Thursday, April 19, 2018

3G Capital's ravenous appetite for profit is killing Tim Hortons

Yet more articles are surfacing about how Brazilian company 3G Capital's rigid cost-cutting and profit-maximizing regime is gutting businesses like Tim Hortons and Kraft Heinz, which have spent decades building up their brands only to be bought up by the Brazilian investment company, which cares little or nothing about employees, franchise loyalty or brand reputation.
Tim Hortons probably will (and probably should) become an important university economics case study. Once one of the defining brands of Canada, the popular and successful coffee-and-donuts chain was first merged with Burger King under the ownership of Restaurant Brands International (the start of its downward slide), which was then in turn gobbled up by 3G Capital. 3G's capitalism-on-steroids business model stresses short-term profit maximization through stringent and drastic cost-cutting. This is not just an exercise in trimming excess fat; this is an obsessive paring back of all the things that make a family franchise operation like Tim Hortons tick. So it's probably not a big surprise that the company's stocks (like those of Kraft Heinz) are fading fast, or that, as previously reported, the once powerful name and reputation of Tim Hortons is curently sinking without trace.
3G, however, probably doesn't care that much, and will just offload any investments that no longer meet their profit requirements. They certainly don't care about a company's loss of national icon status, nor the plight of the franchisees who have spent years or even decades building up their businesses, nor for that matter whether the company is still in existence in 50 or even 10 years time. This is the ugly face of rampant globalized capitalism.

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