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Months After Burger King Acquisition, Tim Hortons Announces Major Layoffs

Months After Burger King Acquisition, Tim Hortons Announces Major Layoffs

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Canadian coffee shop chain Tim Hortons, has laid of dozens of employees

Wikimedia Commons

Is Tim Horton’s going down the tubes?

Only a couple of months after Burger King officially merged with Canadian coffee and doughnut chain Tim Hortons for $12.5 billion and moved its headquarters to Canada, its new acquisition has decided to clean house. According to the CBC, Tim Hortons announced layoffs of dozens of high-end corporate employees, including pregnant women and longtime staffers. Anonymous employees told CBC that estimations of staff layoffs are somewhere between 20 and 40 percent.

"Respectfully, because we are still in the process of the re-organization — we're not in the position to confirm the number of people impacted either leaving the company or with new opportunities," Tim Hortons’ vice president of corporate affairs Alexandra Cygnal said in a statement.

As part of the acquisition deal, Burger King agreed to not cut frontline staff at Tim Hortons (meaning people that actually work at Tim Hortons store locations), but that number does not apply to the thousands of employees who work at headquarters and regional offices across Canada.

Burger King franchises

The majority of the locations of international fast-food restaurant chain Burger King are privately owned franchises. While the majority of franchisees are smaller operations, several have grown into major corporations in their own right. At the end of the company's fiscal year in 2015, Burger King reported it had more than 15,000 outlets in 84 countries of these, approximately 50% are in the United States and 99.9% are privately owned and operated. The company locations employ more than 37,000 people who serve approximately 11.4 million customers daily.

Since its predecessor's inception in 1953, Burger King has used several variations of franchising to expand its operations. In the United States, the company originally relied on a regional franchise model with owners having exclusive expansion rights in a defined geographic territory. This model proved to be problematic as it led to issues of food quality, procedures and image management. A 1970s attempt by one of its largest franchises to take over the chain led to a restructuring of its franchising system, tossing the old method in favor of a restricted, per store licensing model. The 1978 restructuring, led by a new director of operations, firmly placed the mantel of franchise oversight on the shoulders of the company.

While Burger King still utilizes a version of its revamped franchising system in the United States, outside of North America its international locations licenses are still sold on a regional basis with franchises owning exclusive development rights for a region or country. These regional franchises are known as master franchises, and are responsible for opening new restaurants, licensing new third party operators, and performing standards oversight of all restaurant locations in these countries one of the larger examples of a master franchise is Hungry Jack's, which oversees over 300 restaurants in Australia.

The 2011 purchase of the company by 3G Capital led to a change in how the company interacts with its franchises. The new owners moved to settle any disagreements with its franchises while initiating a sale of the majority of corporate locations with the goal of becoming an exclusive franchisor. The company also entered into several new franchise agreements that will allow it to dramatically expand its presence in several new markets including the BRIC nations. Additionally the company moved to establish new master franchise agreements in several regions while realigning its operations in several markets.

Tuesday, August 26, 2014

Warren Buffett Caught in the Burger King Scandal.

Burger King Backlash Begins.

The Burger King Backlash begins.

“By Monday afternoon, Burger King's Facebook page had more than 1,000 mostly negative comments about the deal”.

(Those 1000 negative comments didn’t count my negative Facebook post…so really it should be 1001 negative comments.)

“Customer Gabe Givens wrote on Burger King's Facebook page: 'If you attempt to buy Tim Hortons for the purposes of evading US taxes, I will NEVER step foot in another Burger King again. Don't do it.”

(That is the spirit Gabe….Good for you. Tell Burger King to drop dead. Take your Whoppers and shove em. Oh and take down the American flag in front of your restaurants…..You don’t mean it, and it is insulting to see it flying there. A lot of people died for that flag, and to see it on your properties is insulting. The American flag represents real Americans and you no longer qualify.

(So Me and Gabe will be sitting over at Mcdonalds enjoying an all American meal and discussing how great our country will be once Burger King is out of the way.)

"A message from Mike Gee carried a similar sentiment. He said: 'Move to Canada to avoid paying taxes and I will never darken the door of a Burger King again. Does corporate greed in this country ever end? Shame!'

(I don’t know what “Darken the door” means but sounds good. If it means Burger King no longer gets any American money, than I support it)

Zach Bernstein added his disapproving voice to the debate. He wrote: 'I don't patronize corporations that engage in tax inversions, so if you do take that route, count me among the many Americans who will never enter one of your stores again.' (Me too….Count me too)

Congress is taking notice too. Even though Congress allows this to happen in the first place. They could easily stop this anti American activity if they chose. $10.00 tarrif on all Whoppers would make the point nicely. Unfortunately Congress is a fraud, and besides the yelling and screaming there isn’t much value to anything they do. But I support Sherrod Browns effort to snub Burger King.

"Sherrod Brown, D-Ohio, released a statement Monday calling on consumers to boycott the home of the Whopper after Burger King announced late Sunday"

"Burger King’s decision to abandon the United States means consumers should turn to Wendy's Old Fashioned Hamburgers or White Castle sliders," Brown said. "Burger King has always said 'Have it Your Way' well my way is to support two Ohio companies that haven’t abandoned their country or customers." Wendy's is based in Dublin, Ohio, while White Castle is headquartered in Columbus."

"White House spokesman Josh Earnest wouldn't comment on Burger King's announcement on Monday (why not?), but said the president generally believes it's unfair for companies to pursue a tax inversion merely to pay less in taxes."

(President Obama needs a spine. He should have said “Burger King is Anti American. They should take all of their restaurants to Canada and keep them there”. Watching Obama fumble around is like watching the cowardly lion in the Wizard of Oz)

Krispy Kreme-owner JAB to buy bakery chain Panera Bread

(Reuters) - JAB Holdings, the owner of Caribou Coffee and Krispy Kreme Doughnuts, said on Wednesday it would buy bakery chain Panera Bread Co (PNRA.O) for $7.2 billion (5.77 billion pounds), as it expands its coffee and breakfast empire through the biggest-ever U.S. restaurant deal.

JAB, the investment vehicle of Germany's billionaire Reimann family, has built up an empire of coffee and food chains through a series of acquisitions in recent years, including that of K-cup coffee pod-maker Keurig Green Mountain Inc.

Panera has about 2,000 bakery cafes in the United States and its fresh offerings appeal to health-conscious consumers. It has been ramping up its loyalty programme, rolling out kiosks to cut customers' waiting times and has expanding its delivery service.

Shares of St. Louis-based Panera jumped 14.2 percent to a record high of $312.98. JAB offered $315 per share in cash, a 20.3 percent premium to the stock's closing price on March 31, the last trading day before media reports of a potential deal.

"We view the acquisition as strategically compelling for JAB . we view the acquisition price as high enough to preclude a competing financial suitor," Wedbush Securities analyst Nick Setyan said in a note.

Setyan said JAB's offer was largely in-line with multiples it has paid for its acquisitions, including Peet's Coffee & Tea and Caribou Coffee.

The acquisition of Panera will be the second-biggest restaurant deal in North America after Burger King's $11.53 billion purchase of Canadian coffee chain Tim Hortons, according to S&P Global Market Intelligence.

Panera has reported better-than-expected earnings per share for the last six quarters. On Wednesday, it reported preliminary first-quarter company-owned sales-store growth of 5.3 percent, which Setyan said comfortably beat Wall Street's expectations.

BTIG analyst Peter Saleh told Reuters the deal would give Panera the flexibility to "invest more in technology, maybe to invest faster behind delivery, to make more investments in their food offering."

JAB became the world's largest pure-play coffee maker by volume in 2015, when it created the Jacobs Douwe Egberts joint venture by combining its D.E. Master Blenders 1753 business with the coffee business of Mondelez International Inc (MDLZ.O).

JAB will also assume about $340 million of Panera's net debt, valuing the deal at $7.5 billion, the companies said in a joint statement. They expect the deal to close in the third quarter.

Panera founder and Chief Executive Ron Shaich and entities affiliated to him have agreed to vote shares representing about 15.5 percent of the company's voting power in favour of the deal.

Panera is being advised by Morgan Stanley & Co LLC and Sullivan & Cromwell LLP is providing legal counsel. Skadden, Arps, Slate, Meagher & Flom LLP is advising JAB.

(Reporting by Anya George Tharakan and Gayathree Ganesan in Bengaluru Editing by Martina D'Couto and Savio D'Souza)


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