In recent years, Canadian institution Tim Hortons has found itself in a bit of trouble.
Sales are down.
Locations throughout the United States have been closing.
It seems that for whatever reason, Timmy's has lost some of its luster.
This is the real reason Tim Hortons has been struggling.
Tim Hortons, the coffee and doughnut shop founded by the hockey superstar of the same
name, has long been a staple for Canadians looking to get their morning caffeine or sugar
rush.
It's the second largest coffee chain in the world, after Starbucks, with more than 4,000
brick and mortar shops across nine countries.
"Friendly service.
Happy customers all the time."
When it started out as a small mom-and-pop storefront in Hamilton, Ontario, it only had
two donuts on the menu, apple fritters and Dutchies.
But it quickly grew into a national chain, and later became an international powerhouse.
But then, something changed, and not for the better.
In October 2017, a survey conducted by the Canadian news magazine Maclean's suggested
that Tim Hortons is no longer the favorite coffee shop in Canada.
Surprisingly, it's not even the second or the third favorite.
At the time of the survey, Tim Hortons was trailing in at fourth place behind McDonald's,
Second Cup, and Starbucks.
With a recent, unexpected drop in sales at the end of 2019, the once-popular coffee shop
appears to be heading towards a slow and unfortunate decline.
This raises the question: Where did this once-beloved Canadian powerhouse go wrong?
In October 2019, The Toronto Star reported that Tim Hortons saw an unexpected and sudden
drop in sales for the third quarter of the year.
Previously, analysts had predicted the company would see a slight increase in revenue during
that quarter, about a 1 percent uptick.
But when October rolled around, it turned out that Tim Hortons' sales actually declined
by 1.4 percent.
Restaurant Brands International is the parent company of Tim Hortons, among other fast food
giants including Popeyes and Burger King.
The company saw a general increase in sales for its other brands that quarter.
Burger King enjoyed a 5 percent increase in year-over-year sales, likely due to the introduction
of the Impossible Whopper in April 2019.
Meanwhile, Popeye's saw a 10 percent increase in sales, likely due to their super-popular
chicken sandwich.
According to The Star, Tim Hortons brings in about 60 percent of the RBI's total revenue,
so the slump in sales at the coffee house isn't a great look for the parent company.
Restaurant Brands International merged Tim Hortons with its other fast food brands in
2014, after RBI's own parent company bought out the chain in a $12.5 billion deal.
Shortly thereafter, the company tried its best to up the coffee shop's profits and decrease
its costs.
Sounds like a good, rational business plan, right?
Not quite.
In so doing, RBI evidently cut a few too many corners, at the cost of alienating its franchisees.
Alex Macedo, Tim Hortons' former president, told BNN Bloomberg in June 2018,
"The second thing we could have done a much better job in is communicating with them,
and being out there on the road within the restaurants talking and learning about what's
happening to the franchisees."
According to the Financial Post, RBI introduced a stricter management system to the company,
which franchisees weren't used to.
Employees largely felt dissatisfied with the new direction, especially after a round of
layoffs shattered employee morale.
According to Eater, the number of corporate employees dropped from nearly 40,000 to a
little more than 1,000, mostly after they sold off company-owned locations and started
depending more on franchisees to run restaurants.
After that, required remodels of those now-franchised locations were paid for at the expense of
the franchisee.
Eater reports that roughly half the café's franchisees in the United States decided to
take legal action against RBI in 2017.
They claimed the company collected around $700 million from franchise owners for marketing
and promotional materials, but actually used it for other expenses that were largely unconnected
to Tim Hortons.
In October 2019, Star reported that,
"Restaurant Brands International Inc. is blaming weakness in the cold beverage and lunchtime
sandwich categories for a surprise drop in comparable store sales at its Tim Hortons
restaurant chain."
As BNN Bloomberg reports, Tim Hortons has struggled to generate hype around its menu
items in the same way that its sister companies have.
Tim's menu doesn't really have a whole lot that the general populace can latch onto the
way they did with, say, Popeyes' chicken sandwich.
"We have steak.
Like our new mushroom steak panini."
But it doesn't seem like that's the only factor at play here.
Tim Hortons' competition, places like Starbucks and Dunkin', have done a much better job at
remaining relevant among millennials.
One major reason might be the ambiance of these establishments.
According to Forbes, Starbucks is continuing to grow, thanks to the company's robust marketing
and ongoing efforts to create a pleasant atmosphere for customers to relax in.
Think about it: You can walk into a Starbucks at pretty much any time of day and find students
catching up on classwork or writers typing away at their laptops.
Tim Hortons simply doesn't have the same effect on people, and that's not necessarily because
Starbucks' coffee and pastries are any better.
It's just that Tim Hortons hasn't put nearly as much time and effort into making its cafés
a cool and comfortable place for people to hang out.
Part of Tim Hortons' has been its down-to-earth approach to customer service.
As The National Post puts it,
"[Tim Hortons'] brand identity is so down-to-earth, unfussy and defiantly provincial that even
the vaguest suggestion of the cosmopolitan is enough, it's feared, to drive away regulars."
But "unfussy" isn't exactly what people want nowadays.
Fast-casual dining isn't as popular as it once was, because customers are generally
seeking out a more boutique-style dining experience, one with careful and conscientious service.
Tim Hortons has a number of menu items which, if marketed properly, could be immensely successful
in this ever-shifting dining landscape.
The problem is, no one really knows about them.
Take their Homestyle Biscuits for instance: They're vegan, but Tim Hortons doesn't really
market that fact.
It's a shame too, since younger customers might really latch onto the product, seeing
as veganism has become so popular in recent years.
One of Tim Hortons' shortcomings is its failure in letting people know that they're keeping
up with the trends.
Beyond Meat has certainly been having a moment, even non-vegetarians love the plant-based
burger, for its ethical sourcing, environmental sustainability, and near identical mouthfeel
to real beef.
In July 2019, Tim Hortons tried to hop on the vegan meat train, inspired by other fast
food restaurants' take on vegan burgers, like sister-company Burger King's Impossible Whopper.
"It's made of f---ing beef right here, you see that?
That's beef."
"We swear, it's not beef."
But a few months later, Tim Hortons pulled the Beyond meat sandwiches from all locations
except for some in British Columbia and Ontario, which happen to have Canada's highest density
of vegans and vegetarians, respectively.
In January 2020, Yahoo Finance reported that Tim Hortons decided to pull the plug on Beyond
Meat at all of its locations, due to a general decline in interest in the plant-based meats.
It's not difficult to figure out why: People associate Tim Hortons with coffee and doughnuts,
no one is actively seeking out Tim Hortons to satisfy their meat cravings.
In 2018, Tim Hortons introduced a new lid design, and many customers weren't happy with
the end result.
"They're making the change because the current lids, as you may know, tend to leak, drip
a little coffee.
The new ones won't."
In fact, even pop star Justin Bieber had a few choice words for these newfangled lids,
and none of those words were "Yummy."
In a December 2019 Instagram post, the disgruntled pop star complained that,
"these new lids are uncomfortable on the mouth, and you get very little liquid each drink
it's a damn outrage and needs to be changed back."
The singer even conducted an Instagram poll, to which 70 percent of respondents said that
they also missed the old lids.
Then again, the CBC reports that many customers weren't particularly happy with the old lid
design, and referred to the flattened lid design as a "double dribble," because patrons
inevitably spilt a bit of coffee onto their shirts as they sipped their beverage.
But customers found themselves in a similar pickle with the new lids.
Evidently they're even more prone to spillage, which people haven't hesitated to point out
on social media.
Some disgruntled customers noted that the lids don't allow for as much coffee to come
out in one sip.
Meanwhile, one poor soul even tried to push the lid down to resemble one of the old lids,
which evidently didn't work.
As the CBC reports, some customers are jokingly selling "antique" Tim Hortons lids online
for up to $200, because customers miss the old design so much.
Perhaps Tim Hortons customers are getting their coffee somewhere else, where the lids
are less of a hassle.
Tim Hortons has added plenty of menu items to its repertoire since its humble beginnings
in 1964.
But the coffee's quality has remained rather static over the years.
Meanwhile, tastes have changed quite a bit: As The Washington Post reports, coffee fanatics
are drinking more gourmet coffee than ever before.
Specialty coffee shops are all about high quality, ethically sourced coffee; think local,
independent coffee shops that focus on educating customers about the origin of their beans.
Meanwhile, Tim Hortons' coffee is certainly better than your grandfather's bitter cup
of Folgers, but it pales in comparison to, say, the fruity notes of a delicately crafted
pour-over at that artsy café downtown.
And customers are catching on: About 61 percent of Americans are drinking gourmet coffee on
the regular.
Speaking to The Washington Post, a spokesperson for the National Coffee Association defined
gourmet coffee as,
"[Coffee that possesses] at least one distinctive attribute in the body, flavor, aroma or acidity."
Tim Hortons doesn't spend much time talking about the flavors and aromas of its coffee,
or even where it comes from, so the chain likely falls short for those customers looking
for something special in their cup.
Even when Tim Hortons tries to focus on the things it does right, like donuts, the chain
still seems to fall short.
In July 2019, Tim Hortons launched an experimental Innovation Café concept in Toronto, where
the coffee shop had a more expansive menu.
The cafe tested out a bunch of new donut ideas like maple pecan donuts and, of course, Pumpkin
Spice donuts, but most of these so-called innovations have yet to make their way into
general Tim Hortons locations.
Meanwhile, many customers felt the few Dream Donuts that did make it to general TIm Hortons
locations left a lot to be desired…despite having fancy flavors like Dulce de Leche,
Chocolate Truffle, and Strawberry Confetti.
Many people took to social media to post about their Dream Donut disappointment.
One dissatisfied customer tweeted:
"Picked up one of those dream donuts from @TimHortons.
Zero filling in it.
No wonder your sales are slumping."
Another gloomster tweeted to Tim Hortons:
"[Your] dream donuts taste like a nightmare"
In recent years, Tim Hortons has introduced several new menu items, seemingly in an attempt
to appeal to a younger generation of consumers.
"Now that's a sweet deal."
We're thinking specifically of offerings like the omelette bites.
But since its inception, Tim Hortons has been known for its simple, down-to-earth aesthetic,
a place that caters to the working class.
But by adding all these newfangled dining options, they run the risk of chasing off
their old customer base, and what they're offering isn't quite good enough to bring
in new customers.
In 2019, MacLean's argued that recent additions like the aforementioned omelette bites and
waffle breakfast sandwiches have the potential to be great additions to the menu.
But because of the café's huge network of locations, they have to forego quality a bit
in favor of consistency: That means using pre-made foods to streamline the process.
Meanwhile, they're ditching old standbys that regular customers used to love to make way
for its newer items.
That's a problem.
But it's not all doom and gloom over at Tim Hortons.
While they've clearly struggled in recent years, the company's leadership hasn't given
up on the fast-food chain just yet.
As The Financial Post reported in January 2020, Duncan Fulton, the chief corporate officer
at Restaurant Brands International, noted that,
"While it's interesting to test in burgers and cereal, it's not what we're famous for."
The publication also claimed that,
"Tim Hortons is plotting a return to its roots as a simple coffee and doughnuts chain, backing
away from the frenzied menu experiments that have complicated its kitchens."
Sure, the company has been having something of an identity crisis lately, but they seem
to be getting back on their feet, and they're starting to realize that customers want the
same old Tim Hortons we've come to know and love.
They might also want to invest in a better marketing team.
"I think it's very important to recognize moms, because moms are the heart and soul
of the community, so it's very important that we give back to them."
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