Tim Hortons Inc. (THI)’s top executive says Canada’s recent crackdown on hiring temporary foreign workers must be flexible if the nation’s biggest coffee merchant is to remain fully staffed.
The loss of foreign workers will compound shortages of Canadians available to work in some regions, making problems such as slow and incorrect orders worse, Chief Executive Officer Marc Caira said in an interview in Ottawa today.
Employment Minister Jason Kenney unveiled new rules on June 20 to restrict employment of temporary foreign workers to “a last and limited resort to fill acute labor shortages.” The rules include a ban on “entry-level” restaurant jobs in areas where unemployment is 6 percent or greater.
Kenney’s changes followed reports of nationwide abuses, and Caira said today Tim Hortons has always sought to hire Canadians first and only then to make proper use of the foreign worker program.
“If you don’t have access to some of the foreign workers where they are required it will ultimately also impact on the Canadians that work in that area,” Caira said, “because we can’t really deliver on the promise that we want in terms of delivering quality service.”
The tighter rules on the worker program will now also include increasing workplace inspections to 25 percent of employers, and cutting permits for low-wage staff to one year from two years, according to a June 20 government statement. The government didn’t single out specific employers it had concerns about.
Tim Hortons, which employs more than 100,000 at about 3,600 restaurants, pours eight of every 10 cups of coffee sold daily in Canada, said Caira at his speech hosted by Ottawa Mayor Jim Watson earlier today.
“We hope to engage with the government -- to work with them to allow us to have some input into this flexibility,” he said. “We have had good success with the program, where there is some hiccup along the way we deal with it quickly and very seriously.”
Companies that “truly cannot find Canadians” will still have access to the temporary worker program, Alexandra Fortier, a spokeswoman for minister Kenney, wrote in an e-mail today. “Employers must redouble their efforts to recruit and train Canadians, and must do more to recruit traditionally under-represented Canadians” such as the disabled, she said.
Tim Hortons needs to translate its control of the breakfast market into a greater share of lunch sales, as a period of consumer anxiety means little revenue growth in the restaurant industry, Caira said.
“Five years ago we were nowhere in lunch,” he said in the speech. “Today we are tied with our nearest competitor,” and “we will be the undisputed leader in lunch in the not-too-distant future.”
The average check at Tim Hortons is less than C$4 ($3.75), Caira said, a total that’s difficult to lift with price increases in a modest economy. Future gains may come more from creating meal combinations or new products such as breakfast hash browns, he said.
“The average check goes up but there has also been tremendous value,” he said. “In this environment it’s very difficult to raise prices.”
Canada’s economic growth slowed to a 1.2 percent annualized first-quarter pace as a harsh winter slowed production. Job creation has also slowed, keeping the unemployment rate of 7 percent above the 6 percent recorded before the last recession began in 2008. The job market is also fragmented among the 10 provinces, with unemployment rates ranging from 3.7 percent in Saskatchewan to 8 percent in Quebec and 12.7 percent in Newfoundland.
Customers in the U.S. are also anxious, said Caira, who reiterated the American market is a “must-win” for the Oakville, Ontario-based company. The company has 859 U.S. stores, and in February laid out a plan to add 300 stores over five years.
New partners will need local expertise and invest more of their own money, Caira said, avoiding past problems with transplanting Canadian plans south of the border. The plan is the same as in Canada: expanding traffic beyond breakfast.
“In the early morning to the mid-morning, we do extremely well; the rest of the day is where we need to improve,” he said. “We don’t have a lunch business, so that’s our first priority.”
Tim Hortons shares fell 0.3 percent to C$57.88 at 4 p.m. in Toronto. They have advanced 3.5 percent since Caira became CEO a year ago, trailing the 26 percent gain in Canada’s main stock index over that time.
“I’m not going to do things on a short-term basis to appease a certain group, everything we do will be in the interest of the longer-term, in the interest of all of our stakeholders,” Caira said when asked about boosting investor confidence. “Over time as we do what we say we are going to do, I think we will be rewarded accordingly.”
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