Tim Hortons coffee and doughnuts are about as closely linked with the Canadian identity as hockey and universal health care, but the institution is under attack.
That’s the view of many of the chain’s franchisees, who are chafing under the corporate ownership of Restaurant Brands International Inc., the fast-food conglomerate that also runs Burger King and Popeyes Louisiana Kitchen. They claim that efforts to squeeze money from restaurant operators are destroying Tim Hortons’ nice-guy image and forcing them to scale back community programs, including youth hockey.
Restaurant Brands, which subsumed Tim Hortons in 2014, is backed by the Brazilian investment firm 3G Capital -- famous for pursuing hard-nosed deals and then aggressively managing expenses. At Tim Hortons, corporate is now charging franchisees more for everything from rent to bacon, which they say is hurting their bottom lines, boosting prices at the register and irking customers.
“We won’t be able to give the service that we’re known for,” said franchisee David Hughes, who owns five Tim Hortons in southern Alberta. “These guys have turned everything into a profit center.”
As Tim Hortons management charges higher prices for coffee and other supplies, restaurants have had to lay off workers, the franchisees say. Store owners are stocking up on bags of sugar at Costco, where it’s cheaper than what the corporate parent charges. Even knives and scissors are more expensive under 3G.
Daniel Schwartz, a 3G partner who serves as Restaurant Brands’ chief executive officer, said that the company has met with the Great White North Franchisee Association. But he doesn’t want to argue with franchisees in public.
“There’s been a lot of change,” Schwartz, 36, said in an interview last month. “With change comes anxiety and uncertainty.”
Tim Gilks, a former Tim Hortons executive who runs a commodities-consulting firm, says the company is now charging each restaurant about $13,750 more for coffee a year. While commodity costs have gone up for everyone, corporate is pushing prices well beyond that increase, he said.
Diners are noticing the changes, especially the higher menu prices, Hughes said. In Alberta, cups of coffee are now 2 cents more expensive than they used to be. That doesn’t sound like much, but coffee drinkers are creatures of habit -- and even a small uptick may register with them.
Franchisees have been increasingly vocal since 2014, when 3G and Warren Buffett’s Berkshire Hathaway first combined Tim Hortons with Burger King. That deal created Restaurant Brands, which located its headquarters in Tim Hortons’ longtime home of Oakville, Ontario.
Wade MacCallum, who owns six Tim Hortons in Canada, said he was told things would be “business as usual” when Restaurant Brands took over. Instead, 3G has overhauled everything, he said.
“The 3G business model is based on cost cutting,” said MacCallum, who serves on the board of the franchisee association. “I don’t think there’s a part of the business they haven’t touched.”
https://www.bloomberg.com/news/arti...rs-worry-chain-is-losing-its-canadian-culture
That’s the view of many of the chain’s franchisees, who are chafing under the corporate ownership of Restaurant Brands International Inc., the fast-food conglomerate that also runs Burger King and Popeyes Louisiana Kitchen. They claim that efforts to squeeze money from restaurant operators are destroying Tim Hortons’ nice-guy image and forcing them to scale back community programs, including youth hockey.
Restaurant Brands, which subsumed Tim Hortons in 2014, is backed by the Brazilian investment firm 3G Capital -- famous for pursuing hard-nosed deals and then aggressively managing expenses. At Tim Hortons, corporate is now charging franchisees more for everything from rent to bacon, which they say is hurting their bottom lines, boosting prices at the register and irking customers.
“We won’t be able to give the service that we’re known for,” said franchisee David Hughes, who owns five Tim Hortons in southern Alberta. “These guys have turned everything into a profit center.”
As Tim Hortons management charges higher prices for coffee and other supplies, restaurants have had to lay off workers, the franchisees say. Store owners are stocking up on bags of sugar at Costco, where it’s cheaper than what the corporate parent charges. Even knives and scissors are more expensive under 3G.
Daniel Schwartz, a 3G partner who serves as Restaurant Brands’ chief executive officer, said that the company has met with the Great White North Franchisee Association. But he doesn’t want to argue with franchisees in public.
“There’s been a lot of change,” Schwartz, 36, said in an interview last month. “With change comes anxiety and uncertainty.”
Tim Gilks, a former Tim Hortons executive who runs a commodities-consulting firm, says the company is now charging each restaurant about $13,750 more for coffee a year. While commodity costs have gone up for everyone, corporate is pushing prices well beyond that increase, he said.
Diners are noticing the changes, especially the higher menu prices, Hughes said. In Alberta, cups of coffee are now 2 cents more expensive than they used to be. That doesn’t sound like much, but coffee drinkers are creatures of habit -- and even a small uptick may register with them.
Franchisees have been increasingly vocal since 2014, when 3G and Warren Buffett’s Berkshire Hathaway first combined Tim Hortons with Burger King. That deal created Restaurant Brands, which located its headquarters in Tim Hortons’ longtime home of Oakville, Ontario.
Wade MacCallum, who owns six Tim Hortons in Canada, said he was told things would be “business as usual” when Restaurant Brands took over. Instead, 3G has overhauled everything, he said.
“The 3G business model is based on cost cutting,” said MacCallum, who serves on the board of the franchisee association. “I don’t think there’s a part of the business they haven’t touched.”
https://www.bloomberg.com/news/arti...rs-worry-chain-is-losing-its-canadian-culture
