Tim Hortons' success is probably more than a testament to brand loyalty among Canadians. A resident of the United States, Arun K. Jain, puts it this way: "The coffee is the main thing. It's very hot, very fresh, and cheaper than Starbuck's."

As Samuel P. Capen professor of marketing research and chairman of the marketing department at the University at Buffalo, State University of New York, Jain has watched closely as Tim Hortons came to the greater Buffalo market and essentially decimated the competition. "Dunkin' Donuts is finished here, it's gone, except for a few highway locations on the outskirts of the area," he tells GSR. "It couldn't compete with Tim Hortons, which became very popular very quickly here, especially among young people."

He points out that coffee, as critical as it is to the chain's business, isn't the only thing Tim Hortons does well. "The doughnuts and other baked goods are high quality, and the chain does very well in finding locations, especially places that offer drive-through opportunities," Jain says. "It's a common sight here in Buffalo to see cars queued up in the morning at a Tim Hortons drive-through. They're very popular places to swing by on the way to work in the morning."

Though he hasn't studied the company's expansion plans in any detail, Jain did tell GSR that other brands facing competition from the Canadian chain "are in for trouble, unless they change. Not just the Dunkin' Donuts of the world, but other kinds of shops, such as bagel shops in strip malls that don't have drive-through access."

Not content to rest on current successful product lines, Tim Hortons is also known for its steady introduction of new products, typically but not always extensions of popular existing offerings. Earlier this year, for example, it introduced a strawberry tart, a steeped tea made from orange pekoe leaves, and a hot chicken and roasted red pepper sandwich, which represented the brand's first entry into hot sandwiches.

Tim Hortons also seems to be fending off a foray by Krispy Kreme into Canadian territory--or perhaps the North Carolina doughnut maker's expectations for Canada were too optimistic in the first place. But in any case KK closed three of its dozen Canadian operations recently, compared with Tim Hortons steady expansion.