Chuck Regehr: It’s fair to say that Canadians have a bit of a love affair with Tim Hortons, but trying to translate a sentiment like love into dollars and cents can sometimes turn a relationship a little bit sour. Well that’s the test that Tim Hortons will face as its parent company, Wendy’s, prepares to put a piece of Tim’s out on the street. Shares in the initial public offering are expected to be priced between $21 and $23. For an assessment of Tim’s value we contacted Rick Wolfe. He’s the President of PostStone Consulting in Toronto. Good morning, Mr. Wolfe.

Rick Wolfe: Good morning.

CR: What kind of growth does Tim Hortons have to produce to make this a good story for investors?

RW: The kind of growth that we can expect from Tim Hortons is I would say in the 10 to 15 per cent range. The trouble is these days it seems that investors are always looking for more. And let’s hope that in the case of Tim Hortons they have sufficient respect for the great management of this company to let them grow at a steady pace.

CR: Now Tim Hortons has done fairly well in Canada. Clearly investors will be hoping for some good growth in the U.S. What are the obstacles they are facing to growth in the U.S.?

RW: The two big obstacles to growth in the U.S. are the fact that their brand is well known here, not well known there, and the fact that they have great competitors there. But I wouldn’t underestimate them. This is one of the best-managed companies anywhere. I would expect to see further U.S. growth from them.

CR: What is Tim Hortons doing differently from some of the other fast food competition?

RW: Every fast food company and every consumer company there is needs to tell four stories. Those stories are a product story, a customer experience story, an operations story and a shareholder value story. You’ve got to tell a couple of those stories in a compelling way in order to succeed. Tim Hortons tells all four in a compelling way.

CR: Who are Tim Hortons main competitors in the U.S.?

RW: Well, you can never ignore a company like McDonald's. But then there are companies like Dunkin’ Donuts and there are companies like Subway that make products that compete very specifically against Tim Hortons.

CR: Is there anything that Tim Hortons has or does that some of these others do not?

RW: Yes, Tim Hortons has the best kitchen arrangement in fast food. It’s a very, very flexible kitchen. This is what I mean about operations. They do a great job of hiring and training staff, but most particularly, their kitchen is very flexible and it allows them to have a much bigger and more diverse menu than a typical competitor. Fast food companies usually get confused when they have too many items. Tim Hortons is able to have lots of items. Secondly, Tim Hortons… has a compelling customer experience.

CR: What is that customer experience that others do not have?

RW: It is consistency, it is freshness. It is a smile at the counter. It is involvement in the community in things that are important to the community. It is the single best promotion in the history of the world. Now maybe I’m exaggerating when I say that, but the Roll Up the Rim to Win promotion is an outstanding promotion.

CR: Do you expect to see that in the U.S. as well?

RW: If not that exact promotion, the basic understanding that underpins that promotion should transfer to the U.S., yes.

CR: Investors that are looking for strong growth, is this the stock for them to buy?

RW: No. Tim Hortons is too mature a company and the business is too tough a business to look at this as a strong growth stock. But absolutely look at it as a stock that should perform well over the long-term — excuse me — look at it as a company that is going to perform well over the long-term. And if the stock doesn’t get ahead of itself, then the stock will perform well, too.

CR: Now companies are not known for selling off assets at the bottom of the market. Wendy’s is looking to spin off at least a small piece of Tim’s. Are they selling at the top of the market?

RW: No, I wouldn’t think they are selling at the top… By selling off a small piece they are getting a valuation on the asset. They allow more visibility for Tim’s which should increase the value of their shares - or that would be their hope, that it would increase the value of their shares. And that would allow them to sell the rest of the company or more big chunks of the company at a higher price later on.

CR: Will you be a buyer?

RW: No, I will not be a buyer but that’s because I do my investing in other kinds of assets. But I think it’s an outstanding company. I literally do not know a better-run company.

CR: Mr. Wolfe, thank you for joining U.S. this morning.

RW: You’re most welcome.

CR: Rick Wolfe is the President of PostStone Consulting in Toronto.