“I’ll have a Whopper and a Timmie’s double double to go, please.”
3G Capital, the majority owner of Burger King, has successfully maneuvered a deal to buy the Canadian iconic coffee and doughnut chain Tim Horton’s. A move that caused stocks for both companies to soar also created a global leader – the third largest fast-food restaurant provider in the world.
Those loyal consumers North of the border were comforted to know that this new holding company with be based in Canada. Financial analysts from the Wall Street Journal suggest that the big draw for Burger King is the potential for tax inversion – that is, relocating to Canada allows the holding company to take advantage of the country’s comparatively lower tax base. The basic U.S. corporate tax rate is about 35 percent. Canada’s federal corporate tax rate is 15 percent, and Ontario currently adds another 11.5 percent, making the total tax bill 26.5 percent.
Michael Hlinka, business commentator for CBC Toronto’s Metro Morning said beyond any marginal tax savings, Burger King may also be trying to keep pace with a key competitor. “McDonald’s has become very serious about making a good cup of coffee.” In a bid to get in on the lucrative profits of coffee sales, Burger King has stepped up its game to compete with McDonald’s globally.
Tim Horton’s is based in Oakville Ont. and Burger King is currently based in Miami, Florida. The two brands, which combined have a US $18-billion market cap, plan to continue to operate individually, however, there is likely a way to market items at both locations.
Tim Horton’s, which sells eight out of the ten coffees sold in Canada, will benefit greatly by earning brand recognition in the U.S., a crucial step in the company’s expansion plan. Burger King currently operates in 98 countries around the world. In an article by The Financial Post, Tim Horton’s CEO Marc Caira said winning over American consumers is key to their strategy. “The U.S. for me is what I call a must-win battle” he said. If Burger King puts Tim Horton’s coffee into stores worldwide, that will ensure it reaches the goal of establishing itself on markets outside of Canada.
So, with the new marriage of the Whopper and the Timbit, according to the article, ‘Burger King CEO Daniel Schwartz will become CEO of the new company. Tim Horton’s President and CEO Marc Caira’s proposed new position is vice-chairman and director.’ Further, Mr. Caira said in a statement. “Our customers, employees, franchisees and fellow Canadians can all rest assured that Tim Horton’s will still be Tim Horton’s following this transaction, including our core values, employee and franchisee relationships, community support and fresh coffee.”
Now together, “You’ve Always Got Time for Tim Horton’s” and you can “Have it Your Way” just like at McDougall Insurance & Financial, without the side of fries. Call one of our branch offices today, for all of your insurance needs. 1 (800) 361 0941