{"id":6834,"date":"2018-04-23T16:59:29","date_gmt":"2018-04-23T20:59:29","guid":{"rendered":"http:\/\/business.financialpost.com\/?p=1579682"},"modified":"2018-04-23T16:59:29","modified_gmt":"2018-04-23T20:59:29","slug":"tim-hortons-reputational-hit-could-hurt-sales-says-bmo-downgrading-stock","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2018\/04\/23\/tim-hortons-reputational-hit-could-hurt-sales-says-bmo-downgrading-stock\/","title":{"rendered":"Tim Hortons\u2019 reputational hit could hurt sales, says BMO, downgrading stock"},"content":{"rendered":"<p>TORONTO \u2014&nbsp;Declining consumer perceptions about Tim Hortons&#8217; brand have prompted Bank of Montreal to downgrade the stock of parent company Restaurant Brands International Inc., suggesting the public disfavour could hurt sales at Canada\u2019s biggest quick-service restaurant chain.<\/p>\n<p>Following a <a href=\"http:\/\/business.financialpost.com\/news\/retail-marketing\/tim-hortons-falls-40-spots-in-annual-reputation-ranking-amid-franchisee-troubles\"  rel=\"noopener\">recent Leger survey<\/a> that saw Tim Hortons plunge to the 50<sup>th<\/sup> most admired company in Canada from fourth a year ago, BMO Capital Markets conducted its own online survey to probe consumer perceptions about Tim Hortons.<\/p>\n<p>\u201cOverall, while brand perception of Tim Hortons remains overwhelmingly positive with respondents (75 per cent view it positively and only 11 per cent view it negatively), there was a significant shift in participants\u2019 perception of Tim Hortons over the last 12 months,\u201d analyst Peter Sklar of BMO wrote in a report Monday.<\/p>\n<ul class=\"related_links\">\n<li><a href=\"http:\/\/business.financialpost.com\/news\/retail-marketing\/business-suicide-civil-war-erupts-between-tim-hortons-franchisee-factions\">&#039;Business suicide&#039;: Civil war erupts between Tim Hortons franchisees<\/a><\/li>\n<li><a href=\"http:\/\/business.financialpost.com\/news\/retail-marketing\/ottawa-probing-tim-hortons-franchisee-claims-rbi-failing-to-honour-commitments\">Ottawa probing Tim Hortons franchisee claims that Brazilian parent company is failing to honour commitments to Canada<\/a><\/li>\n<li><a href=\"http:\/\/business.financialpost.com\/news\/retail-marketing\/tim-hortons-falls-40-spots-in-annual-reputation-ranking-amid-franchisee-troubles\">Tim Hortons has fallen out of favour with Canadians, new survey suggests<\/a><\/li>\n<\/ul>\n<p>In an online BMO survey of 700 Canadians, 16 per cent of respondents said that their perception of Tim Hortons had become more positive in the last year and 28 per cent said that their perception had become more negative. Over the same period of time, their perception of Starbucks remained neutral and their impression of McDonald\u2019s McCaf\u00e9 had improved, Sklar noted.<\/p>\n<p>\u201cOf those respondents who stated that their perception (of Tim Hortons) had become more negative, over 50 per cent stated that it was due to seeing negative press on Tim Hortons in the news and 71 per cent said that the negative attention would cause them to consider going to Tim Hortons less frequently; 27 per cent stated they would prefer to go to another coffee retailer more.\u201d<\/p>\n<p>Owner Restaurant Brands International Inc., set to report first-quarter results on Tuesday, has seen its share value decline 23 per cent in the last six months.<\/p>\n<p>The BMO survey also found other Tim Hortons innovations, including espresso drinks and the mobile app, \u201cdo not appear to be gaining traction,\u201d with consumers at a time that rival McDonald\u2019s held a $1 coffee promotion generated significant consumer awareness.<\/p>\n<p>Sklar revised his first quarter same-store sales estimate for Tim Hortons Canada to 0 per cent from a prior estimate of 0.8 per cent.<\/p>\n<p>\u201cWhile the same-store sales at Tim Hortons Canada has a minimal impact on the short-term earnings of Restaurant Brands International, we find that the stock tends to trade on same-store sales results.\u201d<\/p>\n<p>BMO downgraded the stock to market perform from outperform and slashed the target price to US$58 from US$70.<\/p>\n<p>The news follows a protracted period of turmoil at the Tim Hortons segment of Restaurant Brands International, which has faced an ongoing revolt and lawsuits from a group of franchisees protesting a slew of head office practices that began after the beloved Canadian brand was scooped up and merged with Burger King by Brazilian hedge fund 3G Capital in 2014.<\/p>\n<p>The federal government <a href=\"http:\/\/business.financialpost.com\/news\/retail-marketing\/ottawa-probing-tim-hortons-franchisee-claims-rbi-failing-to-honour-commitments\"  rel=\"noopener\">has promised to probe allegations<\/a> made by the Great White North Franchisee Association earlier this month that new management has failed to live up to a number of promises made to the government in the takeover deal. That included commitments to maintain franchisee relationships, rent, and royalty structure for five years, and to maintain existing employment levels at Tim\u2019s restaurants. Some Ontario franchisees drew the ire of labour groups and a wave of negative public attention in January after they reduced employee benefits in response to the province\u2019s minimum wage hike. They countered that head office was not allowing them to increase menu board prices in response to the wage hikes, as other chains such as McDonald\u2019s had done.<\/p>\n<p><a href=\"http:\/\/business.financialpost.com\/news\/retail-marketing\/business-suicide-civil-war-erupts-between-tim-hortons-franchisee-factions\"  rel=\"noopener\">Tensions boiled over last week<\/a> when the 19-member board of Tim Hortons franchisees that meets regularly with head office called out the 600-plus member splinter franchisee association in a letter for contributing to the brand\u2019s damaged reputation by attracting negative media attention and contacting the federal government.<\/p>\n<p>&lt;em&gt;\u2022 Email: &lt;a href=&#8221;mailto:hshaw@nationalpost.com&#8221;&gt;hshaw@nationalpost.com&lt;\/a&gt; | Twitter: &lt;a href=&#8221;<a href=\"http:\/\/twitter.com\/HollieKShaw&#038;%238221\" rel=\"nofollow\">http:\/\/twitter.com\/HollieKShaw&#038;#8221<\/a>; class=&#8221;twitter-follow-button&#8221;&gt;HollieKShaw&lt;\/a&gt;&lt;\/em&gt;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Almost a third of respondents say their perception of the coffee chain has become more negative<\/p>\n","protected":false},"author":578,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/6834"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/578"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=6834"}],"version-history":[{"count":1,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/6834\/revisions"}],"predecessor-version":[{"id":6837,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/6834\/revisions\/6837"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=6834"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=6834"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=6834"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}