Tim Hortons and Cold Stone: Co-Branding Strategies

A Q&A with Tim Hortons' David Clanachan and Cold Stone Creamery's Dan Beem on the ins and outs of co-branding

Tim Hortons (THI) and Cold Stone Creamery have co-branded nearly 50 restaurant locations in the U.S. and Canada this year and are continuing to expand the partnership, which grew from a chance meeting between the company CEOs in early 2008. BusinessWeek columnist Steve McKee asked Dan Beem, Cold Stone's president, and David Clanachan, Tim Hortons' chief operations officer, to explain why they did it and how it has worked. Edited excerpts of the interviews follow.

Why did you initiate this co-branding effort? What challenges were you trying to address? What opportunities were you trying to leverage?

Dan Beem: The co-branding initiative will leverage complementary dayparts [breakfast, lunch, and dinner in restaurant parlance] and seasonality to provide a quality experience for customers, a profitable scenario for franchisees, and to take advantage of prime real estate with little additional capital needed. Cold Stone Creamery drives significant customer traffic and sales in the evening market while Tim Hortons creates a substantial portion of its traffic and sales in the morning and lunch dayparts. Each brand has global reach with strengths in different markets that can be leveraged by the other brand.

David Clanachan: Co-branding with Cold Stone Creamery offers customers a reason to visit our co-branded locations morning, noon, and night. Tim Hortons' strength is our morning and noon day periods with coffee and baked goods, soups, and sandwiches. Cold Stone's strength is afternoon and evening periods with ice cream as a snack treat. Our intention is to fill each other's non-peak periods with new or even repeat customers.

Co-branding allows us to leverage efficiencies and costs from a real estate and operational standpoint. And co-branding gave us the opportunity to leverage our similar customer profiles.

What specific attributes/imagery do the two brand identities share that led you to believe a co-branding effort between them might be beneficial?

D.B.: It was a natural fit in terms of dayparts, but more than that, both represent the best of each space. Our brands have similar philosophies when it comes to customer service and quality of product. We knew they would be great together.

D.C.: In a nutshell, we saw our brand identities as very similar in commitments to quality, friendly service, and cleanliness. But it was freshness that jumped out at us. Tim Hortons mantra is "Always Fresh," from our 20-minute freshness guarantee on our coffee, to our baked goods and soups and sandwiches. Likewise, Cold Stone makes its own ice cream on premises and then mixes in whatever decadent ingredients you want, right in front of you. Freshness was a point of differentiation that we thought would lead to better collaboration.

In what attributes/imagery do the two brands differ that presented challenges to the effort?

D.B.: Value is getting great play in this economy, but comfort consumption is also doing well. Because purchase decisions can be different between Tim Hortons and Cold Stone Creamery customers, we were sensitive to the challenges this may pose. Cold Stone Creamery is often an occasional indulgent experience, a 10-minute vacation, whereas Tim Hortons is a daily convenience visit. What we found, however, is that these differences actually impact the complementary brand positively.

D.C.: How customers relate to each brand was an early consideration. Tim Hortons is largely a convenience play: The location of our stores, speed of service, and how we fit into someone's busy work day are customer priorities. Cold Stone is largely a destination play: Customers will travel there and usually at a time when they are less rushed.

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