Yearning for her daily ritual – the heady brew that is an extra-large double-double from Tim Hortons – Wendy Cotie sounds a bit desperate.
"I need my Tims," she says. "I'm addicted to it, I really am. I don't know what they put in that stuff. More caffeine? Is there nicotine in there?"
But Ms. Cotie is staying away, as a matter of principle. The news that some franchisees were cutting benefits and paid breaks for employees to cut costs after Ontario hiked the minimum wage by 21 per cent has caused her to lose her taste for the brand, if not her cravings for its coffee.
Her boycott abides despite the fact that she's not sure whether the franchise owners of her local Tims in Arnprior, Ont., had made cuts. While she plans to find out, she objects to the fact that the chain's parent company, Restaurant Brands International Inc., has said so little on the issue. RBI is controlled by Brazilian private-equity firm 3G Capital. They bought Tim Hortons for $12.5-billion in 2014.
"A company that's that busy, they've got to have huge profits at the end of the year," she said. "Why can't that filter down to their franchise owners to help them?"
While she is just one person, Ms. Cotie's boycott is a case study in the danger to the Tim Hortons brand. On Friday, roughly 50 protests were planned across Canada in response to the cuts; a social-media campaign is encouraging a boycott. The brand, meanwhile, has become a political punching bag for an unpopular Ontario premier: Kathleen Wynne has accused some franchise owners of treating employees as "pawns."
The question is whether all the negative publicity could inflict lasting damage to the brand. The issue of employee perks comes on the heels of a bitter battle between store owners and the parent company over cost-cutting and alleged mismanagement.
"These events are starting to accumulate," said Bruce MacLellan, chief executive of Environics Communications Inc. "An organization can't sustain that kind of continued pressure on their reputation."
Tim Hortons has long enjoyed the halo of a strong image among Canadian consumers. Research firm Ipsos Canada ranked Tim Hortons ninth in Canada in its annual Most Influential Brands survey last year, just behind Visa, Walmart and YouTube and ahead of the CBC. Tim Hortons has consistently ranked in the top 10 in that survey for the last five years in a row.
Environics conducts an annual survey measuring Canadians' trust in businesses and other institutions. According to its most recent findings, 71 per cent of people say that a business being Canadian-owned is an important driver of trust.
Customers may not be aware, or care, that Tim Hortons' controlling owner is not Canadian, because of the chain's massive real-estate footprint in communities across the country. However, the brand must take care to maintain perceptions that it is a meaningful part of the community and a good employer in order to prevent that trust from slipping.
Furthermore, 72 per cent of people surveyed by Environics said open communication by company leadership is an important driver of trust.
"The new ownership of Tim Hortons isn't really visible," Mr. MacLellan said.
RBI declined requests for an interview. In a statement last week, the company accused some owners of using employees "to further an agenda." "These recent actions by a few restaurant owners … do not reflect the values of our brand," the statement said.
Paul Wales, who worked on Tim Hortons advertising for 16 years as an executive creative director at ad agency J. Walter Thompson Canada, says it is his perception the brand has been doing more promotional work advertising deals or products.
"We all understood the importance of sales … but at the same time, we knew we needed to reflect the brand values to customers as well," he said, citing memorable "based on a true story" ads that told the story of a family arriving in Canada for the first time, or of a son who mistakenly believes his immigrant father does not support his love of hockey.
"Those type of spots insulate the brand a little bit.So when you're in rough waters, people look to those and might say, I still love Tim Hortons."
However, he cautioned that emotional or value-based advertising must reflect the actual values a company demonstrates. "I'm always going to have some sort of emotional connection to that business," Mr. Wales said. "For me, all the news that surrounded it … I feel disconnected. There's a change in behaviour."
At the same time, customers in general tend to have a very short memory. When today's outrage fades, people often slip back into yesterday's habits and brand loyalties.
"They may see a little bit of decline in their traffic, but in the long term I think it's going to go back to normal," said Darren Tristano, a Chicago-based food-service-industry analyst.
In a research note, Bank of Montreal analyst Peter Sklar predicted the negative publicity would die down. He also noted that the impact would be isolated to franchisee profits, not the parent company's results, since it collects royalties based on revenue, not profits. Whether revenues are impacted would depend on how widespread and long-lasting the boycott is.
Prices are set at the corporate level. Franchisees have asked for price hikes across the board, which have yet to occur, though RBI has raised prices on some breakfast items. The only other levers for owners looking to offset higher wages is to cut costs – some have chosen to do so through benefit cuts. That could affect the company if it leads to higher employee turnover, Mr. Tristano said.
"Every restaurant company has disputes with franchisees," he added. "The brands that have done a better job have allowed franchisees to have a voice in the way the business is run.… If their voice is heard within the business, you don't hear it elsewhere."