Tim Hortons’ parent company has reduced the rent its restaurant owners pay to cope with the effects of the COVID-19 pandemic, but an independent group of franchisees is putting pressure on the company to provide more financial support, including waiving some rent payments for up to three months.
The measures were communicated to store owners last week as a number of retail tenants began to seek rent relief. Fast food chain A&W Canada, for example, asked landlords for a two-month deferral on its franchisees’ rent payments.
Restaurant Brands International Inc. informed its Tim Hortons franchisees last week that it would be temporarily changing from a “base rent" that is calculated based on a location’s past sales to a rent that is a percentage of current sales – representing a decrease for restaurants that have experienced falling revenue and lower foot traffic because of social distancing practices. The company also said it would defer rent payments due on April 1 for 45 days, to free up cash flow for owners – amounting to $11,000 for each location, on average, according to RBI.
RBI owns many of its locations and acts as landlord to franchisees; in any other cases, the company said it would cover the difference between the reduced rent and the rent due to the property owner.
But a group representing franchisees that have clashed with RBI in recent years has said the support does not go far enough to keep many owners in business.
The Association of Canadian Franchisees told its members last week that it was calling on the company to do more, including suspending the payment of franchise royalties for at least three months, without interest, and waiving rent altogether for owners who need it to remain viable.
While the ACF stressed its commitment to food safety, it also suggested a temporary halt on food safety audits, to allay stress on employees and to keep the number of people entering the store down.
The company called that suggestion “irresponsible.” The ACF declined a request for comment for this story.
“They do not represent the very large majority of Tim Hortons restaurant owners who are totally committed to the highest standards and are working tirelessly to support their communities," RBI chief corporate officer Duncan Fulton said in a statement, adding that the company was prepared to address any liquidity issues with owners one-on-one.
As concerns about the new coronavirus that causes COVID-19 have ramped up over the past two weeks, a number of chains including Starbucks and McDonald’s have closed most of their restaurants in Canada, opting to provide service through drive-through and delivery only.
RBI has shut down all in-restaurant seating, but left it up to franchisees with drive-through operations whether to shut their doors to takeout orders. It is adding a “curbside” pick-up feature to the Tim Hortons app for customers, such as truck drivers or those without cars who do not have drive-through access.
The app will allow them to order and pay on their mobile devices and have staff bring their food to them outside the restaurant. The company has also partnered with third-party delivery services Uber Eats and Skip the Dishes and more than 850 franchisees signed up for delivery just at the end of last week.
With a report from Rachelle Younglai
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.