Five things we learned about Tim Hortons from the recent Maclean’s exposé

The paradox represented by Tim Hortons‘ “always fresh” frozen doughnuts got a thorough examination last week in a long Maclean’s feature examining why Archibald Jollymore, former executive vice-president, and others are launching a whopping $1.95-billion class action lawsuit against the doughnut chain.

http://www.torontolife.com
September 13, 2010

Five things we learned about Tim Hortons from the recent Maclean’s exposé
Ashleigh Ryan

Tim_Hortons.jpg

Always fresh? (Image: Ann Baekken)

The paradox represented by Tim Hortons‘ “always fresh” frozen doughnuts got a thorough examination last week in a long Maclean’s feature examining why Archibald Jollymore, former executive vice-president, and others are launching a whopping $1.95-billion class action lawsuit against the doughnut chain. The case pits Jollymore, a cousin of Tim’s co-founder Ron Joyce, against current president (and Joyce’s successor) Paul D. House, and is laced with the family feuding, backhanded commentary, executive rivalries and all the other prerequisites for a juicy corporate scandal.

Here, five things we learned about Canada’s doughnut titan.

1. Publicly traded Tim’s just sold its 50 per cent stake in Maidstone—the Brantford, Ontario, bakery where all its “doughnut and muffin delights” are made—to a Swiss company called Aryzta AG for $475 million. More and more, the company is becoming less and less Canadian.

2. The cost of purchasing a frozen doughnut from Maidstone, which flash-freezes them using the “par-bake” method, is approximately double what it would cost franchisees to bake them from scratch on-site, according to court documents. Jollymore says this process ate into profit margins so much that he and his wife (both franchise owners) were forced to “eliminate or reduce free product donations to charities, school fundraisers and community events.”

3. Tim Hortons co-founder Ron Joyce admitted the famous donuts ain’t what they used to be. When the frozen method was introduced after he stepped down, he said, “I’ve tried them, and they’re certainly not the same.” One franchise owner who backs the lawsuit even calculated that the “always fresh” donuts are 14.3 per cent smaller than the actual fresh ones.

4. Current Tim’s president Paul D. House doesn’t have many friends—or, rather, he certainly has a lot of enemies—around the office. Joyce in particular has taken a few jabs at his successor, entitling his autobiography Always Fresh and deliberately omitting any honourable mention of House taking the reins of the company.

5. Alumni of the Joyce-era Tim’s are far from united in the lawsuit. Graham Oliver, owner of five franchises and Joyce’s nephew, is among many who oppose the suit, arguing that if the public knew how much franchisees earn, the whining rhetoric about profit margins would result in a serious blow to the company’s image, evoking franchise owners as “wealthy, greedy people.”

• Tim Hortons’ extra large trouble-trouble [Maclean's]

Comments

1. I’m ok with the owners being wealthy. But not with buying degraded quality baking. It was great before. Now it’s disappointing. The brand still seems strong-but I don’t find myself loving it anymore. The sandwiches and soups dropped in quality too. At one point my dad asked why their packaged coffee tasted different than what was served at the store: they said it was because the coffee is relabeled Maxwell House.
September 13, 2010 at 11:21 pm | by Ben

2. ALWAYS FRESH IS DELIBERATELY MISLEADING…WHEN SOMEONE SAYS FRESH I THINK IT WAS JUST MADE FROM FRESH INGREDIENTS AND BAKED ON THE PREMISES. THERE IS AN ASTRONOMICAL PROFIT IN TIM HORTON AND THE FRANCHISES ARE DIFFICULT TO GET. IT’S WHO YOU KNOW NOT WHAT YOU KNOW…STOP BEING GREEDY…CANADA MADE YOU WHAT YOU ARE SO KEEP IT CANADIAN AND START BAKING BOYS.
September 14, 2010 at 9:26 am | by TIM DEVLIN

3. If the public can’t tell the difference good product and bad product……….let those “greedy bastards” laugh all the way to the bank.
September 14, 2010 at 9:38 am | by fat chance

4. I agree with ‘fat chance’ (September 14, 2010 at 9:38 am). It never ceases to amaze me how the Canadian sheeple line up to buy this (third rate) cafeteria food. Really, that’s what it is – from their coffee to their donuts. What garbage. What a f@%$# up country. Canadians are loath to support local, independent merchants and instead, queue up for the familiar – a long list of cookie-cutter, mediocre chains that serve up the best shade of gray. Canadians are the ‘gray’ people. Fat lovable ponces…. lovable lummoxes….
September 14, 2010 at 10:36 am | by McNot

5. Oh…. and BTW, GOOD LUCK in New York! Your gonna need it.
September 14, 2010 at 10:54 am | by McNot

6. Renting someone else’s business model causes problems, especially for mom-and-pop investors.
“Blue chip” systems can be better at papering-over the single greatest risk to franchisees: franchisor over-reaching (opportunism) which difficult to defend against because of sunk costs and few franchisee associations.
For many reasons, opportunistic franchisors make a higher ROI than non-predatory ones.
Les Stewart MBA
Midhurst ON Canada
September 14, 2010 at 11:35 am | by Les Stewart MBA

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Risks: Ad hominem attack, Blame the other franchisees, Blue chip, Bullying, Can't buy lower priced products, Central commissary, Class action lawsuits are an unproven form of remedy, Class action lawsuits benefit lawyers, not franchisees, Class action only as good as the lawyers involved, Class-action lawsuits: lawyers take majority of risks & spoils, Comments on article are interesting, Company man, Competence, Costs of scandals, Food criticism, Gouging on supplies, Greed, Franchisee-on-franchisee opportunism, House negro, Lawsuits, class action, Les Stewart, Misrepresentations, Nothing personal, it's just business, Opportunism: contract creates powers which are used to strip investor value during relationship, Quality industry leadership breeds similar managers and workers, Relative of franchisor owns construction company, Sincerity, Sunk costs: franchisee's trapped capital keeps them chained to treadmill, Tied contracting, Tip of the iceberg, Tobacco industry-type defence, Canada, 20100913 Five things

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