Tim Hortons nears layoff notices for hundreds of office workers: report
[UPDATE, Tuesday, 3:23 p.m. ET: Tim Hortons has confirmed layoff notices have gone out ]
Tim Hortons appears to be on the verge of slashing a “significant” number of office employees this week, according to a published report.
Sources have suggested as much as half of all office staff at more than half a dozen regional offices could be affected by the decision, which would come roughly six weeks after the iconic Canadian coffee chain was acquired by 3G Capital, a Brazil-based investment firm and owner of Burger King.
Layoff notices could go out Tuesday, according to the report.
“As part of the transaction, we are still in the process of evaluating the current organizational structure,” Tim Hortons spokesperson Alexandra Cygal said in an email message. “We have nothing to announce at this time.”
The Oakville, Ont.-based fast food chain operates seven regional offices that employ around 1,400 staff members. As part of 3G’s successful acquisition of Tim Hortons, it agreed to “maintain significant employment levels” at Tim Hortons’ existing Ontario headquarters, according to a statement from Industry Canada.
The federal department approved the $12.5 billion blockbuster deal on Dec. 4. But there is no mention of protecting staff levels in field offices.
Tim Hortons doesn’t directly employ the tens of thousands of full- and part-time staffs at the 3,600 or so franchisee-owned locations across Canada. But it does directly employ 2,150 people spread across its headquarters, five distribution centres and seven regional offices.
Tims distribution centres are located in Guelph, Ont., Kingston, Ont., Langley, B.C., Calgary and Debert, Nova Scotia. Another facility is owned in Vaudreuil Dorion, Que., according to regulatory filings. There are three manufacturing facilities as well, based in Hamilton, Oakville and Rochester, New York.
3G comes with a reputation for dramatically slashing budgets and head count at companies it gains control of. About 450 middle managers and higher-ups were fired from Burger King when it was acquired by 3G in 2010.
More recently, Heinz has dumped 3,400 positions across the food processing company since being acquired by the New York and Rio-based investment fund in February 2013. A cold rationality at 3G driven by a thirst for bigger profits fed into another controversial decision to close Heinz’s century-old Leamington, Ont. ketchup factory last June.
In another move that should help fatten Tim Hortons’ bottom line, the chain announced in November it was raising prices on coffee and other popular menu items.
3G has borrowed billions to buy Tim Hortons, financing the merger with $10.4 billion in loaned money.
That towering debt load 3G must pay down, combined with an eye toward generating bigger near-term profits, is pressuring every expense at the new Tim Hortons, experts say, from headcount to office supplies.
“3G Capital has a well-established post-takeover playbook of cost cutting and mass layoffs,” a paper opposing the deal published by the left-leaning Canadian Centre for Policy Alternatives warned in late October. “The deal is troubling for our country and for fans of Canada’s coffee chain.”
Marc Caira, Tims’ ex-chief executive who has moved to the board of the new company, called Restaurant Brands International, stated at the time of the deal’s announcement in August it will be “business as usual,” with the Canadian chain taking out full-page newspaper ads stating the same.
Invisible to customer
The CCPA report said “hundreds” of jobs throughout Tims’ supply chain, as well as head and regional offices, are at risk.
“They’re going to look for synergies, but any changes they make will be completely invisible to the customer,” Ken Wong, a business professor at Queen’s University told Global News after the deal’s announcement.
WATCH: Tim Hortons says it’s coffee will cost you an average of 10 cents more due higher operating costs.