No plans to rework Tims, new owner says

Industry watchers or franchisees waiting for Tim Hortons’ new owner, 3G Capital, to rework the restaurant model from the ground up need not worry, executives said Thursday. They don’t want to mess with a formula that has worked well for so many years.

“The starting point for Tims was very different ( from that of Burger King). The brand has had positive same- store sales for 23 years,” Josh Kobza, chief financial officer at Restaurant Brands International, Inc., the operating company for Burger King and Tim Hortons, told industry analysts at the CIBC Retail and Consumer conference.

“A lot of the strategies that ( former Tim Hortons CEO Marc Caira) and the team laid out, and that the marketing team has come up with, especially on the menu side, are working well.”

Known for relentless streamlining, by 2012 Burger King had 12 per cent fewer employees than it did prior to 3G’s acquisition in 2010. But it has improved sales and profit margins and kick- started an aggressive global expansion, with recent entries into India and France.

In the fourth quarter, sales at restaurants open for more than a year rose 4.1 per cent at Tim Hortons and three per cent at Burger King.

Perry Caicco, retailing analyst at CIBC, asked Kobza how the company intended to soothe the potentially frayed nerves of Canadian Tim Hortons franchisees anticipating more cuts or drastic changes. This week’s deal to combine ketchup maker H. J. Heinz with Kraft Foods Group, backed by 3G and Warren Buffett’s Berkshire Hathaway, was not discussed.

“3G are the most notorious cost- cutters in the cost- cutting business,” Caicco said. “When franchisees see head- office costs slashed, how do you balance with them their fear of losing service from head office with what you are doing for the business?”

Kobza said when 3G acquired Burger King, the fast- food company was losing sales and market share to competitors, unlike Tims, and was also battling franchisees over products they did not want to sell.

“We felt like we needed to make changes,” Kobza said. “One of the

When franchisees see headoffice costs slashed, how do you balance ... their fear of losing service ... with what you are doing for the business?

big parts of what we have been focused on is changing the menu and the marketing approach at Burger King and trying to turn around a loss of share and a loss of sales.”

Tim Hortons, in addition to fairly consistent sales growth, has had two successful product introductions in the past year with dark roast coffee and a crispy chicken sandwich, he said.