Tim Hortons added plant-based sausage from Beyond Meat to its three breakfast sandwiches menu in selected Canadian stores. In its announcement in May, the coffee chain said it wants to address Canadians’ evolving taste toward healthier meat alternatives.
Tim Horton hopes that Beyond Breakfast Sausage could satisfy vegans and meat lovers alike. While the initial rollout takes place in limited locations, Tim Hortons President Alex Macedo expects that the plant-based sausage will soon be available in all 4,000 Canadian stores.
The announcement became spurred Beyond Meat’s stock to an all-time high of $93 per share — an impressive feat given that it only debuted in the market on May 2. The surge catapulted Beyond Meat to a market valuation of $4.8 billion which was more than 22 times than the estimates coming from Wall Street analysts.
While Tim Hortons managed positively affect Beyond Meat’s stock, it cannot do the same for its parent company. The Canadian coffee chain is owned by Restaurant Brands International, which also owns Burger King among others.
Shares of Tim Hortons parent company fell
Restaurant Brands reported earnings of 55 cents a share from a revenue of $1.27 billion in April. Its shares were down more than two percent with experts noting the continued sluggish sales of Tim Hortons.
Although Restaurant Brands, which has a market value of $29.9 billion, was up 23 percent for 2019, Tim Hortons had posted negative comparable-store sales since the first quarter of 2018.
During its most recent conference call, CEO Daniel Schwartz said the chain’s poor performance was due to a slowdown in its home market brought about by poor weather and softness in lunchtime purchases. The slowing trend, however, was also pronounced in its worldwide sales which have been on a decline since 2017.
It was a very bad 2018 for Tim Hortons
Tim Hortons opened 2018 with its franchisees and employees in Ontario feuding over issues on minimum wage. Specifically, RBI prevented its franchisees from raising prices in order to cope with the increase in the minimum wage. The franchisees were then compelled to cut paid breaks as well as remove other employee benefits.
What made the situation worse for the company was that franchisee Jer-Lynn Horton-Joyce – who is Tim Hortons’ very own daughter – and her husband were among the franchisees that resorted to removing employee benefits. Horton-Joyce said they were left with no choice as RBI refused to lend the necessary financial assistance they needed.
Alan Middleton, assistant professor of Marketing and executive director of the Schulin Executive Education Center highlighted mistakes that Tim Hortons committed last year. The company mismanaged its franchisees, came up with awful advertisements, introduced low-quality food, underestimated McDonald’s as tough competition, and most importantly pushed away from its core audience the boomers and Gen X-ers by rehashing the brand to suit the taste of the millennials.
The coffee and donut chain already had a bad 2018, merely two to three months into the year. By June, things got worse when a video of a woman defecating inside one of its stores went viral.
Tim Hortons recovering from past misfortunes
Schwartz, however, assured that the management has been persistent in addressing the issues, in part through a new marketing strategy focused on capturing its home market once again.
As part of its commitment to enhancing customer experience, for example, Restaurant Brands rolled out the much-anticipated loyalty program for Tim Hortons. The loyalty program is only one out of its many plans lined up this year that are geared towards making the brand stand out as an authentic Canadian brand.
In January 2019, it announced its new headquarters located in downtown Toronto’s historic Exchange Tower. The new office was designed to celebrate Tim Horton’s Canadian roots, the company said in a statement.
The office, decorated with imagery of original Tim Hortons coffee shops and of Tim Horton himself, serves “to remind everyone of the brand’s humble and unique origins.”
Plans are so far successful to some extent as Tim Hortons was able to re-enter in the Top 10 list of Canada’s most influential brands by February this year. The list was based on the survey conducted by the Association of Canadian Advertisers and Ipsos.
The list was dominated by U.S tech companies and Tim Hortons was the only Canadian brand which made it to the top ten rankings. It was listed alongside Google, Amazon, Apple, Facebook, Microsoft, YouTube, Visa, Netflix, and Walmart.
Ipsos COO Steve Levy said that the fact that Tim Hortons was able to re-enter the top 10 list of most influential brands, it means that “brands that have experienced challenges, like Tim Hortons, can bounce back if they focus on addressing the right issues.”
Tim Hortons in its home market
Many years ago, Tim Hortons was founded in 1964 by Miles “Tim” Horton, one of Canada’s most celebrated professional ice hockey players. The coffee and donuts place was truly an embodiment of what being a Canadian is all about.
Restaurants Brands International took over in 2014. RBI was the result of the $12.5-billion merger between American brand Burger King and Tim Hortons. The holding company, though resulted from a merger between a U.S. brand and a Canadian brand, was majority-owned by the Brazilian investment company 3G Capital. By 2017, RBI purchased more American brands such as Popeyes Louisiana Kitchen.
From that time on, Tim Hortons seemingly went against the definition of “Canadian’s ridiculous niceness.” The brand seemingly focused on increasing its margins, which undermined the quality of its food, the welfare of its employees, and its relationship with its franchisees.
Is it time to embrace Canadians roots once and for all?
In an interview in May 2018, Bruce Philp, author and branding consultant with Heuristic Branding, said Tim Hortons’ almost-demise happened so fast.
“What I think is significant about the recent dip in the affection Canadians have for the Tim Hortons brand is how sudden it was. In a single year, they went from perennial all-star to the doghouse, something that didn’t even happen after the company was sold in 2014,” Philp said.
From RBI’s takeover in 2014, there had been common feedback among Canadians that the taste and quality of food served in the chain have definitely become poor in quality. That was their main problem. Many long-time customers blamed the decline in food quality to the fact that the brand has become too “Americanized.”
Case in point, donuts were no longer made in-store but delivered from a U.S.-based facility. The donuts are now too sweet and fancy while the brewed coffee becomes too bland for the Canadian taste. The customers wanted their Canadian brand back.
Interestingly, Tim Hortons was once owned by Wendy’s, an American international fast food chain, for many years until Tim Hortons re-launched and restructured as a Canadian company in 2009. It was not clear what took place while it was under Wendy’s. But the fact that it restructured in 2009 and only experienced problems once again after RBI’s takeover might be worth looking at. There may be one important lesson hiding somewhere.
(Featured imaged by BalkansCat via Shutterstock)