It’s been a tough few of years for Tim Horton’s, after being taken over by Restaurant Brands International (RBI). Sales have dropped, its popularity has tanked and its image has suffered under the ongoing rebellion by unhappy franchisees. Now, Head Office has launched a desperate recovery program…
Tim’s front-line employees have suffered multiple indignities since the takeover by RBI.
Not the least of which was the hard line that the Head Office took against price
increases to help offset the Ontario minimum wage increase to (C)$14
an hour earlier this year. Fanchisees had to make unpopular
front-line cuts to make ends meet.
Daniel Schwartz, RBI CEO, told the National Post that he blames the media for the persistent negative public image of Tim’s since the takeover:
“We are not pleased with the narrative in the media that has usually reflected a purposely negative tone that has really been dictated by a small group of dissident franchisees and their advisors,”
Sour grapes, I say. It was RBI that upset the apple cart in the first place, reneging on its pre-take-over promise to maintain good relations with the franchisees, and instituting massive profit skims and changes in the way the company operates.
The roof caves in…
In recent months, Tim’s has recorded declines in sales and in its popularity, which should have triggered alarm bells much sooner than they have.
An annual survey asking Canadians how much they trusted their iconic brands say Tim’s drop from number 4 last year to number 50 this year. Any other brand would consider that a disaster, but Tim’s has just kept rolling along.
Sales have been down at Tim’s Canadian outlets for six consecutive quarters. Head Office has done nothing to counter that ugly trend up to now.
More than 60 per cent of Tim’s Canadian franchisees have joined a rebellion against Head Office, forming the Great White North Franchisees Association (GWNFA), which is suing the Head Office over promises made as part of the RBI takeover which the GWNFA says have been broken. Tim’s Head office insists that the GWNFA people are merely disgruntled dissidents. Whoever they are, they are not ‘a small group’. They are a solid majority. Who does Schwartz think he’s kidding?
What are they going to do?
Tim’s Head Office has announced a revival initiative, and, yesterday, it disclosed all.
The previously-announced (C)$700 million plan to update Tim’s restaurants, including installing a new (C)$12,000 Espresso machine in each store, was previously believed to be financed by the franchisees. Now, Tim’s corporate has apparently committed to pay the tab.
Yesterday, CEO Schwartz unveiled a plan to improve relations with franchisees and their teams with the goal of improving service (and morale) at Horton;s outlets.
He also pledged to work on rehabilitating Tim’s brand image and repairing damaged media relations. The latter seems a long shot, though, considering his comments about the media being responsible for Tim’s image problems.
Nevertheless, Tim’s shares rose more than (C)$4 by the end of the trading day, yesterday, on the news.
My take…
Schwartz is obviously under pressure from his masters to fix the Horton’s mess. Why he has taken an adversarial stand against the franchisees and the media up to now is a mystery to me. That’s been a really bad idea from the outset. But it’s taken the better part of four years, since the takeover in 2014, for Schwartz to realize that. Now, he’s proposed an audacious master plan to make it all better. But the problems have been left to fester too long. No matter what he does, now, it may be too little too late.
~ Maggie J.