TORONTO - Tim Hortons is hiring -- Canada's No. 1 coffee chain is looking for a new leader after the abrupt departure of its CEO.

The company announced Wednesday that Don Schroeder, 65, no longer serves as president and CEO after three years at the helm and two decades as an employee.

Tim Hortons' (TSX:THI) board said it believes a change at the top at this time is best for the company. In the meantime, executive chairman Paul House, who has previously held the position of president and CEO, will take on the role on an interim basis.

"Don Schroeder has made significant contributions to Tim Hortons during his 20 years of service, and although a transitional arrangement could not be reached, we appreciate his leadership as president and CEO since his appointment in 2008," House said in a release.

"We have a talented, experienced and highly capable executive group, and we will continue to drive execution of our established strategic growth plans and initiatives, which are designed to capitalize on market opportunities, as the board concludes the process to appoint a new CEO."

The board said it was already engaged in comprehensive succession planning for the CEO position as part of its strategic planning. A spokesman for the company said it would not comment further.

Tim Hortons did not say why Schroeder was leaving so suddenly, but Brian Yarbrough, a retail analyst at Edward Jones in St. Louis, believes the fact that it could not reach a "transitional arrangement" is key.

"It seems like the board went to him and said 'Look, we want to find a different guy to lead this firm longer-term and take it to the next level, will you stick around in the transition period?' -- and he just said 'I'm out."'

Shares in the company fell about 1.7 per cent to close down 78 cents at $45.05 Wednesday on the Toronto Stock Exchange after reaching a record high of $48.31 just two weeks ago.

Schroeder's departure is a surprise, given that it's only been three years since he became CEO, and there's been no specific event or reason for a sudden departure, Yarbrough said. Schroeder was appointed in 2008, just before the onset of the financial downturn, and was able to keep @U.S. and Canadian stores are performing well.

"I didn't see a lot of flaws in what he had been doing," Yarbrough said.

In its most recent quarterly results, Tims posted a 2.3 per cent rise in profit to $80.7 million, or 48 cents per diluted share -- missing analyst estimates for a profit of 51 cents per share.

The company's same-store sales, or results for stores open at least a year, rose two per cent in Canada and 4.9 per cent in the United States. Canadian same-store sales were affected by bad weather and higher redemptions for food and beverage prizes in the company's popular Roll Up the Rim to Win promotional contest.

At home, Tims faces increasing competition from McDonald's, Subway and other fast food chains trying to tackle the breakfast market with heavy promotions.

It also continues to face challenges in the hyper-competitive U.S. market, where it must compete with well-established brands such as Dunkin' Donuts and Starbucks.

"It's definitely not as easy as they originally planned, they thought once they got to 500 stores, they'd have a lot of recognition and they'd be just starting to roll out across the U.S. and that obviously isn't playing out."

Tim Hortons has been in the hot seat in recent months after it became increasingly clear that the company's once-ambitious expansion into the United States wasn't necessarily going according to plan. The restaurant operator announced late last year it would shut down 54 locations in New England where it was losing money.

The closures were considered by many as a sign that Tim Hortons has run into major problems convincing Americans to buy its products, even after a splashy rollout of locations in high-trafficked spots like Times Square and Broadway in Manhattan.

But, Yarbrough said Schroeder shouldn't be held responsible for the strategy, as it was well-entrenched under House, who was CEO on a temporary basis in 2005 while Schroeder moved into the job.

House has worked for Tim Hortons for more than 25 years, and held the role of president and chief operating officer in the mid-'90s.

Schroeder, meanwhile, followed a rather unusual path toward leading one of Canada's most recognized brands. Just prior to his appointment as CEO, he was president of the Tim Horton Children's Foundation.

He holds a Master of Laws degree and acted as the company's general counsel, among other executive positions. Prior to that, Schroeder had been indirectly involved with the company since the 1970s as a lawyer for a number of franchisees, before becoming a franchisee of a number of restaurants himself.

There is no apparent successor for Schroeder, given that it doesn't appear the company had been grooming someone for the role. The company will be searching for a new CEO at the same time as another big Canadian brand, Shoppers Drug Mart (TSX:SC) also seeks a new leader.

Based in Oakville, Ont., Tim Hortons is Canada's biggest restaurant chain and the fourth-biggest in North America with more than 3,700 restaurants on the continent.