Sunday, July 5, 2009

Tim Hortons Returning to Canada

In spite of the fact that Timmy’s has been owned since 1995 by U.S. hamburger chain Wendy’s International Inc., Tim Hortons is securely linked to the Canadian identity. After all, its founder was the legendary Tim Horton, Hall of Fame defenseman for Toronto Maple Leafs, who died tragically in a vehicle accident in 1974. Horton’s coffee shops are familiar landmarks in our communities for as long as most of us can remember.

Well, Tim Hortons is coming back to Canada. It is not nostalgically motivated but entirely business. Currently incorporated in the Unites States, the company filed notice with the U.S. Securities and Exchange Commission, stating that it proposes to reorganize itself as a ‘Canadian public company’ in order to take advantage of the decreasing Canadian corporate tax rates. The new company would maintain the name Tim Horton’s Inc. The Canadian federal government is whittling down the federal corporate income tax rate to 15 per cent by 2012 from 22.12 per cent in 2007 and the current rate of 19 percent. Good for you Harper. The U.S. rate is presently 33 percent. You blew it Obama. The company has also considered that 90 percent of its revenue comes from Canadian operations. The company has 2,930 restaurants in Canada making it Canada's largest restaurant chain, 527 restaurants in the U.S. and a presence in Ireland and Britain, primarily through self-serve outlets in grocery stores. Hortons plans to open 150 to 180 new stores in 2009. The company reported a profit of $66.4-million or 37 cents a share in the first quarter of 2009, up 7.5 per cent from $61.8-million or 33 cents a year earlier.

I know people who dislike Hortons coffee and many more who are dedicated drinkers. I did not say addicted but dedicated because urban legends take care of the addiction references. One dated urban legend claimed that Tim Horton’s coffee contains the secret additive of nicotine and another that Tim Hortons coffee contains higher than normal levels of caffeine. An alternative conspiracy theory about Tim Hortons coffee rumors that Tim Hortons coffee has MSG in it. All of these implications have been disproved by independent testing as well as those done by the Canadian Food Inspection Agency. Their website asserts that there is no truth these urban legends.

Shareholders must approve the reorganization. D-Day is September 2nd.

In comparison to Starbuck’s customarily bold enjoyable flavours, Hortons is an unexciting but pleasant beverage. People who prefer Hortons generally do not like a strong coffee taste but love the lower per cup cost.

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