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Burger King and Tim Hortons Corporations Merger Essay

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Updated: Jul 22nd, 2021

The first Tim Hortons restaurant was opened in 1964 in Hamilton, Ontario. Ever since that time the chain of Tim Hortons restaurants is focused on good quality products, always fresh meals, successful leadership and excellent service. These features are the base of the company’s great success today. Over the time the chain of Tim Hortons restaurants has grown into one of the world’s strongest competitors in the fast food market. The chain specializes on serving good quality coffee, having exceptional bakery and providing the customers with a variety of baked goods and also selling home style lunches.

Nowadays, Tom Hortons is one of the biggest companies of Canada with a fairly deserved iconic brand status. The strategy of Tim Hortons restaurants is to develop high customer loyalty and cooperate with communities and franchises of the region where it operates. In order to maintain the guest loyalty, the restaurants are determined to satisfy the rapidly changing tastes and preferences of their clients. Tim Hortons chain is known for its excellently brewed coffee, the selection of types, flavors and blends of Tim Hortons coffees is large.

Today, the restaurants serve a wide range of cappuccinos, hot chocolates, teas of various kinds, home style soups, fresh sandwiches and baked goods such as bagels, donuts, pastries, muffins, cookies and croissants. Tim Hortons restaurants are open twenty four hours a day, they sell take away meals and have dining rooms. These restaurants operate in conventional locations such as shopping malls, as well as unconventional ones such as gas stations, universities, airports and hospitals. Tim Hortons’ strategy is to be flexible and fit anywhere.

Burger King was founded in 1954 in Miami, Florida. This company operates and franchises a large number of fast food hamburger restaurants all around the world. Today, it is number two in the list of the biggest chains of hamburger restaurants all around the world. Statistically, by 2013 the chain included thirteen thousand six hundred and sixty seven restaurants in over ninety five countries. Nearly fifty per cent of these restaurants are situated outside of the territory of the United States and Canada.

Among the food items presented by Burger King restaurants there are burgers prepared on a grill, sandwiches of various kinds, soft drinks, French fries. The most recognized and demanded Burger King product is WHOPPER, a burger sandwich that was first introduced in 1957. The company is proud of its cost efficient and very quick service providing the customers with high quality fast food products at affordable prices. The company’s revenues are earned in two ways.

First – the retail sales at the restaurants of the chain, and second – the franchise incomes earned due to the reputation of the Burger King brand, these revenues are based on the royalties occurring from the percentage of sales of the franchise restaurants, and also from the fees paid by the franchisees of the brand for the properties occupied by them. The company managers believe that the high percentage of the franchised restaurants is one of the strengths of the business as it creates an advantage for the Burger King system that needs to grow. The model of this business is franchise dominated; in fact, the whole system was founded mostly by its franchisees. One of the main disadvantages of the system is its high dependence of its multiple franchisees and its limited control over them.

The merger between Canadian based Tim Hortons and Burger King that is worldwide is often discussed these days. The debate about the merger explores various points of view on the happening. It is important to mention that after the merger Burger King that used to be based in Florida is planning to move their headquarters to Canada. The issues of the merger of the two corporations and the relocation of the American Burger King to the neighboring country are viewed as an unpatriotic gesture from the side of the global franchised company.

Some of the American politicians even addressed their audiences in the United States encouraging the citizens to stop visiting Burger King restaurants and give the preference to such fast food places as Wendy’s and White Castle. To my mind, this approach definitely makes sense, because a large global corporation is intentionally changing its citizenship and transferring all of its revenues to the north. Besides, for the Canadian society it is also unpleasant to put up with the fact that a foreign company bought their national icon of a business. At the same time, from the point of view of the business owners and shareholders this maneuver is justified due to the opportunity of tax inversion.

This operation is not a new trick; it has been practiced for years by multiple American companies. Tax inversion allows the businesses to escape the complicated and high American taxation. In my opinion, this is a wise decision from the point of view of the business holders, this is why I agree with the merger and find it a clever thing to do for both Tim Hortons and Burger King. Tax inversion and its popularity are also explained by the process of globalization and the companies’ desire to embrace the global citizenship in the corporate world.

The merger between Tim Hortons and Burger King would not have happened without the agreement of both of the corporations. This means that both of the sides are hoping to benefit from the process of cooperation. This merger has attracted a lot of public attention to the issue of tax inversion and revealed the attempts of the Congress and the government of the United States to reduce this practice or at least limit it. This is done in order to prevent the flow of income from leaving the territory of the United States.

The politicians of the country are trying to employ various measures to stop their native businesses from moving abroad in order to lower their taxes. The question of tax inversion is discussed within the topic about the merger between Burger King and Tim Hortons even though the C.E.O. of Burger King publically announced that this deal had nothing to do with the tax savings. The leaders of both companies noted that they were hoping to benefit from joining their resources and acquiring bigger markets.

In reality, it is clear that the relocation of Burger King headquarters will make an impact on the size of the taxes for the company, moreover, Burger King has immense opportunities for the new market exploration on the territory of Canada. At the same time, Tim Hortons is going to receive an opportunity to explore international markets. The benefits Burger King is going to obtain from the deal are larger than the ones of Tim Hortons.

The merger of two large corporations is definitely going to be highly profitable for both Tim Hortons ad Burger King. The new corporation is going to be much bigger and stronger and able to compete with serious rivals such as McDonalds. Besides, the companies have an opportunity of sharing insights and improving their own performance. For example, Burger King had to struggle for their morning customers with companies such as Starbucks, while Tim Hortons is an unbeatable leader in Canada that enjoys the status of a national icon and favor of the majority of the citizens. From the point of view of politics, Canada is the side that wins from the merger, because the revenues from the worldwide Burger King are now going to be centered there.

The post-merger brand is going to strengthen the performance of both Tim Hortons and Burger King, which will bring bigger incomes to both of the participants, this means that the companies are going to pay bigger taxes and feed the Canadian economy quite a lot. Moreover, Canada is known as Burger King’s biggest market, this aspect is definitely going to be explored by the brand, the number of properties owned by Burger King franchise there is going to grow. The new brand in going to do a large portion of its business on the territory of Canada, the merger is also going to focus on expanding Tim Hortons outside of Canada. All of these transformations are going to promote the Canadian economy a lot.

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IvyPanda. (2021) 'Burger King and Tim Hortons Corporations Merger'. 22 July.

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