New York City tourist Raeann Boynton stares at the Tim Hortons restaurant menu on 53rd Street and says she's not impressed.

"If I have the option to go to Starbucks or Tim Hortons, I'm going to Starbucks," said the 17-year-old student from New Orleans who ordered an ice cappuccino at Tim Hortons during a recent holiday in New York. Starbucks has "much more variety, and it's more convenient since there are so many of them."

Tim Hortons' failure to catch on with consumers like Boynton in the U.S., where the coffee and doughnut chain's Canadian charm means little in a crowded fast-food market, is causing growing unrest among its shareholders.

Activist investors say the $664-million-U.S. expansion over the last decade has been a waste. At stake may be a forced retreat from a market that promises the Oakville, Ont.-based company potential growth as it reaches saturation at home.

"They are meeting the point at which they won't be able to open any more stores in Canada," said Jim Danahy, chief executive officer of Customer LAB, a Toronto-based retail consulting firm. "They know long-term growth will have to come from the U.S."

Tim Hortons recently faced criticism of its U.S. strategy from activist investors Highfields Capital Management LP of Boston and New Yorkbased Scout Capital Management LLC, which hold four and five per cent of the company's shares, respectively. Both investment firms pressured the company to scale back the U.S. expansion, and instead direct capital to share buybacks.

"The company's consistent and long-standing underperformance should long ago have been a wake-up to Tim Hortons' board and management," Scout said in a letter on June 25. "We urge you to curtail the use of the company's cash flow to fund real estate or new store capex in the U.S."

With a U.S. market share of only 2.7 per cent, according to retail consulting firm Technomic Inc., Tim Hortons hasn't been able to replicate the institutional status that it enjoys in Canada. The chain was founded in Hamilton in 1964 by late National Hockey League player Tim Horton, the man credited with inventing the slap shot. The chain plays off its founder's hockey roots, sponsoring minor hockey development programs, and can be found in practically every city in the country. The company has 3,453 locations in Canada, more than McDonald's Corp.

Even with the slow growth in the U.S., investors have pushed the shares higher. Tim Hortons has risen 22 per cent this year, compared with a 1.7 per cent gain in the Standard & Poor's/TSX Composite Index, Canada's benchmark equity gauge. While it dominates in Canada, the company derives only 5.3 per cent of its revenue from its U.S. locations, which account for 18 per cent of its total stores, according to data compiled by Bloomberg. Canadian stores generated $182,000 in operating profit per store last year, whereas U.S. stores generated $20,000 per store, said Derek Dley, an analyst at Canaccord Genuity Corp., in a phone interview July 16.

Analysts have attributed the comparatively poor results in the U.S. to the company's inability to adapt its marketing to U.S. consumers, along with the chain's small market presence.

"Competitiveness and brand would be the two biggest issues for them in the U.S.," said Bobby Hagedorn, a St. Louisbased analyst at Edward Jones. "There's just more options, and they're just so much smaller."