We’ve heard stories – a string of them this spring and summer – about discontent among Tim Horton’s franchisees over the policies and tactics employed by the new head office, Restaurant Brands International (RBI). Now, the chain’s masters have alarming sales figures to deal with, as well…
Tim Horton ‘s has reported a sales drop of 0.8 per cent, year over year, during the second fiscal quarter. That trend was driven by a 0.6 per cent drop at Canadian outlets. There may be many reasons for the poor performance, but Franchisees say that RBI is to blame, taking profits out of operator’s pockets in any way it can devise.
RBI says it’s had its successes this year, including the launch of an Espresso promotion and a new mobile ordering app. But the figures suggest that ‘success’ is illusory. Horton’s shares have dropped 8 per cent in the past month.
At least part of that decline in share prices, which mirror a decline in investor confidence,can be chalked up to the high-profile revolt by Canadian franchisees who have formed an association to fight head office greed and save their traditional, highly successful business model.
The franchisees have banded together under the Great White North Franchisees Association banner and have launched a (C)$500 million lawsuit against RBI claiming that the had office has mismanaged polled advertising funds and gouged franchisees by needlessly increasing their costs. Association President David Hughes told reporters, “While RBI continues to be profitable, the same cannot be said of Tim Horton’s franchisees.”
The evidence is clear…
In top of all that, the head office recently decreed increases in retail prices for many Horton’s menu items, with RBI citing increased operating costs. What it all seems to add up to is RBI sucking all the profit it can out of its system, at the expense of both franchisees and customers. That’s not a sustainable business model!
We hope that Tim Horton’s – a Canadian cultural icon – doesn’t die from starvation caused by head office greed.
~ Maggie J.