The Cautionary Tale Of Tim Horton’s
If you’re from Canada you know about Tim Horton’s. Think of “Timmies” coffee as Starbucks x Dunkin’ Donuts here in the US, commanding an unimaginable 80% of all coffee sales north of the border. Canadians’ love of Timmies coffee nurtured an overall affinity for the brand, which eventually became synonymous with Canadian pride. But as you’ll read in the attached Guardian article, things have changed for the worse for this once-beloved chain.
Tim Horton’s woes began during a merger with Burger King that created a new QSR entity called Restaurant Brands International. RBI is owned by the Brazilian investment firm 3G Capital, who’s notorious for wringing every nickel of costs savings out of existing businesses through a process called zero cost budgeting. So when RBI (aka 3G) purchased Tim Horton’s, they began implementing cost controls in the name of lower prices and at the expense of quality. Things got so bad that when Ontario significantly raised its minimum wage RBI refused to let franchisees in that Province raise their prices to account for the extra labor costs. As a results franchisees had to cut employees’ work hours and reduce benefits just to stay in business.
Moves like this have killed Tim Horton’s brand perception in Canada. It also hurt the top line, with same store sales declining for eight consecutive quarters. Customer dissatisfaction turned into a shit show (literally), when one angry customer who was refused access to the bathroom literally pooped in the middle of the restaurant and threw her turd at the cashier. Yes, a video of the incident went viral, and no, projectile feces isn’t exactly the image you want in your head the next time you order a cup of Timmies.
So what’s the takeaway here? My read is that brands, no matter how strong and long-tenured, are like living organisms which must be continually nurtured. Cutting corners to make a quick buck might seem tempting in the short term, but the downside of brand erosion may cost much more in the long run.