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At Issue
Lunch Roll Economics: Turning a Penny Into A Dime
Tuesday, February 18, 2003
A long time ago, your loyal scribe was a teaching assistant at the University of Guelph. I had the daunting task of helping fourth year business students master the art of selling. Every week I marked papers, held office hours and role played for students intent on mastering sales and sales management.It was a great diversion for me. At the time, I was neck deep into the vagaries of a very dismal science called agricultural economics. So getting the chance to help some students hone their sales skills was a welcome retreat from crunching numbers. It's too bad we didn't have fellow CkTimes columnist and sales guru John Weese on board. I'm sure he could have enhanced the few tidbits I was able to give the students.
In those days I was consulting for different government agencies and private corporations. When I wasn't doing that I was working a large farm in the Dresden area. "Under the Agridome" was in its infancy, but it was well on its way to being what it is today. Everything I did in those days focused on building my career for the future.
For those of you who follow my "other writing career", you'll know its all about agriculture. But back in the day, while building that career, I had the rogue notion float through my head about opening a donut shop. At the time, I was not immune from imbibing a few donuts. Living in Guelph at the time, Tim Hortons was just a block from my apartment. From my naive vantage point, it looked like a license to print money.
That was at a time when Tim Horton's hadn't graduated into the fast food dynamo it is today. The Guelph Tim's was a hole in the wall divided into two parts. The one side had a number of stools which were constantly inundated with folks smoking a cigarette and chafing down a coffee and donut. The other side had a simple counter where folks like me could order coffee and donuts. It was packed almost all the time.
You see, I grew up near a bakery called "Burns". "Burns" bakery was a great place for folks who liked donuts. In my mind their specialty was something called the lunch roll. It was your basic bun swiped with white icing. A generation of kids grew up on them in Dresden. When I was a kid they cost 10 cents. When they were a day old, they cost 1 cent. Those were the days before the microwave oven. Just think what I could have done with those 1 cent lunch rolls with a little bit of microwave energy?
I could have turned that penny back into a dime. That is just what I thought Tim Horton's was doing down at the corner in Guelph. This idea became so strong that I entertained turning it into a grad school marketing project. Unfortunately, on my way to doing that, my marketing project turned into launching a new woman's shampoo. It might have been a turning point in my career. At least I got an A for the woman's shampoo.
But I still think about the "donut business." Clearly, though, that business has changed even for Tim Horton's. In many ways Tim Horton's has redefined itself. Tim Hortons now has 2,149 outlets across Canada, and 157 south of the border. It has been mostly American owned since 1995 when Wendy's bought it. It now accounts for 30 to 35% of Wendy's total revenue. Last year, it had nearly $2.1 billion in Canadian sales compared to $2.2 billion for the troubled McDonald's Corp. It shouldn't be too long before they overtake the burger giant in sales.
We shall see. Regardless of who owns it, many folks think of Tim Hortons as strictly Canadian. Sorry Molsons. That was borne out last week, when Heritage Minister Sheila Copps announced her candidacy for the Liberal leadership at a Tim Horton's in Hamilton. Copps play at Tim Horton's was high on symbolism. She's obviously hoping Tim's success can spill over into her campaign.
At the end of the day, we'll see who's smelling the coffee. It may be Sheila Copps. The road is full of business train wrecks gone awry. Nobody ever expected Mickey D's to have its troubles. Mother's Pizza is now the answer to a trivia question. But coffee and donuts, a simple business idea, seems to work. What was I thinking so many years ago?
Philip Shaw, farms 830 acres near Dresden, Ontario. He holds a Masters of Agricultural Economics and Business Degree from the University of Guelph and is a well-known commentator on agricultural issues in print, on radio and over satellite in Canada and the United States. In the Chatham-Kent Times, Phil will use his frank and forthright writing style to address political and economic issues from the local to the international stage. He is a keen observer of political life at all levels, reads widely and has travelled the world to gather fodder for his column. See what's At Issue this week.
