Lattes & Unicorn Frappuccinos: Tim Hortons and Starbucks compete with new products

Two coffee shop chains announced an expanded menu Wednesday with a latte and a unicorn-inspired drink, as they try to attract more customers in a competitive industry.

Tim Hortons says its stores will now offer lattes with freshly brewed espresso beans, instead of a powder.

More than 3,500 of its 4,600 shops have been equipped with espresso machines.

The new coffee drink will be available next week.

Starbucks, meanwhile, has launched what they call a Unicorn Frappuccino, a purple and blue drink that changes colour as the layers mix.

Foodservice and franchise consultant Doug Fisher says Tim Hortons' sales have been pretty flat in Canada, and he sees the latte as a smart move to try to bring new life into the company.

"I think it's something that makes a statement," he says, adding that the company is trying to attract customers who prefer the more upscale coffee of Starbucks and Second Cup.

University of Toronto marketing professor David Soberman says part of the game in quick service restaurants is getting someone who doesn't typically come in to try your product.

"It's not a business of 'do I get you to purchase once,' it's a business of repurchase. People go in and buy these things on a regular basis," Soberman says. "They were going to your competitor, now they're going to you, this can make a huge difference in the profitability of your business."

As for the Unicorn Frappuccino, Fisher says Starbucks is perfectly targetting millenials and their phones, attracting free advertising on social media.

"If you have the right hits on social media, it's outstanding," he says.

Soberman adds that Starbucks is also trying to attract a different kind of customer.

"The coffee market in general now is trying to expand, bring people in to the market that were not typically coffee drinkers," Soberman says. "This is the same thing that happened in the beer market, now it's happening in the coffee market."