The unexpected closure of multiple Tim Hortons restaurants in the U.S. has raised suspicions among the coffee-loving public — is the brand simply experiencing slow business, or is it on the verge of something much worse?

Restaurant Brands International, Tim Hortons’ parent company, recently reached a mutual agreement with an American franchisee to close four stores in Cincinnati, Ohio. Devinder Lamsar, the company’s spokeswoman, declined to answer why the decision was made and released a statement instead:

“Every market we enter poses unique opportunities and challenges, the U.S. market is no different. We have learned a great deal about what works well and areas where we can improve by working closely with our area development partners.”

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While Lamsar reports the company has experienced substantial growth in states like New York and Michigan, it has also seen multiple closures across the U.S. in recent years, including six restaurants in St. Louis, Missouri and one restaurant in Indianapolis, Indiana, which had only been in operation for four months.

The closures could be indicative of the company’s struggle to shake off a quickly deteriorating reputation. Tim Hortons has recently been involved in some high profile lawsuits and public battles with its own franchisees, putting the company under a very controversial spotlight. Franchisees even formed a group named The Great White North Franchisee Association to call out the company on poor management practices, which only worsened the situation.

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Such controversies are likely to have contributed to a decline in customer loyalty, which then caused sales to slow down over the years. Perhaps the one issue that really hurt Tim Horton’s reputation (at least, among Canadians) was the company’s mishandling of the minimum wage increase in Ontario earlier this year. Several restaurant owners took away employee benefits to offset increased labour costs, which upset several Canadians across the country and even sparked nationwide protests.

Despite the rumours and tough competition from donut shops like Dunkin Donuts, Tim Hortons says it remains committed to expanding the brand in the U.S.

Source: WCPO, Financial Post

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