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The IUP Journal of Case Folio

Tim Hortons: On the Road to Recovery?

Article Details

Pub. Date	: June' 2023
Product Name	: The IUP Journal of Case Folio
Product Type	: Article
Product Code	: IJCF010623
Author Name	: Syeda Ikrama and Syeda Maseeha Qumer
Availability	: YES
Subject/Domain	: Management
Download Format	: PDF Format
No. of Pages	: 18

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Abstract

The case discusses the revival of Canada's largest fast-food restaurant chain Tim Hortons, founded by the hockey superstar of the same name in 1964. What started out as a small mom-and-pop storefront with just two doughnuts on the menu, grew into a global coffee chain with over 5,100 restaurants across 13 countries, including the US, Mexico, Spain, UK, Middle East, China, Thailand, and Philippines, as of March 2022. Tim Hortons' slide began in 2014 after its management got into a bitter fight with franchisees in Canada as its parent company, Restaurant Brands International (RBI), began cutting costs in order to increase operational efficiency and boost profits. After RBI took over, Tim Hortons was perceived to be acting in a way that seemed antithetical to Canadian values. Many store owners were unhappy with what they saw as selfserving measures by the parent company to increase its margins at the franchisees' expense. The very public row between the Tim Hortons parent company, franchisees, and employees hurt not only the brand's reputation, but also its sales. Moreover, declining product quality, little innovation, inadequate marketing, proliferation of new products, and Covid-19-related repercussions led to a decline in same-store sales. The growth rate of same-store sales declined by 29.3% globally and by 29.9% in Canada for the quarter-ended June 2020, the steepest fall the brand had ever experienced. However, in early 2020, Jose Cil (Cil), CEO of RBI, reinvigorated the brand with a Back-to- Basics plan. That plan included a refocus on its core coffee and breakfast platforms and extensive investments in technology, including massive changes to its loyalty program, and a $100 mn investment in drive-thru menu boards. Tim Hortons also expanded overseas and opened more stores in UK, Spain, Mexico, and Middle East. In fiscal 2021, Tim Hortons' sales were $6.5 bn, a 19% increase compared to the $5.5 bn registered the previous year.

Introduction

In the first quarter-ended March 2022, Tim Hortons Inc. (Tim Hortons), the iconic Canada-based coffee chain posted system-wide sales growth of 12.9% to $1.56 bn compared to $1.38 bn in the corresponding period of the previous year.i As of March 2022, Tim Hortons operated over 5,100 restaurants in 13 countries including US, Mexico, Spain, UK, and across Middle East, China, Thailand, and Philippines. Founded in 1964, Tim Hortons, commonly referred to as 'Tims or Timmy's' by loyal customers, had become part of the Canadian identity. The chain appealed to a broad range of

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