The unrest at Tim Horton’s Canada persists. And, now, Horton’s head office – Restaurant Brands International – has decreed menu price hikes on top of the abiding friction between itself and a significant number of franchisees. To a neutral observer, it looks like RBI is cutting off its nose to spite its face…
Confused or maybe just ill-informed protesters at a Tim Horton’s Store in
Greater Toronto last week. To be clear, folks: Tim’s workers got pay increases
on January 1 thanks to the government – not pay cuts.
You have to wonder how an organization like Restaurant Brands International (RBI) manages to stay in business. When it bought out Tim Horton’s. we were warned that RBI was a den of cutters and choppers, dedicated to enriching itself and its share holders at the expense of customers and franchisees. Then, the cost-cutting and profit skimming started, and franchise owners became more and more angry as their cut of the take shrank and RBI sucked up more and more.
Furious franchisees, claiming that RBI’s actions were destroying the value of their investments, formed a business lobby group, the Great White North Franchisees Association (GWNFA) to fight RBI and its tight fists. GWNFA had filed a (C)$500 million lawsuit against RBI. Then, RBI branded GWNFA members ‘rogue’ franchisees and made it clear that there will be no easy solution to the dispute.
But that was just the beginning…
THEN… The new minimum wage came into effect January 1, and franchisees took another enormous hit to their profits. No help from RBI on softening the blow, in spite of the fact that other Fast Food chains in the Province of Ontario got head office help and support to meet the challenge.
THEN… Some franchisees announced cuts in employee benefits to help keep their operations profitable.
NOW… RBI has decreed menu price increases in some regions. They say that’s got nothing to do with the franchisee dispute or the the minimum wage hike.
“Regular adjustments to menu prices are a normal part of the restaurant business,” RBI said in an e-mail to CBC news. “Many factors are considered when determining the final price of each menu offering and prices may vary by region.”
To a neutral observer, it doesn’t add up.
So what IS going on?
It appeared that RBI didn’t care what happened to its franchisees – until the minimum wage went up. Franchisees begged for price increases before January 1, but were denied by RBI. Then, RBI allowed price hikes in some ‘high-rent’ regions such as Greater Toronto, to ensure that its franchisees there didn’t actually go under. At least, that’s how it looks.
What is certain is, Horton’s prices will put it at a disadvantage compared to its competitors – at least until they raise prices to respond to the minimum wage hike. But what will the whole mess do to the Horton’s brand? And how will the franchisee ‘revolt’ pan out?
And what about tomorrow?
Last Tuesday, protesters proclaimed the first ‘No Timmy’s Tuesday’, asking customers to boycott Horton’s outlets for the day. As far as I could tell, they were demonstrating solidarity with Tim’s workers who were losing benefits because the minimum wage squeeze on franchisees.
Will the demonstrators be out at horton’s stores near and far with their placards, again? Will customers shy away from Tim’s as a result of a 20-23 cent increase in the price of a breakfast Sandwich combo? Will RBI finally come to its senses, moderate its greed and lay off franchisees?
At this point, I’d couldn’t begin to predict the next move in the Horton’s civil war, let alone forecast an end to hostilities.
We’ll all just have to wait and see…
~ Maggie J.