Tim Hortons announces sudden closure of 4 Cincinnati, Ohio., area locations [UPDATED]
Parent company RBI says it remains committed to working closely with its franchisees to drive the brand's growth in the U.S. The chain is in the midst of a public feud with franchisees
Tim Hortons parent company Restaurant Brands International closed four more American locations as the coffee-and-doughnut chain struggles to overcome franchisee discontent and souring public opinion.
RBI says it reached a mutual agreement with the franchisee in Cincinnati, Ohio, to close four restaurants.
Spokeswoman Devinder Lamsar did not directly answer why the company made the decision and instead sent a statement.
“Every market we enter poses unique opportunities and challenges, the U.S. market is no different,” the statement reads. “We have learned a great deal about what works well and areas where we can improve by working closely with our area development partners.”
The company has seen robust growth in some markets, like New York and Michigan, she said in the email.
However, it has closed multiple restaurants in the U.S. over the past several years.
It reportedly recently also closed an Indianapolis, Ind. location after less than four months of operations.
Lamsar declined to confirm the closure, but sent a statement saying the company believes the city “remains an attractive market” for it.
Show Me Hospitality LLC, the area developer for Tim Hortons restaurants in the Greater St. Louis, Mo.-area, closed six of its restaurants there in late 2017, according to a statement it released in January.
The developer said it was forced to do so after RBI terminated franchise agreements for the six spots.
Show Me Hospitality filed a lawsuit against the parent company in July 2017. It claims RBI wanted the group to enter into a new area development agreement that required it to open 200 restaurants—five times more than its original agreement with former management. When Show Me Hospitality declined to do so, it claims RBI said it would terminate the old agreement.
Neither the developer’s president, its lawyer nor RBI immediately responded to a request for comment on the suit.
The closures come as Tim Hortons is embroiled in an ongoing public battle with some of its franchisees, who have formed an unsanctioned group called The Great White North Franchisee Association to fight against alleged mismanagement.
The company and group have filed multiple lawsuits against each other in both Canada and the U.S. Meanwhile, Tim Hortons ranking plummeted in two recent reputational surveys and the company grappled with nationwide protests against how it and some franchisees handled a minimum wage increase in Ontario earlier this year. Some restaurant owners scaled back on employee benefits to offset the higher labour costs.
Show Me Hospitality is a member of GWNFA’s U.S. chapter. GWNFA says it represents about half of all Tim Hortons franchisees in Canada and the U.S.
GWNFA did not immediately respond to a request for comment on the string of American closures.
In June, after reports RBI was scaling back on its U.S. expansion plans, Tim Hortons president Alex Macedo said in a statement that the company has seen softer comparable sales growth in the U.S. in more recent quarters amid a very competitive environment.
The company had 685 American locations at the end of 2017, up from 649 stores at the end of 2014, he said.
Lamsar said the company remains committed to working closely with its franchisees to drive the brand’s growth in the U.S.
“We will need to determine the sequence of our expansion efforts outside of Canada to prioritize markets to establish density and brand awareness.”
RBI’s shares fell 94 cents or 1.14 per cent to $81.62 on the Toronto Stock Exchange.