Last year an internal spat between Tim Hortons franchisees and its parent company, Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR), became highly public. Canadian franchisees formed The Great White North Franchisee Association in an attempt to push through reform in what franchisees believe are oppressive changes from corporate.
RBI stock has dropped 10.2% in 2018, and a number of factors have aligned to worsen the ongoing situation. There was public outcry after cost-cutting measures stripped away employee benefits at Tim Hortons in response to the Ontario minimum wage hikes. The image of Tim Hortons in the eyes of Canadians has been hit hard, in a recent survey it plunged to 50th in a brand reputation rankings survey compared to fourth in the previous year.
The federal government has agreed to look into claims by the GWNFA that cost-cutting measures have led to reduced quality and safety at Tim Hortons restaurants. RBI has remained relatively mum during the process, preferring instead to wait it out. Shares are now down 8.5% year over year. In 2017 RBI posted revenues of $4.57 billion compared to $4.14 billion in the prior year. It reported net restaurant growth of 2.9% at Tim Hortons and comparable sales in constant currency fell 0.1% at Tim Hortons locations.
RBI offers a quarterly dividend of $0.45 per share representing a 1.9% dividend yield. Unfortunately for the company a resolution in this bitter battle with franchisees does not appear to be forthcoming.
