What we think

You are here

Tim Hortons: Canadian capitalism, ‘small business’ and resistance


January 15, 2018

When the heirs to billionaire Tim Hortons founders cut paid breaks and benefits for the minimum wage employees at their Coburg franchise, it exposed the massive inequality at the heart Canada’s iconic coffee shop and has sparked a wave of resistance. Some have blamed the foreign firm that now owns the company, looking back in nostalgia on earlier days, while the company itself blames the supposedly independent small business for going rogue. The history of Tim Hortons, however, reveals a cut-throat capitalist company—which chases low taxes while holding down wages, uses franchises to squeeze small owners and pit them against workers, exploits migrant workers and opposes unions. But the history also shows the potential for resistance and solidarity.

Canadian capitalism

In 1964 hockey player Tim Horton started a doughbut shop in Hamilton, and in 1967 partnered with Ron Joyce, a cop who ran a Dairy Queen restaurant. While named after Horton and connected to the national sport he played, it was Joyce who ran the company. As he boasted to the Financial Times, “Tim Horton was playing hockey. He knew nothing about business. So I became his partner. From there we grew the business.” There were 40 stores by 1974 when Tim Horton died in a car crash and Joyce became partners with Horton’s widow, Lori. But saw her as an obstacle to building his empire—dismissing her in his autobiography as a “player’s wife” who was a “liability.” He bought her out for $1 million but kept the company name for branding purposes.

By the mid 1990s the company had more than 1,000 stores and merged with Wendy’s—another fast food chain that has made a fortune off low-wage workers. This was not a “foreign takeover” but a capitalist business tactic that allowed Tim Hortons to expand into the US while Joyce remained the largest shareholder. He also fought off a lawsuit from Lori Horton trying to win back the half of the company she sold him.

In the 2000s, with 2000 stores Tim Hortons surpassed McDonald’s in Canadian sales. Joyce sold his stock, becoming a billionaire, and the company separated from Wendy’s and returned to Canada. This was another business tactic that allowed it to take advantage of the lower corporate taxes created by years of Liberal and Conservative cuts. As the Chief Financial Officer explained, "The Canadian federal tax rate has been declining since 1980 and will reach 15 per cent by 2012. In addition provinces such as Ontario, Alberta and British Columbia have reduced or are reducing their provincial tax rates to 10 per cent.”

While Harper used the return of Tim Hortons to chase votes, Rick Hillier used the company to sugar coat Canadian militarism. As the death toll of Canadian troops and Afghan civilians mounted in 2006, the Canadian general invited Tim Hortons to set up a store in Kandahar—to improve the moral of troops and better sell the occupation at home. Canada’s occupation allowed Canadian companies to expand, from oil companies to doughnut shops. As Tim Hortons Director of Business Development explained, "We also look forward to introducing the many soldiers from other nations stationed in Kandahar to the Tim Hortons experience.”

But the Timmy-Tory partnership has not always gone well. Facing increasing climate justice protests, Enbridge launched an ad campaign with Tim Hortons in 2015—hoping to sugar coat its toxic tar sands. But mass opposition, including a 30,000 signature petition, stopped the campaign. In response, Ezra Levant and tar sands supporters tried to start a #boycottims campaign on social media.

‘Small business’

In response to the latest wave of protest, Tim Hortons has tried to distance itself from the heirs and owners of the Coburg store that cut paid breaks and benefits. As parent company Restaurant Brands International claimed, “Almost all our restaurants in Canada are independently owned and operated by small business owners who are responsible for handling all employment matters, including all policies for benefits and wages, for their restaurants.” The paradoxical claim that Tim Hortons is both a multibillion dollar chain, and a small business, allows the parent company to escape blame for individual stores while continuing to siphon profits from them.

It’s true that most stores are operated by business owners who run an average of three stores. But these are not separate, small businesses independent from the multi-billion dollar corporation. As CEO Don Schroader explained in 2011, Tim Hortons owns the very land on which the franchises sits, and demands a constant profit return: “we are landlords, it is part of our business model and part of what sets us apart from other franchise systems in terms of the profitability of the overall system. So we have good re-occurring streams of income - we have the royalties which we receive every month, we have rent which is generated as a result of controlling that real estate, and then we make money from the distribution systems and from our vertical integration opportunities. It collectively gives us a healthy and steady stream of income to operate and grow the system and the real estate is a big part of that and it ties us close to the restaurant owners as well.”

Now 3G Capital, the Brazilian private equity firm that merged Tim Hortons and Burger King into Restaurant Brands International in 2014, is using the franchise model that built Tim Hortons to demand an even greater stream of profits. An article in the Financial Post earlier this year described the profit-squeeze assembly-line: “Real-time electronic billboards display employee success metrics: for example, the number of croissants and breakfast sandwiches sold at each restaurant every day that week, and franchisee drive-thru times (less than 25 seconds puts a franchise in the green zone; more than 30 seconds puts them in the red zone)…‘We are now part of an equation focused on profit extraction, and that profit goes to shareholders,’ said Hughes, president of Tim Hortons’ new association of Canadian franchisees.” This is not only a way to generate more profits, but also to drive out small business owners within the company. Schroeder, who as CEO championed of the franchise model, is now supporting frustrated franchise owners: “Left unchecked, there will certainly be a major consolidation of store ownership — fewer store owners to deal with is much more convenient and less costly than dealing with a system where the average franchisee owns about 3.5 stores.”

As a result of mounting frustration, franchise owners launched two class action lawsuits against the parent company last year—a $500 million lawsuit in July alleging mismanagement of advertising funds and rising costs, and another $850 million class action lawsuit  in October alleging increasing the wholesale prices. Hoping to capitalize on the same nationalism that built the empire, they are calling themselves The Great White North Franchisee Association (GWNFA), and include half the franchises in Ontario.

Workers of the world

Some see the latest clawback of wages and benefits, and frustration of franchise owners, as a result of the foreign ownership of Tim Hortons. When it merged with Burger King in 2014, some labour leaders characterized it as “the sale of an iconic Canadian business to a group of foreign billionaires”—glamorizing a Canadian billionaire whose empire chased low corporate taxes while paying workers poverty wages for 40 years prior to the merger.

It was in 2012, prior to the merger, that four temporary foreign workers from Mexico working for Tim Hortons in Dawson Creek, BC filed a human rights complaint against their employer for racist abuse, a doubling of their rents and putting double the workers per room. “When Tim Hortons advertises the double-double, I don’t believe this is what most Canadians had in mind,” explained their lawyer.  Two were fired and deported for raising concerns, while two fled for their safety. It was the “iconic Canadian business” who the RCMP and Employment Standards Branch investigated in 2013 when Filipino workers working in Fernie, BC blew the whistle on harassment and wage theft.

But when anger erupted in 2013 at the Temporary Foreign Worker Program—and companies like RBC and Tim Hortons who used it to pay migrant workers less wages—much of it was not aimed at raising wages, improving employment conditions or securing status for migrant workers. The facebook group “Boycott the Royal Bank of Canada” called for protecting “our” jobs from “foreign workers,” and NDP leader Thomas Mulcair repeated the racist rhetoric: “To allow temporary foreign workers, through this type of strategem, to be brought in to deprive Canadians of their livelihood is grotesque.” Mulcair further claimed that the TFWP (created by the Liberals) had simply been mismanaged by Harper: “the temporary foreign worker program was designed as a way to provide labour in the fields where a lot of Canadians wouldn’t work—like the picking of fruits and vegetables…it’s now more akin to a situation where the person serving you in a Tim Hortons is likely to be a temporary foreign worker.”

But this was not a program with good intentions gone awry. As Naveen Mehta, UCFW Canada’s general counsel and director of human rights explained, “the workers brought in to do the work are grossly exploited and often treated like indentured servants…The reality is [the government] have engineered a program that leads to a low wage economy, where the rights of both domestic and foreign workers are trashed to bolster the corporate bottom line.”

The movement of migrant workers internationally is about global capital using its links with its own nation states to use immigration laws to divide workers and undermine the agency of the international working class. By placing legal constraints on the movement of workers, globally or between workplaces, workers cannot exercise choice in the labour market. State laws are used internationally to ensure capital has a steady supply of cheap, exploitable labour. This is why we need to call for full citizenship rights for migrant workers and for open work permits.

Having temporary and disposable low-wage workers, who can be paid lower wages, denied labour rights and deported at the end of their contract, has served Tim Hortons expansion. As Macleans explained in 2014 (prior to the merger), “Tim Hortons has said it employs around 4,500 temporary foreign workers, equal to about five per cent of its 100,000-strong workforce. That may not seem like a lot, but think of that temporary labour force as a release valve when local labour markets overheat with the addition of new stores. Then multiply it by all the other chains pursuing a similar strategy. You quickly arrive at an industry dependent on TFWs to fuel its exponential expansion.”

The solution is not to build illusions in Canadian capitalists or contribute to the scapegoating of migrant workers, but to build solidarity and unity among all workers. In 2013, USW Local 9346, which represents mine workers in BC, supported the Filipino migrant workers in Fernie as part of the Steelworkers campaign to challenge the TFWP, and in 2015 the workers reached a settlement. “I think justice has been served and we raised our voice…Even though we are foreign workers we still have rights and we deserve to be treated fairly,” explained Richard Pepito. In 2015, when a Winnipeg Tim Hortons fired a worker for speaking with labour organizers, a broad campaign—including the Manitoba Federation of Labour, Winnipeg Labour Council and University of Winnipeg Students’ Association—helped win her job back and support the unionization of the store. This built momentum to unionize a second Tim Hortons in Winnipeg last July.

Roll up the resistance

By building a broad campaign to raise in the minimum wage and improve labour standards, the Fight for $15 and Fairness is raising class struggle. This is exposing the “Canadian icon” of Tim Hortons for what it has always been: a profit-hungry corporations that has made billions by exploiting workers and taking advantage of low corporate taxes. That Ron Joyce Jr and Jeri-Lynn Horton-Joyce, the children and heirs of the co-founders, should claim to be “small business owners” shows that this argument against a higher minimum wage has always been led by big business—including Tim Hortons, Wendy’s, Macdonald’s, Walmart, and Loblaws—not small business, many of whom support a higher minimum wage.

Class struggle is also driving a wedge into the business community, and exposing rifts. Tim Hortons owners have been happy to exploit workers and treat migrant workers as disposable, but now find themselves squeezed between workers demands for higher wages and their parent company demands for higher profits. This is widening the pre-existing rift, with both sides blaming each other for attacking workers. The GWNFA claim that “while other competitors have received concessions from their franchisors [to compensate for the rising minimum wage], unfortunately our chain has not. Many of our store owners are left no alternative but to implement cost saving measures in order to survive.” But these “cost savings” on the backs of workers have provoked widespread anger. In response Tim Hortons, which is facing lawsuits for squeezing franchises, is now blaming them the cutbacks that have provoked public anger. In a statement targeting both the GWNFA and the Coburg franchise, Tim Hortons says that workers “should never be used to further an agenda or be treated as just an ‘expense.’”

The Liberals, having been pressured into passing Bill 148 and seeing a majority support for the $15 minimum wage, are banking their election hopes on presenting themselves as defenders of workers—and calling out Tim Hortons as bullies. This is convenient cover for a government that froze the minimum wage for years, cut corporate taxes and recently bullied teachers back to work. But it’s a tactic that will work until the NDP wakes up and smells the brewing resistance. In 2014 the NDP refused to support the $14 minimum wage because of “small businesses”, and even now it can’t take a clear position in support of workers: in BC the NDP government is delaying $15/hr, and in Manitoba the NDP supports a slow phase in. In reaction to Tim Hortons’ punitive cuts, the NDP first said it wasn’t “Canadian values,” playing the nationalist card, and then the labour critic Cindy Forster said “at the very least, we should wait and see a little bit about whether or not there’s any impact to local businesses with respect to the wage increase.”

We shouldn’t wait and see a little bit, we should fight back a lot. Many have instinctively called for boycotts—which is a welcome sentiment of revulsion that has shaken Tim Hortons’ carefully crafted nationalist image. This tactic worked in the past to sever ties between the Enbridge and Tim Hortons brands, but these cut backs are not a temporary ad campaign but a permanent business strategy. But the anger behind the boycott sentiment can be channeled towards more enduring strategies—from solidarity with migrant workers to support for workers unionizing—that directly counters the cuts by supporting Tim Hortons workers in their own workplace. This means demanding Tim Hortons reverse their cuts, making an example of them so other companies dare not make similar cutbacks, while continuing to extend the fight for $15 and fairness.

* Sign the petition to tell Tim Hortons to stop rolling back workers’ rights.

* Join the January 19 Stand with Tim Hortons workers: Canada-wide day of action

Section: 
Geo Tags: 
, after login or registration your account will be connected.
To prevent automated spam submissions leave this field empty.

Featured Event

Events

Recent Videos

The documentary shows the greed of corporate America and the hope for a better future
The latest from the female-fronted hard rock band takes on Trump's America
With ongoing austerity and the rise of the right, we need socialist politics and candidates more than ever
Visit our YouTube Channel for more videos: Our Youtube Channel
Visit our UStream Channel for live videos: Our Ustream Channel