A Court Case Reveals Some of Tim Hortons’ Secrets

Tim Hortons’ iconic status in Canada means that owning one of its franchises has become seen as the next best thing to winning a lottery.

But even lottery wins come with headaches. In a Montreal court, 15 franchise holders are suing Tim Hortons for 27 million Canadian dollars for profits that they claim the company’s policies and practices have denied them.

Like much in the Canadian court system, the case is moving sluggishly. The lawsuit was filed in March 2024.

But this month, Tim Hortons submitted a document challenging its franchise holders’ claims and asking the Quebec Superior Court to dismiss the case. Most interesting of all, it also offers a peek behind the curtain at some of Tim Hortons’ secrets, particularly around how much customers pay and how it rewards loyal double-double drinkers.

You aren’t mistaken if you think Tim Hortons’ prices have soared since the Covid pandemic and Russia’s full-scale invasion of Ukraine.

By the company’s calculations in the filing, general inflation rose by 18.4 percent between 2021 and 2024. But Tim Hortons’ customers in Quebec paid 21.1 percent more during the same time.

Among many factors, the dissident franchise holders blamed their lost profits on their inability to set prices. In dismissing that idea in its court filing, Tim Hortons confirmed that what customers pay depends on where they live.

The company has divided the country into 62 “price clusters.” In each of them, it constantly adjusts prices based on a variety of factors, including local competition, labor costs, income and the number of customers who pass through. Four times a year, the company tests prices.

It uses that data to set prices at the highest possible level that won’t send customers fleeing down the street to, say, McDonald’s for a better deal. Or, as the court filing put it, the system is about “balancing competitiveness with profitability.”

The court filing also shows that there is no such thing as a free coffee. It includes a chart showing that a combination of price increases and reduced loyalty benefits made Tims Rewards “self funded” within a year of its introduction in 2019. Habitués of Tim Hortons are effectively rewarding themselves along with customers who don’t participate.

The franchise owners who took Tim Hortons to court want to see operating profit margins of about 15 percent. According to Tim Hortons, most of them achieved between about 9 percent and 14 percent.

While short of the franchisees’ target, those profit margins would be the envy of most restaurant owners across the country. A survey by Restaurants Canada, an industry group, found that 36 percent of its members were losing money or just breaking even in the first three months of this year. Only 13 percent had profit margins of more than 10 percent.

In the court filing, Tim Hortons notes that one of the 15 franchise holders made 1.4 million Canadian dollars from his five restaurants in the Gaspé region in 2023 and has purchased four helicopters since 2021 and started an aviation business.

Nevertheless, the document, which includes the lengthy franchise contract, makes it clear that the restaurant owners are largely at the mercy of Tim Hortons and that the company is constantly putting its hand into their pockets.

With some minor exceptions, they must buy all their food, supplies and equipment from Tim Hortons or from suppliers the company has chosen. The contract requires them to repaint their shops every year and renovate them every five years. In addition to their franchise fees, the owners turn over royalty payments based on sales every week (with steep late fees for delayed payments) and contribute monthly for advertising. They even have to pay Tim Hortons to advertise the opening of new restaurants although they have no say over what the company does with that money.

But there is one area where the franchise holders have total autonomy. Tim Hortons makes the hiring of management and paying of employees entirely the franchise owners’ responsibility. The people who pour your coffee or make your sandwich work for local owners, not for Tims.

Tim Hortons has been criticized in recent years for a perception that it is too reliant on employees who come to Canada under the temporary foreign workers program. Tim Hortons notes in the court filing that one of the owners who have sued had 40 temporary workers from Madagascar in his eight restaurants. Late last month, the company said that 4,000 of the 110,000 workers in its outlets were employed on the temporary work permits.

Now, after acknowledging that it lobbied the government to bring in temporary workers, Tim Hortons has embarked on a public-relations campaign to “help Canadian restaurant owners hire 10,000 new local team members.” The most visible sign of it to date has been television commercials that try to portray working for Tim Hortons as a rite of passage for young Canadians.

Given, however, that Tim Hortons has no say in whom its owners employ, I asked the company how it had come up with the figure of 10,000 local hires and how it would make sure that happens.

Duncan Fulton, the chief corporate officer of Tim Hortons’ parent company, told me that the number came out of a request for a hiring promotion from an advisory council of franchise owners. Based on people logging into a corporate training system, Mr. Fulton estimated that about 6,500 people had joined the company in Canada since the ads began airing three weeks ago. He was unable, however, to tell me how that number compared with past hiring binges for the peak summer season.

Ian Austen reports on Canada for The Times. A Windsor, Ontario, native now based in Ottawa, he has reported on the country for two decades. He can be reached at [email protected].

Canada at the World Cup

It was the postcard for how the World Cup, in one moment, can symbolize the coming together of nation and team unlike anything else.

It wasn’t the six goals that Canada scored, nor the almost certainty that the emphatic victory over Qatar on a picture-perfect day in Vancouver would send Canada to the knockout stage.

It was the moments after the heartbreaking injury to the midfielder Ismaël Koné that best conveyed Canada’s tournament so far. With his leg broken, Koné still managed to wave to supporters, a message to keep cheering on their team.

Nathan Saliba, who replaced Koné in the lineup, reacted accordingly when he scored the fourth goal of the afternoon. He grabbed his injured teammate’s jersey and held it aloft as the crowd at B.C. Place cheered his goal.

“In a moment like this, I don’t think they need me so much — they have each other,” the team’s American coach, Jesse Marsch, who was in tears after Koné’s injury, said after the game. “Their families are here and we have a family barbecue tomorrow and we will enjoy that and he will be on our minds.”

Tougher challenges may lie ahead — next up is Switzerland — but what was clear on Thursday is that Canada, nation and team, is showing the kind of spirit that could deliver further moments of ecstasy, even if agonies are also part of the journey.

Tariq Panja is a global sports correspondent for The Times who is covering his fifth World Cup.

In Canadian Culture

No longer content with being “Hollywood North,” the Canadian screen industry is asserting itself and telling its own stories more than ever. Matina Stevis-Gridneff, The Times’s Canada bureau chief, and the photographer Cole Burston went backstage at the Canadian Screen Awards a few weeks ago. They found actors, directors, producers, writers and more — both young and veteran — who are deeply invested in defining Canadian-ness on the big and small screens. If you missed it, here’s a gift link: Canada’s Showbiz Steps Out of Hollywood’s Shadow.

Also, Seth Rogen, the Canadian actor, writer, director and producer, sat down with Lulu Garcia-Navarro, The Times’s writer and co-host of “The Interview,” to talk about his early start in comedy and the prolific Hollywood career that has followed.

Share Your ‘Hockey Night in Canada’ Memories

On Tuesday, the CBC and Rogers Sportsnet announced that the national broadcaster would no longer air “Hockey Night in Canada” on Saturday nights after the companies could not agree on a sub-licensing deal, Vjosa Isai reported.

We’d love to hear your feelings about this decision and your memories of watching “Hockey Night in Canada” on Saturday nights on the CBC at [email protected]. We may reprint a selection of the best in next week’s Canada Letter.

We won’t publish any part of your response without following up with you first, verifying your information and hearing back from you. And we won’t share your contact information outside the Times newsroom or use it for any reason other than to get in touch with you.

Trans Canada

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