Exteriors of the Tim Hortons coffee shop on Division St. in Cobourg, Ont. on Jan. 10, 2018.Fred Lum
Tim Hortons has handed the reins to a new leader who faces the task of smoothing over relations with its franchisees and boosting sales growth at the coffee-and-doughnut chain.
Alex Macedo became president of Tim Hortons in December, parent company Restaurant Brands International Inc. confirmed on Thursday. The company made no public announcement at the time.
Mr. Macedo previously had that position at sister chain Burger King's North American division.
There, he oversaw the revitalization of its U.S. business when it was struggling with tense dealings with its franchisees and failure to make sales gains, Matthew Dunnigan, chief financial officer of RBI, told a conference this week.
Now, Mr. Macedo will try to apply those lessons at Tim Hortons, including improving relations with its franchisees' amid multiple legal and other spats with its restaurant owners.
Mr. Macedo was "very heavily involved in our turnaround of the Burger King system in the U.S., coming from a brand that … wasn't growing, had strained franchisee relationships and [was] really kind of working very hard over a number of years [toward] building very strong relationships with the franchisees and driving sales in the U.S.," Mr. Dunnigan said at the UBS global consumer and retail conference.
"We're really excited to have someone of his calibre taking over the leadership of the Tim Hortons brand."
Tim Hortons has grappled with relatively flat sales at its existing restaurants and a sluggish expansion south of the border where it has long faced challenges in becoming a familiar name. At the same time, it wrestles with rising tensions with some franchisees who complain the parent company's tight-fisted management style is hurting the brand.
Industry observers pointed to the fight between franchisees and RBI as a key reason to appoint a new leader of Tim Hortons.
"One of the major reasons he is being brought in is to repair the relationship between the franchisees and the company," said Jeff Dover, principal at food-services consultancy fsSTRATEGY. "It's broken right now.
"A successful restaurant company has a win-win relationship – a happy relationship – between franchisees and franchisors. Hopefully it all works out."
The difficulties started after RBI, which is based in Oakville, Ont., and controlled by the Brazilian private-equity firm 3G Capital, acquired Tim Hortons in late 2014 and merged it with its Burger King chain, slashing costs and staff. Last year, it acquired Popeyes Louisiana Kitchen.
Tim Hortons had been without a president since last June when Elias Diaz Sese abruptly left the position and Daniel Schwartz, chief executive officer of parent RBI, took a more hands-on role in trying to fix the problems at Tim Hortons.
Mr. Schwartz remains "involved in the Canadian business working closely with Alex" and Sami Siddiqui, president of the Tim Hortons chain in Canada, the company said in an e-mail.
The changes came after disgruntled Tim Hortons restaurant owners formed the Great White North Franchisee Association last March to represent them in their grievances with the company. By June, when Mr. Diaz Sese stepped down, the association – which now says it represents 70 per cent of Tim Hortons restaurant owners in Canada – had launched a lawsuit aimed at gaining class-action status after alleging the company was misusing its advertising funds. The association has since launched a second lawsuit seeking class-action status alleging the company was interfering with franchisees' right to form such a group. The company has denied the allegations.
Mr. Schwartz last month, when asked by an analyst about franchisees' performance, said the company aims "to drive franchise owner profitability and drive guest [customer] satisfaction, and those goals haven't changed. And in general, those profitability trends tend to move in line with the direction of the same-store sales [at existing restaurants,] which is why we're always very focused on driving sales growth together with our franchise partners."
Darren Tristano, a food-services expert in Chicago, said the new Tim Hortons leader could introduce more head-office staff changes and fresh ideas to help motivate its franchisees.
Because there is little growth in the coffee and fast-food sector and stiff competition from McDonald's Corp. and others, "the status quo is not enough," Mr Tristano said.
He said Mr. Macedo oversaw a strategy of more creative marketing and product introductions at Burger King that has started to bolster the bottom line of its franchisees. But they were in a different situation than the ones at Tim Hortons because the latter were already in a stronger financial position when their new owner arrived in 2014.
Burger King was plagued by internal friction and a lacklustre business when 3G acquired it in 2010, taking it public two years later. In its fourth quarter of 2017, Burger King's same-store sales outperformed those of Tim Hortons, rising just 0.1 per cent at the latter compared with a 4.6-per-cent lift at the burger chain. Even so, RBI's fourth-quarter profit more than tripled to US$395-million.