'They're vulnerable right now': Tim Hortons' brand reputation plummets
Published Thursday, April 5, 2018 11:36AM EDT
Last Updated Thursday, April 5, 2018 3:03PM EDT
Franchisee dissatisfaction with Tim Hortons’ management and hefty cost-cutting measures appear to be hurting the coffee giant’s reputation among Canadians, according to a new survey.
Tim Hortons took a dramatic tumble when it fell from 4th place last year to 50th in an annual ranking of the most admired companies in Canada.
The survey, conducted by Leger in partnership with National Public Relations and The Globe and Mail, ranked the top 100 companies in Canada out of 241 businesses in 28 sectors. Each company was assessed by approximately 2,100 consumers online from Dec. 19 to Jan. 29.
Christian Bourque, the executive vice president of Leger, attributes Tim Hortons’ drop in public opinion to the recent “minimum wage war” in Ontario.
In January, the restaurant chain faced backlash after a number of franchisees in the province cut workers’ benefits to offset the higher wage costs. Boycotts and protests across the province slammed franchisees and the company’s corporate parent, Restaurant Brand International, for failing to come up with a better response to the province’s move.
Although the controversy was centred in Ontario, Bourque said in the introduction to the survey that the effect on its brand was far-reaching. He noted that, in neighbouring Quebec, Tim Hortons lost 17 points in the survey from the year before.
“In the traditional media era, the crisis could have been limited geographically, but these are different times,” he said. “At the pace at which bad news hits social media, is then reinterpreted by the masses through the endless game of shares, reputation volatility is clearly upon us.”
Bruce Winder, a co-founder and partner at Retail Advisors Network, told CTV News Channel that he thinks Tim Hortons should be worried by the survey results.
“I’m shocked. This is an incredible drop, but it shows you just how Canadians feel right now about this brand,” he said. “I think people are moving Tim Hortons into the camp of sort of an untrusted, large company… They’ve lost some of that Canadian fabric as the company next door.”
Although the coffee chain’s overall sales are still growing, Tim Hortons’ comparable sales at restaurants slipped 0.1 per cent for the 2017 financial year.
Winder thinks a lack of alternatives, rather than brand loyalty, has many Canadians continuing to visit Tim Hortons. And that should raise the coffee chain’s concern about its competition.
However, he does think the coffee chain should be concerned about its competitors in light of this survey.
“They need to be incredibly worried about it,” Winder said. “Eventually, someone like a McDonald’s could take some serious market share from them. They’re vulnerable right now. They need to repair this as soon as possible.”
David Soberman, national chair of strategic marketing at the Rotman School of Management, says McDonald’s stands a good chance of wooing some of Tim Hortons’ jaded customers over to its side.
“People will switch when they feel that the brand isn’t as strong,” Soberman told CTV News Channel on Thursday.
Soberman said he was also shocked by the plunge in Tim Hortons’ brand reputation, which he says receives intense scrutiny because it’s so wrapped up in Canada’s national identity.
“Tim Hortons is almost like a Canadian icon,” he said. “So by virtue of being so prominent, you also become highly discussed when something negative happens.”
Tim Hortons wasn’t the only company that lost favour in the eyes of Canadians. Sears also took a big hit, slipping 61 spots, putting the brand right out of the top 100 companies. The bankrupt retailer invited controversy when it came to light that head office staff would receive big bonuses while there was a large shortfall in the company’s pension fund.
As for the most admired companies in Canada? Google, Shoppers Drug Mart and Canadian Tire claimed the top three spots this year. Sony replaced Tim Hortons for 4th place and Samsung made a dramatic comeback from last year’s exploding batteries PR nightmare to round out the top five.
With files from The Canadian Press