By Tamsin McMahon - Wednesday, November 21, 2012 - 0 Comments
Despite big investments to spruce up stores and expand menus, once-thriving restaurant chains are suddenly struggling to get ahead
Analysts were understandably skeptical this month when Tim Hortons interim CEO Paul House blamed the company’s disappointing third-quarter financial results partly on “capacity issues” at some of its restaurants. Canada’s iconic coffee-and-doughnut chain reported that it’s on track to miss its annual growth target in part because lineups at some of its stores were simply too long. “In some ways, it is not good news, but in other ways, it is good news in the sense that . . . we’ve got lots of business,” House told a conference call last week.
It’s a remarkably positive spin on what has been an off year for the ubiquitous coffee chain. Sales growth at existing Tim Hortons stores has been below two per cent for the past two quarters, while growth of 2.3 per cent at U.S. stores fell well below its target of five per cent. What growth the company has seen has been from customers spending more at each visit, even as traffic to its stores declined. The report wasn’t all bad news. The chain did manage a $105.7-million profit for the quarter, up two per cent from a year ago. Continue…
By Michael Friscolanti - Tuesday, September 6, 2011 at 9:40 AM - 4 Comments
A bitter court battle is spilling intimate secrets about Tim Hortons’ hefty profits
Last year, customers spent more than $5 billion at Tim Hortons. Five billion dollars. That’s $13.7 million worth of coffee and doughnuts per day. Which, in theory, should leave everyone—head office, shareholders and individual franchisees—with plenty of proﬁt to go around. (Don Schroeder, recently fired as Tim’s CEO, pocketed $5.7 million just for walking away and keeping quiet.)
But not everyone agrees with how the pot is divvied up. Arch and Anne Jollymore, both long-time Hortons franchisees, were in a Toronto courtroom last week hoping to certify a hefty class-action lawsuit against the iconic company, arguing that Tim’s historic shift to frozen doughnuts nearly a decade ago has taken a huge bite out of their cash registers—while providing head office with “spectacular” returns. Their legal briefs are complex (the court file is tens of thousands of pages) but the couple’s claim boils down to this: Hortons “forced” franchisees to scrap their deep fryers, then sold them frozen fritters and crullers for triple the cost of the scratch-baked versions.
Three years after the lawsuit was filed, a judge will soon decide whether the action should be sent to trial or tossed out of court. But whatever the outcome, the high-profile case has already served up one revelation that some loyal double-double drinkers will have a hard time swallowing: the Jollymores aren’t the only Hortons operators who think they should be making more money.
By Michael Friscolanti - Tuesday, July 26, 2011 at 9:00 AM - 6 Comments
A fired CEO, shifting allegiances, a billion-dollar lawsuit and a history of infighting
Don Schroeder is in the early days of what his $6-million severance agreement describes as the “quiet period.” For at least the next three years, the ex-president and CEO of Tim Hortons is forbidden from uttering a public word about the closed-door discussions that led to his swift—and still unexplained—exit. He is not permitted to speak to the media. He cannot say or write anything “disparaging, derogatory or defamatory” about the company that canned him. And he has agreed, after consulting with a lawyer, not to sue.
Even during private conversations, Schroeder must choose his words carefully. Clause 17, for example, allows him to share the details of his abrupt dismissal with “immediate family”—but only on the condition that their mouths remain equally shut.
In the meantime, as the 65-year-old settles into his new role as a well-paid (and tight-lipped) Hortons consultant, the full story behind his bizarre firing remains as much of a Bay Street mystery as it did that morning two months ago, when Canada’s favourite coffee shop announced it was suddenly in need of a new boss. “It was the oddest press release I’ve ever seen,” says Brian Yarbrough, an analyst at Edward Jones. “It didn’t say: ‘This gentleman is resigning’ or ‘This gentleman is pursuing other opportunities.’ It was just: ‘He is no longer with the firm.’ We were all sitting here scratching our heads.”
By macleans.ca - Thursday, June 9, 2011 at 12:40 PM - 1 Comment
A wrongfully convicted woman regains her freedom, while a Boston player gets knocked out of the playoffs by a vicious hit
Boots on the ground
Canada’s combat tour in Afghanistan is entering its final few weeks, but the military is already preparing for its next deployment—wherever it may be. Months after being forced out of their secret staging base in Dubai because of a diplomatic spat, the Canadian Forces have reportedly reached deals to open new bases in Germany and Jamaica, and are in talks with Senegal, South Korea, Kenya and Singapore. As Defence Minister Peter MacKay said, Canada has become a “go-to nation” when it comes to responding to natural disasters and other NATO missions—requiring a much bigger bootprint on foreign soil.
A revamped battle plan
Forty years after Richard Nixon declared a “war on drugs,” a new report has confirmed what police, prosecutors—and traffickers—have long known: we’re losing. Released by a consortium of world leaders, including Kofi Annan, the former UN secretary-general, the report says it’s time to start treating drug abuse as a public health problem, not a criminal one, and consider legalizing certain substances to undercut criminal gangs. The war on drugs has cost billions of dollars and countless lives. But, to borrow a phrase, admitting the old strategy is broken is the first step to recovery.