Tim Hortons parent launches plan to bolster iconic chain’s reputation
TORONTO — Executives at the parent company of Tim Hortons say they will take steps to improve the chain’s battered reputation after the coffee seller posted another quarter of disappointing sales in Canada.
Sales at Tim Hortons grew overall by 2.1 per cent in the first quarter, a figure that includes international locations. But comparable sales fell 0.3 per cent, driven by weak performance at the company’s Canadian restaurants amid a sustained wave of negative news and surveys suggesting some consumers are turned off by the brand.
Daniel Schwartz, chief executive of Restaurant Brands International Inc., blamed a group of unhappy Tim Hortons franchisees on Tuesday for the ongoing negative publicity. The Great White North Franchisee Association, a group comprised of more than 60 per cent of Canadian franchisees, is suing head office for a slew of alleged practices that they say has hurt their business since the merger of Burger King in 2014. The federal government is investigating the group’s allegations that the parent company failed to live up to promises made at the time of the merger, such as maintaining good relationships with franchisees.
“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,” Schwartz said in an interview after the company posted stronger than expected earnings, led by solid sales at Burger King and Popeye’s.
“This negative tone is starting to negatively impact our guest perceptions of the brand and undermines the good and honest intentions of our restaurant owners, their team members and our employees who are all working day to day every day to do the best for the guests and the brand.”
As a result, the company has launched a platform aimed at improving performance at Tim Hortons, including a planned $700 million restaurant renovation plan, improving coffee selection with products such as espresso and working on the brand’s communication strategies through marketing and improved media relations.
The company has “significantly improved the dialogue and the relationship with the restaurant owners” over the last few quarters, Schwartz said. “We obviously realize we have more work to do there.”
However, the company has not changed its perspective on speaking directly to members of the Great White North Franchisee Association, preferring instead to deal with a 19-member franchisee board that meets regularly with head office.
Schwartz insists that “most Canadian franchisees” are supportive of management, adding several hundred restaurants have signed on to the company’s restaurant renovation plans.
Restaurant Brands earned US$147.8 million or US 59 cents per share in the period ended March 31. That compared with profit of US$50.2 million (US 21 cents) a year ago. Revenue rose to US$1.25 billion, up from US$1 billion in the same quarter last year.
On an adjusted basis, the company earned US 66 cents per share for the quarter, up from 36 cents per share. That beat average analyst estimates of US 56 cents per share, according to Thomson Reuters.