Competition brewing in Canada’s cold beverage market, as KFC and Dunkin’ take on Tim Hortons

An employee fills a drinks order at a Dunkin' in New Jersey. The U.S. coffee chain will return to the Canadian market in late 2026 or early 2027, with plans to open hundreds of locations across the country. Photo by Ron Antonelli/Bloomberg

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Some fast-food big guns from the United States are muscling in on Tim Hortons’ territory as one of Canada’s beverage kings, but the iconic coffee chain says it is not worried.

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Asked during a conference call with analysts this month about “a notable Northeast chain” that plans a rapid return to the Canadian market, Josh Kobza, chief executive of parent company Restaurant Brands International Inc., said competition is nothing new in the quick-service restaurant market.

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“My confidence level on Tim’s is really high,” Patrick Doyle, RBI executive chairman, said during same call.

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The “notable Northeast chain” is Dunkin’, formerly known as Dunkin’ Donuts, which will return to the Canadian market in late 2026 or early 2027, with plans to open hundreds of locations across the country.

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The move was announced in May by Canadian restaurant operator Foodtastic, which will exclusively develop the Dunkin’ brand nationally through both corporate and franchise-operated locations.

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The return of Dunkin’ could heat up the beverage and baked goods market, long dominated by Tim Hortons, as well as McDonald’s.

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While known for its coffee and doughnuts, Dunkin’ dropped “Donuts” from its name in January 2019 and has since rebranded as a “beverage-led company,” serving not only the iced coffee it’s been known for, but also a variety of refreshers, lemonades, frozen drinks and zero-sugar cold beverages. The brand collaborated with celebrity Kylie Jenner this summer for a line of pink-coloured drinks.

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“I think it’s a cooler, younger, trendier brand with better coffee and baked goods and tastier breakfast offering than what Tim’s or McDonalds has right now,” Foodtastic founder and chief executive Peter Mammas told the Financial Post in an interview in May.

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Ten days after the Dunkin’ announcement, Tim Hortons said it planned to open 80 new Tims restaurants across Canada this year and renovate about 400 restaurants.

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RBI executive chair Doyle said Tim Hortons is a business that has consistently performed over the past five years, and he expects competition in Canada five years from now to be pretty much identical to what it is today.

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“This is all in our control and the consumer environment, the economy, is no different this year than it was last year,” he added. “This is about continuing to find ways to be more interesting.”

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But the push for beverage market share isn’t limited to Dunkin’. KFC Corp., best known for fried chicken, debuted a new lineup of cold drinks last month called Kwench, the restaurant chain’s first launch of the line in North America.

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Made-to-order beverages include iced lattes, milkshakes, refreshers and lemonades, with prices starting at $3.50.

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KFC has launched Kwench in the United Kingdom, Ireland and Australia, but not yet in its home market, the United States.

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KFC Canada president and general manager Ryan Koon said the company wanted the North American launch to be in Canada because it has had success with innovative products here such as the Double Down sandwich and its pickle menu that sold out last year.