroads and progress in building 
consumer brand awareness and convenience in our core and priority markets. Our 
planned initiatives for the U.S. market include the following:
        --  Driving average unit volumes in existing restaurants:
            leveraging the strong awareness and convenience we have created
            in our core and priority markets to drive average unit volumes
            and enhance returns.
      o New and differentiated beverages, snacks and meal items, and
        compelling combos, to grow order size and make us more relevant to
        a broader number of U.S. consumers.
      o Leveraging technology, marketing and promotional initiatives to
        appeal to consumer needs, different dayparts and occasions, all
        designed to drive sales and traffic. Our view on the U.S., similar
        to the Canadian market, is that we have significant opportunities
        to grow average cheque while delivering value to consumers.
        --  Developing restaurants: optimizing our business model and
            restaurant-level economics with the goal of generating
            increased profit and growth.  Focused on our core and priority
            markets, through a less capital intense model, we expect an
            increase of approximately 300 restaurants in the U.S. by the
            end of 2018.  Our development plans will be complemented by
            brand and channel extensions to drive brand awareness and
        --  Traditional franchising development:  to complement our own
            development, pursuing traditional franchising development such
            as Area Development Agreements and Master Licensing Agreements,
            where partners deploy their capital and local market
            knowledge.  We have signed our first development agreements
            consistent with this strategy, with close to 100 (mix of
            standard and non-standard) units over the next five years in:
            St. Louis, Missouri (40); Youngstown, Ohio, 25 (all
            non-standard to complement our existing development); Fort
            Wayne, Indiana (15) and Fargo and Minot, North Dakota (15).

We expect this multi-layered, disciplined approach to developing our U.S. 
business will result in substantial progress in the U.S. segment and U.S. 
operating income of up to $50 million by 2018.

International: Grow, Learn, Expand

We are adopting a pragmatic and disciplined approach to continued 
international growth.  We intend to do this through:
        --  Further expansion in Gulf Cooperation Council (GCC): 
            continuing to learn and grow in the GCC where we have
            demonstrated initial success and have a roadmap to
            approximately 220 locations.
        --  Validation of international market opportunities and
            approach: refining our existing market research, business
            assessments and views on market opportunities.
        --  Position for potential market entries:  prioritize markets and
            develop due diligence to position us to enter new international
            markets in 2015.

* * *

Plan Summary

"We are setting out to be bold, different and daring.  We envision a Tim 
Hortons that is one of the industry's most consumer-centric brands, leveraging 
technology to build our understanding of emerging consumer insights and to 
connect with them in new and innovative ways.  We are focusing on flawless 
execution and creating the ultimate guest experience.  We are asserting our 
coffee and food leadership, simplifying our operations and pursuing 
differentiated innovation.  Our team is aligned, focused and committed to 
strong execution and market leadership," added Caira.

2014 Financial Outlook and Longer-term Financial Aspirations

The Company has disclosed its 2014 financial outlook with our fourth quarter 
results, as follows:
        --  Diluted earnings per share (EPS) of $3.17 to $3.27
        --  Same-store sales growth of 1% to 3% in Canada and 2% to 4% in
            the U.S.
        --  A total of 215 to 255 restaurant openings in Canada, the U.S.
            and the Gulf Cooperation Council, including:
      o 140 to 160 restaurant openings in Canada, approximately evenly
        split between standard and non-standard format restaurants
      o 40 to 60 full-serve restaurant openings in the U.S., approximately
        evenly split between standard and non-standard format restaurants
        --  Capital expenditures between $180 million to $220 million,
            including approximately US$30 million in the U.S.
        --  Effective tax rate of approximately 29%.

In support of the strategic initiatives outlined above, the Company has 
established the following aspirations beyond 2014, from 2015 to 2018:
        --  EPS: 11%-13% compounded annual growth rate;
        --  Collectively, we plan to open more than 800 locations in North
            America and the GCC (between 2014 and 2018);
        --  Cumulative free cash flow1 of approximately $2 billion;

We expect to reduce total capital intensity of the business as the plan 
progresses, and we are targeting to improve return on assets and total return 
to shareholders.

Executive compensation measures have been changed to better align with the 
strategy, shareholder value creation and same-store sales growth, which is 
directly linked to the success of our partnership with our franchise community.

The operational objectives, financial outlook and aspirational goals 
(collectively, "targets") established for 2014 and for our long-term 
aspirations are based on the accounting, tax and other legislative rules in 
place at the time the targets were issued and on the continuation of share 
repurchase programs as expected.  The impact of future changes in accounting, 
tax and/or other legislative rules that may or may not become effective in 
fiscal 2014 and future years, changes to our share repurchase activities, and 
other matters not contemplated at the time the targets were established that 
could affect our business, are not included in the determination of these 
targets.  In addition, the targets are forward-looking and are based on our 
expectations and outlook on, and shall only be effective as of, the date the 
targets were originally issued.

Except as required by applicable securities laws, we do not intend to update 
our annual targets.  These targets and our performance generally are subject 
to various risks and uncertainties ("risk factors") which may impact future 
performance and our achievement of these targets.  Refer to our safe harbor 
statement, which incorporates by reference our "risk factors" set forth at the 
end of this release, and our Annual Report on Form 10-K for 2012 filed on 
February 21st, 2013, our Quarterly Report on Form 10-Q filed on November 7th, 
2013, and our Annual Report on Form 10-K for 2013 (expected to be filed on or 
about February 25th, 2014).

(1)Free cash flow is a non-GAAP measure. Free cash flow is generally defined 
as net income adjusted for amortization and depreciation, net of capital 
requirements to sustain business growth. Management believes that free cash 
flow is an important tool to compare underlying cash flow generated from core 
operating activities once capital investment requirements have been met. Free 
cash flow does not represent residual cash flow available for discretionary 
expenditures. This non-GAAP measure is not intended to replace the 
presentation of our financial results in accordance with GAAP. The Company's 
use of the term free cash flow may differ from similar measures reported by 
other companies. Free cash flow as contemplated above, was calculated as 
follows: Net income attributable to THI, plus depreciation and amortization 
(excluding VIEs), less capital expenditures (excluding VIEs).

Safe Harbor Statement

Certain information in this news release, particularly information regarding 
future performance, finances, and plans, expectations and objectives of 
management, and other information, constitutes forward-looking information 
within the meaning of Canadian securities laws and forward-looking statements 
within the meaning of the Private Securities Litigation Reform Act of 1995. We 
refer to all of these as forward-looking statements. Various factors including 
competition in the quick service segment of the food service industry, general 
economic conditions and others described as "risk factors" in the Company's 
2012 Annual Report on Form 10-K filed February 21st, 2013, our Quarterly 
Report on Form 10-Q filed on November 7th, 2013, and our 2013 Annual Report on 
Form 10-K expected to be filed on or about February 25th, 2014 with the U.S. 
Securities and Exchange Commission and Canadian Securities Administrators, 
could affect the Company's actual results and cause such results to differ 
materially from those expressed in, or implied by, forward-looking statements. 
As such, readers are cautioned not to place undue reliance on forward-looking 
statements contained in this news release, which speak only as to management's 
expectations as of the date hereof.
Forward-looking statements are based on a number of assumptions which may 
prove to be incorrect, including, but not limited to, assumptions about: the 
absence of an adverse event or condition that damages our strong brand 
position and reputation; the absence of a material increase in competition or 
in volume or type of competitive activity within the quick service restaurant 
segment of the food service industry; our ability to obtain financing on 
favourable terms; our ability to maintain investment grade credit ratings; 
prospects and execution risks concerning our U.S. market strategy; general 
worldwide economic conditions; cost and availability of commodities; the 
ability to retain our senior management team or the inability to attract and 
retain qualified personnel; continuing positive working relationships with the 
majority of the Company's restaurant owners; the absence of any material 
adverse effects arising as a result of litigation; and there being no 
significant change in the Company's ability to comply with current or future 
regulatory requirements.

We are presenting this information for the purpose of informing you of 
management's current expectations regarding these matters, and this 
information may not be appropriate for any other purpose. We assume no 
obligation to update or alter any forward-looking statements after they are 
made, whether as a result of new information, future events, or otherwise, 
except as required by applicable law. Please review the Company's Safe Harbor 
Statement at www.timhortons.com/ca/en/about/safeharbor.html.

Tim Hortons Inc. Overview
Tim Hortons is one of the largest publicly-traded restaurant chains in North 
America based on market capitalization, and the largest in Canada. Operating 
in the quick service segment of the restaurant industry, Tim Hortons appeals 
to a broad range of consumer tastes, with a menu that includes premium coffee, 
hot and cold specialty drinks (including lattes, cappuccinos and espresso 
shots), specialty teas and fruit smoothies, fresh baked goods, grilled Panini 
and classic sandwiches, wraps, soups, prepared foods and other food products. 
As of December 29, 2013, Tim Hortons had 4,485 systemwide restaurants, 
including 3,588 in Canada, 859 in the United States and 38 in the Gulf 
Cooperation Council. More information about the Company is available at 

SOURCE  Tim Hortons 
Investors: Scott Bonikowsky, (905) 339-6186 
orbonikowsky_scott@timhortons.com Media: Olga Petrycki, (905) 339-5960 
To view this news release in HTML formatting, please use the following URL: 
CO: Tim Hortons
ST: Ontario
-0- Feb/25/2014 14:00 GMT
Press spacebar to pause and continue. Press esc to stop.