Starbucks is Better than Timmy’s!


There are a lot of reasons why I like Starbucks better. First of all, hot chocolate is my drink of choice and Starbucks makes an exquisite hot chocolate. Tim Horton’s still has theirs as an oversweetened miserable concoction from a push button instant machine dating from the 1970s.

Also, I have not forgiven Timmy’s for desecrating their donut recipe. Once upon a time they had wonderful donuts with a melt-in-your-mouth texture, baked fresh daily in-store. Then they decided it would be better to make them all in Ontario and ship them frozen to each store to serve. The texture is lost and, as a result, it’s just not good enough to justify that level of calorie intake.

Starbucks is also a very welcoming environment, encouraging people to come in, make themselves comfortable, use the internet, stay a while. Quite a few Timmy’s have signs requesting that customers leave after 30 minutes and the seating is those metal chairs that are welded to the tables, just like they have in McDonald’s.

Tim Horton’s merged with Burger King and trades as Restaurant Brands International on the TSX (QSR:T) in December 2014 at $41 a share. They now trade near $56 a share. They yield about 1%, so the dividend just isn’t meaningful, and a P/E of 45 makes it very expensive. I don’t like them as a long-term investment just because Burger King just hasn’t been that enticing in the fast-food space and Tim Horton’s likes to go and fail miserably in expansion in the US from time to time. In my view, their product just isn’t good enough to try to take on the US market, when there are competitors doing a better job there. Tim Horton’s seems to me to be quite close to saturation in Canada. Burger King has let their brand slide and hasn’t done anything that exciting for a very long time. It doesn’t have a big enough dividend to interest me and I just don’t see this as a great long term investment.

Starbucks (SBUX:NASDAQ), however, is still growing globally and in my view has a much better product. It yields 1.2% and the share price has been increasingly steadily, from a low of about $35 in November to a current price of about $55. They have a profit margin of 14.5% compared to Timmy’s 8.38%, and a more reasonable (though still expensive) P/E of 30. I really see Starbucks as the one I’d rather own. That said, I currently don’t own either, though if Starbucks has a drop in price I would love to buy some.

This is not intended as investment advice. Before buying any stock do your own research or speak to a professional.



One Comment

  1. As a seven year Starbucks veteran I must admit I prefer the Waves hot chocolate, in which they melt real chocolate, but Starbucks is pretty good. They love having people working at the tables (contrary to the public’s perception) so you can settle in for as long as you want. And they try to have plenty of plugs handy as well. It’s a good, professional environment. Timmy’s? Well, I can’t work in Timmy’s because since I cover hacker news, not only are most of the sites I read daily blocked, but MY site is blocked as well by their overzealous net nanny software. And good luck finding an outlet there.

    I do love the garden veggie bagel, though. Can’t say no to those.

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