Burger King's Plan For Tim Hortons? Look To The Developing World

Tim Hortons, Canada's best-loved coffee and donut chain.

If Burger King goes through with its purchase of Canadian coffee and doughnut chain Tim Hortons ,it’ll be saving a chunk of change on corporate taxes. But the fast food company (and its majority owners, Brazilian private equity firm 3G Capital) won’t just benefit financially from the deal, which Burger Kingconfirmed on Sunday night following a Wall StreetJournal report. It’ll be able to double down on what has been an aggressive international expansion that began in earnest following 3G Capital’s acquisition in 2010.

“It could just be ‘plug and play’ with the formula Burger King has created over the past four or five years internationally,” said a source with knowledge of talks between the companies. “Nearly half of Burger King’s stores are now outside the United States.”

As Burger King and Tim Hortons don’t technically compete, fast food fans in the Middle East, Latin America and other parts of the developing world may soon be able to buy coffee and a pastry alongside their Whopper and fries.

“Could you have a Tim Hortons and a Burger King across the street from each other in South Africa? Absolutely,” said the source.

Burger King’s international footprint is 97 countries and territories strong, and growing fast. Since 2012, the company has either opened restaurants or announced the establishment of a joint venture to expand its presence in the following:

Martinique

Guadeloupe

French Guyana

Brunei

Sri Lanka

India

Mexico

South Africa

Singapore

China

Russia

Of course, the tax inversion deal and merger could well see 3,600-store Tim Hortons crop up in locations closer to home, although the coffee market is far more saturated in the continental U.S.

At present, the Ontario-based outfit can be found in 11 states, mostly in the northeast and near the Canadian border. (At last count, there were 11 in Manhattan, almost all in tourist-heavy areas like Herald Square and Grand Central Station.)

But 3G Capital will likely go into this partnership by looking further afield for growth, in markets like UAE, Qatar, Oman and Turkey where there remains more demand than supply for American (and, in this case, Canadian) fast food.