Bakers Journal

Features Business and Operations Marketing
The Final Proof: November 2014


October 28, 2014
By Stephanie Ortenzi

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What a mega-deal can teach us about building a brand and keeping it strong.

What a mega-deal can teach us about building a brand and keeping it strong.

No business story raised more shackles and stirred more hearts than the news in August that Burger King was planning to buy Tim Hortons.
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Coffee beans  
Tim’s CEO, Marc Caira, famously said that essentially everything about the company stems from coffee.


 

North and south of the 49th parallel, there were many objections to the deal. Tim’s Canadian fans went wild, mostly out of fear of product and flavour changes, proving just how invested we are in this brand. On the American side, the flak was mostly about Burger King exporting taxes to a country with lower corporate taxes, which the company denied. Tim’s made some denials of its own, particularly that there would be no changes “at the restaurant level.” We want to believe this, but only time will tell.

In the meantime, three significant business lessons have surfaced from this historic business story – great takeaways to consider how your own business is doing. 

1. Never take your customers for granted
Why would a corporation create an unprecedented, full-colour, double-page spread (ad?) for a national newspaper to speak directly to its customers? All marketing and advertising speaks to consumers, but this message aimed at quashing any fear Tim’s customers have. Simply and sparsely, the ad was a photo of two identical steaming cups of Tim’s coffee, with only two words of copy: “Before” one cup and “After” under the other. That’s how the company measures its brand love.

If you ever cut a slow-selling item (and a customer who loved that product was upset about it), you were looking straight into the face of “brand love.” As much as you want that customer to be happy, you may have to stand by your decision and eat the fallout. But here’s the thing about customers who love your products: they want to be loved back. What have you done recently to let your customers know you appreciate them?

2. Don’t be afraid to clean house
Tim’s potential new owners (at the time of writing, the deal is still only an “agreement to buy”) might find cleaning house difficult, if past performance is any indication. The actual new owner of Tim’s would be 3G Capital, a Brazilian equity firm. During the first year of 3G’s takeover of Burger King when it put Daniel Schwartz into the CEO position, some impressive house cleaning took place. Schwartz sold the corporate jet and cancelled the annual executive million-dollar party held in Italy. Then he converted a sizable number of stores into franchises, with great bottom-line impact. The executive extravagance is an obvious and relatively easy move, but turning property into franchise is a significant pivot.

Do you need to clean house? Have you been considering some specific moves that feel a bit risky but come with a potentially great upside?

Think of Tim’s historic move to get rid of its deep fryers and switch to frozen par-baked goods instead. The sky didn’t fall. The right cuts and changes won’t impact your brand. They’ll make it stronger.

3. Use anchor products to naturally upsell
Tim’s CEO, Marc Caira, famously said that essentially everything about the company stems from coffee. In case you’re too young to remember, the tides turned for Tim’s when the company decided to focus on its anchor product: fresh coffee. By white-marking a time stamp on every pot (which they still do today), that last quarter of a pot of coffee that’s past the 20-minute mark was officially unfit for consumption. That’s how the company earned its promise: “Always Fresh.”

With quality now established for its anchor, we can see how coffee sells donuts, bagels, sweet cakes, breakfast, lunch and dinner.

Do your signature items have this kind of merchandising reach? Are you leveraging the inter-relationship among products? Strong products upsell naturally: a whole-wheat sandwich loaf wants an apple pie; 12 assorted donuts want a multigrain loaf and some rolls. Many of your customers are already buying this way. Could more do the same?

Whether or not the deal properly closes, the value of Tim Hortons as a business model – as a way to build a brand and keep the love of that brand strong, respected and sustained – will endure.


Stephanie Ortenzi (www.pistachiowriting.com) is a food-marketing writer.


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