[LINK] "Tim Hortons: The Canadian icon Canadians won’t work for"

[rfmcdonald]

MacLean's' Jason Kirby writes about why Tim Horton's favours the temporary foreign worker program: it needs to skimp on wages in order to finance a growth strategy that's starting to sputter. Canadians not working at Tim Horton's, demanding higher wages, works to Tim Horton's benefit.

It’s not just Timmies that’s having trouble finding domestic workers, of course. Across the country, restaurants complain they can’t fill openings. Much of the focus has rightly been on the question of whether restaurants should be paying more to attract Canadian workers. But at the core of the issue is a problem that’s been mostly overlooked: Many restaurant chains now rely on a business model based on blanketing the landscape with locations in order to generate growth. It’s a fundamentally flawed strategy, and Tim Hortons is only the most obvious example.

You can see this play out by looking at the chain’s same-stores sales figure, which reflects the performance of only those stores that have been open for at least 13 months. It’s a handy measure that lets investors peer through all that dust from new-store construction to gauge the underlying health of a chain. In the case of Tim Hortons, average same-store sales have been deteriorating for years. In its most recent quarter, Tim Hortons posted overall sales growth in Canada of five per cent. But same-store sales grew just 1.6 per cent. Were it not for the 160-odd new stores added over the previous 12 months, Tim Hortons sales and profits would likely have been considerably less.

Tim Hortons’ chief coffee slinger knows he has a problem. In February, while unveiling a new growth plan, Caira warned that opening more stores can’t be the company’s only path to growth. More product innovation is needed, he said, and he vowed that Tim Hortons’ long-struggling expansion into the U.S. would finally start to pay off, with profits rolling in by 2018.

Then, to no one’s surprise, Caira announced another massive round of expansion: 500 more stores in Canada over the next five years. (The chain already operates 3,600 locations here, almost all of them owned by franchisees, up by half from a decade ago.) The message was clear: The old growth strategy may be broke, but while we fix it, here’s another restaurant 500 m closer to wherever you happen to be right now.