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A doughnut with your coffee?

The coffee in the coffee cups is not the only thing that is hot in the Twin Cities coffee shop market. Canadian donut shop, Tim Hortons, announced that they will be expanding into the Minnesota market. It is expected that they will open their first stores in the Twin Cities area and have signed an agreement with Restaurant Development Partners Corp. (RDP) to operate the stores.

The company has a few stores in the state, but the three existing units are on or near the Canadian border. The new metro-area stores will face strong competition from the incumbent coffee shops in the metro area, including Caribou, Starbucks and Dunn Brothers.

Tim Hortons has almost 5,000 coffee shops worldwide and more than 800 in the U.S. In addition to existing competitors, Dunkin Donuts has also announced expansion into the Twin Cities coffee market. Dunkin's first store will be in New Hope, but they are expected to open "dozens" of new locations.

Because of the unique aspects of this market, site selection for the commercial real estate properties is crucial. An area close to major arterial roads or freeways, with easy access and good traffic flow and the ability to feature a drive-thru, can greatly enhance the profitability of such a business or franchise.

The Minneapolis/St. Paul Business Journal reports that the competition for prime locations has led to at least one case of Starbucks outbidding Dunkin on a piece of property. For investors or franchisee's, it will be essential that you fully understand the cost structure of your franchise agreement and that the property will support sufficient cash flow to provide for the successful operation.

Source:, "Even more doughnuts: Tim Hortons will expand in Minnesota," Nick Halter, June 13, 2016,

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