Tim Hortons franchisees push back against cost-cutting changes, report suggests
New owners have pushed for change at iconic coffee chain
Tim Hortons franchisees are pushing back against changes implemented by the chain's new owners that are designed to cut costs but will lower the quality of the products, a report suggests.
According to the report in Tuesday's Globe & Mail newspaper, the franchisees have created an organization called the Great White North Franchisee Association to represent their interests and urge the chain's owner, Restaurant Brands International, to slow down and rethink aggressive cost-cutting strategies.
In 2014, Restaurant Brands bought Tim Hortons and merged it with Burger King. Since then, the new owners have pushed for efficiency changes at the ubiquitous coffee and doughnut chain that have pleased investors — the stock is up by almost 40 per cent since the deal — but upset long time franchisees.
Among the complaints are inferior equipment such as coffee carafes, mugs, lids and trays that break more often, the report said. Those money-saving moves have hurt Tim Hortons brand and hurt the franchisees' ability to make money, according to a letter sent to company management and signed by John Sotos of law firm Sotos LLP, which represents the irate franchisees.
Sotos confirmed the existence of the letter in an email to CBC News, but declined to provide a copy of it, saying it contains "privileged and confidential information."
Restaurant Brands, meanwhile, poured cold water on the notion that there's any sort of rift, and noted that its goal is to keep working "shoulder to shoulder" with franchisees. "We are proud of the growth we have achieved in recent years and we will continue to listen to franchise owners on how we can build a stronger business together," a spokesperson told CBC News.
The company reached out to all of its franchisees in a letter this week from Elias Diaz, the brand president of Tim Hortons, in which he reassured them that "the Tim Hortons brand has been built by thousands of dedicated franchise owners. They are the foundation of our system, and we have always and will continue to seek their counsel and work in close collaboration with them to deliver a great guest experience every day across our restaurants in Canada."
Noting that sales and profitability at the chain have increased every year since buying Tims, the letter from Diaz told franchisees that the company looks forward to working with them "to ensure that the Tim Hortons brand is healthy for the long run by focusing on what will help us serve our guests and the iconic Tim Hortons brand now and in the future."