Tim Horton's - Key - © kavinė Vankuveryje on Wikipedia

Tim’s Franchisees Face Supply Shortages

The Financial Post reports that Tim Horton’s franchisees, already squeezed for profits by their head office and rocked by an angry war between some franchisees and the head office, have been hit with supply shortages. The head office says it’s behind a day, in some cases, in its just-in-time delivery of other goods to Tim’s outlets…

Hortons Truck Montreal - © Steve Brandon via FlikrA Tim Horton’s delivery truck parked on the street in downtown Montréal.
Not such a common sight on Ontario streets this week…

Horton’s franchisees are suffering under a shortage of more than 45 items they can usually order from the chain’s Guelph, Ontario, corporate supply depot. Some Franchises say they’re poised to go out of stock on some food items, including Bread Wraps and a Brownie featured in two April monthly specials.

Tim’s Ontario division head office has apologized to franchisees, but not to customers (not yet, anyway) and has not revealed the reasons for the shortage of so many standard supply items. The depot in Guelph serves about three quarters of Tim’s more than 1,700 Ontario stores.

Another black eye…

The mysterious shortages are just another black eye in a string of embarrassments that have plagued the chain in Canada over the past year or so.

Unhappy franchisees formed the Great White North Franchisees Association (GWNFA) last year to fight their head office on a number of issues, including alleged misuse of collective funds that were supposed to have gone towards chain-wide brand advertising. More than 60 per cent of Tim’s Canadian franchisees have signed up with the organization.The GWNFA has yet to comment on the supply chain mess.

Meanwhile… The federal government has confirmed it will investigate charges by GWNFA that the new owner, Restaurant Brands International (RBI), reneged on promises it made when it took over Horton’s in 2014. Those promises included maintaining rent and royalty structures, and existing employment levels at franchises across Canada for five years. RBI also pledged to maintain good relations with its franchisees. Clearly, that promise had not been kept.

What’s a franchisee to do in the meantime?

Until regular supply shipments resume, the Ontario Tim’s headquarters has suggested franchisees buy food and goods unavailable through the corporation at Walmart. Really? Yes, really. They can keep the effected menu items on their menu, maybe,  but they can’t make a profit at that rate.

And one franchisees who wished to remain anonymous told the Financial Post that some, but not all of the items on the shortage list can be bought elsewhere, but others, like the Tim’s Brand Coffee and Tea, can’t.

My take?

My inner conspiracy theorist is wondering if the head office might have engineered the supply shortage to punish franchisees for rebelling against RBI. Of course, that would be the head office punishing itself, ultimately, because sales and, therefore, royalties paid to head office by the store operators would fall.

It’s also occurred to my inner conspirator that RBI has become so concerned with sending profits back up the line to RBI and mother corporation 3G of Brazil, that it has become over-extended with its manufacturing and other master suppliers. But that’s probably a non-starter, too, since the head office would ultimately be punishing itself, and especially its credit, with such a move.

The supply chain glitch is probably legit…

No. As fishy as a massive supply chain muddle coming just at this time may look, it’s probably a genuine, unintended screw-up in the system, and we can believe Tim’s head office when it says it’s really, truly sorry. But, on top of the recent announcement that Horton’s fell from fourth place to fiftieth in the annual national survey of trusted brands, it’s a hard pill for Horton’s corporate to swallow. And franchisees aren’t getting any happier.

~ Maggie J.