A recent Globe and Mail story described the ‘brutal’ transformation of beloved Canadian restaurant brand Tim Hortons. The cause of the messy shift? Budget cuts by Tim’s new owners – Brazilian holding company 3G Capital and Restaurant Brands International (RBI).

I was invited by Mark Brennae of CFAX radio to chat about this disruption. If you’d like to listen to our interview, simply click on the link. Or you can skim the notes below to get the highlights.

The disruption of Tim Hortons seems to be linked to cost-cutting measures by 3G and RBI – Tim’s parent companies. And perhaps driven by declining numbers, RBI is looking to open new franchise partnerships in markets as far afield as the Philippines, Mexico and the UK. But is this the right strategy? In my view, a wiser route would be to return to the assets that made you great in the first place – in this case, Tim’s incredible ‘local Canadian success story’ brand.

This disruption isn’t a unique phenomenon – I’ve seen it happen many times. Great brands (usually at the behest of number crunchers) lose their brand’s north star, and cut corners to drive up shareholder value. The unfortunate downside? Morale plummets, and customers feel the brand they once loved has gone away.

Brands are incredibly fragile. It takes careful cultivation to create a great one. And the trust can be easily dashed by apparent betrayal of brand values.

Tim Hortons has a brand asset – local Canadian franchise ownership – that even great brands like McDonald’s don’t have. This asset would be invaluable if leveraged properly. Unfortunately, right now, many of us still don’t know that Tim’s is a local Canadian franchise phenomenon. Given a choice, fast food fans would always go local.

Quotable Quotes

“What we’re seeing is the holding company pulling the planks off the brand boat to make a fire. Eventually, you run out of planks and the boat sinks.”

“In addition to feeling the heat to cut budgets, Tim’s is taking heat from local competitors. They’re getting squeezed from both sides.”

“When same store sales are plummeting, looking for new markets is like looking for new branches when the tree trunk is rotting. It doesn’t work.”

“In my own experience, I remember McDonald’s (a brand I worked on personally) reacting to declining same store sales by going afield to open new restaurants. It didn’t work. Then, they rediscovered a winning formula – fix the coffee, fix the food, fix the experience, fix the brand.”

“Tim’s has an incredible brand asset. Local Canadian. If they leveraged this properly, they would create a renewed reason for Canadians to visit.”

“When I spoke to my friend, franchise expert Angela Cote, her immediate reaction to the news of RBI looking for new Tim’s franchise markets was ‘What, because they can’t make the brand work?’ Cote understands that successful franchises need to be built on successful brands – not the other way around.”

Honorable Mentions

CFAX

Mark Brennae

Angela Cote

Timbits

CBC

Globe and Mail

Tim Horton’s

Restaurant Brands International

3G Capital

As a brand strategy expert, successful entrepreneur, and award-winning author, Marc Stoiber uses simplicity and creativity to help people discover what’s awesome about their business… and then helps them tell the world. For more on creating your company’s value proposition, connect with Marc on Facebook, Twitter, and LinkedIn, and sign up to his monthly newsletter.  

Want to try building your own powerful brand to create an unfair business advantage? Try out Marc’s Brand DIY – available now.