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Canadian doughnut chain enters NYC doughnut wars

/ Source: The Associated Press

There's a new doughnut in town with a Canadian accent, and it's saving Zachary Abella from making a two-hour commute.

For a sip of hot chocolate and his preferred pastry fix, the 32-year-old Manhattan lawyer has driven 100 miles to Meriden, Conn., to what was then the closest Tim Hortons, a beloved Canadian chain that sells coffee and baked goods.

Abella, a Toronto native, now has an easier time satisfying his cravings. Earlier this month, Tim Hortons opened its first New York City locations, replacing 11 Dunkin' Donuts in Manhattan and Brooklyn.

The transformation brings new blood to the doughnut war in America's most competitive market. Employees from both companies took to the streets this week, handing out coupons while mascots roamed major transportation hubs.

It also rekindled memories of a decade-old fight between Dunkin' Donuts and the Riese Organization, a franchisee that owned the Dunkin' Donuts stores and now owns the Tim Hortons locations.

In 1999, Dunkin' Donuts tried to end its relationship with Riese, alleging that the franchisee didn't do enough to keep stores clean. The New York Post had published a photograph of a mouse eating a doughnut in the window of a Riese-owned outlet. After years of lawsuits, both companies ended their contract this month.

It was the perfect opportunity for Tim Hortons to step in, said Don Schroeder, President and CEO of Tim Hortons Inc.

"The key is the high volume of traffic and an established clientele," Schroeder said. "People are creatures of habit."

Neither company would disclose sales figures since the Canadian chain entered New York; most of the new stores are in midtown Manhattan, including near Grand Central Terminal and Penn Station. Worldwide, Dunkin' Donuts has nearly 15,000 stores that drew in $6.9 billion in sales in 2008. In contrast, Tim Hortons has about 3,500 stores that made $1.9 billion last year; the companies did not immediately respond to requests Friday for U.S. sales figures.

Dunkin' Donuts plans to open more stores elsewhere in the city in addition to the 415 located within 10 miles of Times Square. "What we offer matches perfectly with what consumers are seeking in these tough times," spokeswoman Michelle King said.

Home health aide Jeanette Rubin, a Dunkin' Donuts devotee, was surprised to find that a Tim Hortons had replaced her usual coffee stop outside Macy's flagship department store on 34th Street. She took a small sip of iced coffee she had just bought and grimaced.

"It doesn't have the Dunkin' Donut kick," she said.

Kathy Chan, a 23-year-old Manhattan real estate agent who moonlights as a doughnut expert, blogging and writing about desserts for various foodie web sites, said Tim Hortons' doughnuts tasted fresh, but heavier than she liked.

"It's denser. It fills you in your belly," the ex-pastry chef said.

Her favorite donut was the honey cruller, a lightly frosted, twisted yeast doughnut.

It had a "crisp exterior and an eggy, rich dough. Most places either make it too eggy, which results in a wet mess, or too dry. This is a good middle ground," Chan said.

The other middle ground may be Tim's prices. In Manhattan, a medium coffee costs less than $2 and a doughnut is just 95 cents.

Timmies, as Canadians affectionately call it, has been ingrained into Canadian culture. But the brand is not well-known to Americans.

Tim Hortons made its U.S. debut in 1984, opening a store in the Buffalo, N.Y., suburb of Tonawanda. It operates more than 500 stores in 11 states.

In Canada, Timmies is the underage pub for teens on Friday nights, the place seniors meet for breakfast, and a campaign stop for politicians hoping to get more votes. Even the Canadian Forces Base in Kandahar, Afghanistan, has a Tim Hortons.

Three more New York City stores that will be co-branded with Cold Stone Creamery ice cream are expected to open in August.

On Wednesday, Abella, the Canadian lawyer, sipped a hot chocolate inside the Broadway and 34th St. location.

"As a Canadian, there are certain things that we can all be proud of and this is one of them," he said. "It's hard to see this translate here in America."