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Tim Hortons Inc. (THI) Chief Executive Don Schroeder says the coffee-and-doughnut chain, which outsells McDonald's Corp. (MCD) in Canada, plans to break even in its U.S. business this year, and is on track to eventually turn a profit in the U.S.

Tim Hortons, with about 3,000 location in Canada, has a little more than 500 U.S. outlets, where its making a push as the battle of coffee sales heats up in the U.S. with McDonald's recently rolling out its McCafe beverage line.

Monday, Tim Hortons opened its first New York City locations after a franchisee re-branded a dozen Dunkin Donuts stores over the weekend, moving into a city where Starbucks Corp. (SBUX), Dunkin Donuts and McDonald's have strong bases. Tim Hortons took up some prime spots, though, in Times Square and Penn Station, which could help develop some brand awareness.

Tim Hortons is opening another 30 to 40 U.S. stores this year, including three additional New York stores co-branded with the Cold Stone Creamery ice cream chain.

Schroeder, who is also company president, said Tim Hortons plans to "grow responsibly" in the next couple years. Without offering a target for number of stores, Schroeder said the chain will look at unique opportunities when expanding in the U.S., like its co-branding partnership with other brands and operating in smaller footprints.

The coffee wars have heated up, with McDonald's joining the fray this year with a $100 million advertising campaign touting its specialty coffee line. At the same time, Starbucks, after years of rampant growth, has retrenched during the recession, shutting down hundreds of stores and scaling back expansion.

All the competition, which has McDonald's stores nationwide offering free samples of its cafe mochas on Mondays this summer, has drawn attention to the category. "All the focus they [McDonald's] have had on coffee raises the awareness of what is out there," Schroeder said Monday in an interview.

Tim Hortons is highlighting the value of its meals, where the average ticket is between $2.75 and $3.50, with specials roughly every month to keep customers interested. In its first quarter, the company said its same-store sales rose 3.2% in the U.S., with a slightly larger increase in Canada.

"If you lose sight of the price-value proposition, you will pay the price," Schroeder said.

Tim Hortons shares were recently up 27 cents, or 1.10%, at $24.78. The company is in the midst of reorganizing as a Canadian public company to take advantage of lower tax rates.

-By Paul Ziobro, Dow Jones Newswires; 212-416-2194; paul.ziobro@dowjones.com