In 2010, the Brazilian private equity firm 3G Capital bought Burger King and turned it around, using a combination of limited time offers, aggressive deals and improved franchise relations to generate sales.
Four years later, Burger King bought the Canadian brand Tim Hortons and looked to deploy many of the same strategies north of the border.
It didn’t quite work. Tim Hortons under parent company Restaurant Brands International has not enjoyed the same powerhouse performance it did before the merger, and the pandemic has made things worse.
Why did the RBI strategy work for Burger King and not Tim Hortons? Mindset, at least according to RBI CEO Jose Cil.
“We kind of used a challenger brand mindset as we went into managing the business in Canada where, in fact, we’re not a challenged brand,” he told investors on Tuesday, according to a transcript of the conversation on the financial services site Sentieo. “We’re a dominant brand where we have more than the lion’s share of the market in Canada, and we haven’t acted as a leader for some time.”
The difference in performance under RBI by both Burger King and Tim Hortons is a lesson that one size does not fit all when it comes to marketing a restaurant brand. The approach that fit with one brand may not necessarily work for the other.
When RBI took over Burger King in 2010 it was a struggling brand that was in dire need of consistent leadership and a firm direction. McDonald’s had eaten its lunch during the recession, forcing Burger King to take desperate measures such as a $1 Double Cheeseburger that yielded intense opposition from franchisees.
But it was also the underdog in the battle against McDonald’s. So not only was Burger King in need of a fresh perspective, the company had the freedom of acting like an aggressive upstart. Burger King had less to lose, after all.
Not so Tim Hortons. Tims is a rousing success in Canada, and in 2014 the chain was performing well. What’s more, it is the McDonald’s in the competitive scenario, a singularly dominant brand with more than 40% of the country’s quick-service restaurant business. That’s ridiculous.
In other words, RBI would have been better simply maintaining the status quo, going with what worked before. Tims, unlike Burger King, was not in need of the type of aggressive marketing and product development strategy deployed at the burger chain.
Tims made some strange decisions—notably its decision last year not only to sell plant-based breakfast sandwiches but to sell Beyond Meat burgers, all in a bid to jump quickly on the plant-based bandwagon that was rolling at Burger King at the time.
This focus on driving sales made the restaurants more difficult to operate. That’s particularly important at a brand like Tims that has a lot of small-scale operators and a generally large menu.
“We haven’t really focused on some of the fundamentals of the business,” Cil said. “We kind of focused on trying to drive top-line growth with promotional activations and a lot of innovation.”
“We had lost touch with consistency and quality and all the innovation and all the limited-time offers that we were doing only exacerbated the situation,” he added.
So what is Tim Hortons doing to fix it? A lot. The executive team is different. The company is adding technology to improve drive-thru speed and invested in new coffee brewers and a water filtration system to improve the chain’s coffee.
“We scrapped everything we had and refocused our teams, working with the owners,” Cil said. “We rebuilt our team as well, and we came out with a game plan that was basically focused on what made Tims famous—back to the basics.”