Not the same Tim Hortons – controversial changes taking a toll on Canada’s favourite coffee shop
Dec 1st, 2010 by palimarrao
Robin Scherbatsky of the popular television series How I Met Your Mother, calls Tim Hortons, “the most Canadian place there is”. And why not? Holding 22.6% of Canada’s mammoth $14 billion fast food market and commanding 62% of Canada’s daily coffee “fix”, Tim Hortons has over the generations evolved to become one of Canada’s favourite cultural icons. But will this adoration and popularity that Tim Hortons has erode when it seeks to expand and in the process become “less Canadian”? Following describes the impact that organizations can have on popularity and brand value because of their supply chain and operations changes.
The first shock that Canada got was when Tim Hortons sold its 50% stake in the Maidstone bakery in Ontario to a Swiss company called Aryzta AG. This is the facility where many of Tim Horton’s products like doughnuts and muffins are made. Selling off such a huge stake to a non Canadian company led to fears in people that Tim Hortons isn’t as “Canadian” anymore.
The second reason why the popularity and even the reach that Tim Hortons has may reduce is because of its new plan of using the “par-bake” method to make its products. The company adopting this means of production entails half made frozen products being sold by the franchise owners after baking them. This is vastly different to the age old days when coffee and doughnuts were made from scratch on location by experienced bakers. However, following the new method of production has greater consequences than just drastically changing the “way it is done”. The cost of production of these goods, is surprisingly higher using the new “par-bake method” by a significant 9.9 cents per a single, unfinished donut. This increase in the cost can have an impact on the market reach if fewer franchisee owners start thinking of owing a Tim Hortons shop to be not as profitable as before.
While this was mainly the sellers’ concern, the customers’ concern was with the new size of their favourite snack- 14.3% smaller than the original donuts. The huge increase in costs coupled with an increasing number of people thinking of Tim Hortons to be not as “Canadian” can prove to be detrimental to its future. While sales are still strong at the time of writing, increasing competition and bad media publicity (firing of an employee for giving out a Timbit) may soon cause Tim Hortons to be not a favourite anymore.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aVbau_WUTixk&refer=news_index
http://www2.macleans.ca/2010/09/07/extra-large-trouble-trouble/2/