Tim Hortons Sees Canadian Growth as It Works to Fix Franchisee Relationship

October 24, 2018 Updated: October 24, 2018

The parent company of Tim Hortons saw sales growth at Canadian locations, as executives say their work to mend fraught franchisee relations is paying off.

Restaurant Brands International Inc. is pleased with the Canadian results, said CEO Daniel Schwartz in an interview.

Sales at Tim Hortons restaurants in Canada open for 13 months or more, a key retail metric, increased 0.9 percent in the quarter ending September 30, according to the company’s third-quarter earnings report. That’s up from 0.6 percent in the same quarter the previous year.

Executive changes, including hiring Duncan Fulton as chief corporate officer in July, and initiatives from the company’s “Winning Together” brand plan helped, said Schwartz.

He highlighted the launch of all-day breakfast nationwide in late July as adding incremental sales and profitability.

The plan also includes renovating restaurants—a $700-million investment that adds open-concept seating. The company has completed about 100 renovations to date, and plans to do hundreds more in the fourth quarter.

“These improved results don’t even reflect several of the initiatives that we have not yet launched,” he said.

Tim Hortons will add a kids’ menu this quarter, he said.

The company also plans to launch a loyalty program nationwide sometime in the first half of 2019, said Tim Hortons president Alex Macedo. The program, dubbed coffee pass, is already being tested in two cities.

Self-service kiosks, which are already present at some locations in and around the Greater Toronto Area, will start to roll out more broadly early next year, he said.

The U.S. market was a little softer, said Schwartz, adding the brand’s team is disproportionately focused on getting Canada in the right place due to the size of the Canadian business, as well as “everything that was going on in Canada.”

The chain has grappled with an unsanctioned group of franchisees who formed the Great White North Franchisee Association (GWNFA) in an effort to remedy alleged mismanagement of the brand. The group has claimed to represent more than half of Canadian Tim Hortons franchisees and launched multiple lawsuits against RBI, its subsidiaries, and several executives. RBI also launched its own lawsuits against the group and some of its members.

In recent months, two prominent GWNFA members, its former president David Hughes and Mark Kuziora, left the company. The group has been fairly silent since late August when it alleged the coffee pots franchisees are required to purchase and use have been shattering and injuring employees. RBI and the manufacturer denied allegations they had changed how they make or source the pots.

The GWNFA’s membership is “still well above” half, said spokeswoman Patti Jameson in an email, adding the group has a new president.

In the past, RBI executives refused to speak with the group, but later admitted they could have better handled franchisee relations and made more of an effort to engage franchisees, including in building the “Winning Together” plan.

“We still have some room to go to work even better with the restaurant owners, but I think the confidence is starting to be built,” said Macedo, adding the company’s decision to listen more, as well as give and receive feedback faster has helped it execute the plan.