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It took Tim Hortons Inc. two years to choose a chief executive to lead the company into its next era. Odd that they didn't choose someone experienced in addressing the company's most urgent needs.
The coffee-shop giant on Tuesday appointed Marc Caira as CEO, effective July 2. The one thing on Mr. Caira's résumé that does look like an obvious fit with Tims is that he's Canadian – all but essential for a company whose well-cultivated public image comes wrapped in the flag.
After that, however, the fit looks less than snug. Mr. Caira has spent 35 years in the food industry, much of it with giant multinational food and beverage maker Nestlé SA. Most recently, he was global head of Nestlé Professional, the division that supplies products to the restaurant industry. So he knows a thing or two about food and drink offerings – and he has worked with Tims from the outside, as a supplier.
But what he doesn't have is even a lick of experience in the retail, restaurant and/or franchise businesses that are what Tim Hortons is all about. At a time when the company is grappling with competition in a crowded market, struggling to build its customer base and stumbling with hit-and-miss international expansion, the new man at the top is going to have to learn the business on the fly. In practical terms, he's a babe in the coffee shop woods – and they are treacherous woods indeed.
His appointment came as Tim Hortons reported a discouraging first quarter, in which profit fell 3 per cent from a year earlier, same-store sales fell for the first time since the company went public seven years ago, and customer traffic slowed.
The core of the company's business – selling a decent cup of coffee at a reasonable price – has come under increased pressure from competitors (especially McDonald's) who are nibbling away at its customer base.
Its expansion into the United States has not been a winner financially; its 800-plus locations there, representing nearly 20 per cent of the Tim Hortons empire, generated a combined operating profit of less than $1-million in the first quarter – less than 1 per cent of the company-wide total.
One of Tims' major shareholders, U.S. activist hedge fund Highfields Capital Management, has been pressing the company to cut bait on its U.S. expansion strategy and focus more on maximizing profits and share price.
Maybe the appointment of Mr. Caira is the first step in addressing Highfields' concerns. This is, after all, an executive with deep knowledge of the supply chain; one of the big things he could bring to the Tims table is a focus on supply costs that could enhance the bottom line of a company whose ability to grow through expansion in its one successful market, Canada, is extremely limited.
Maybe the appointment is an acceptance that it's time to focus on profits over expansion. If it's not, it doesn't make a lot of sense.
David Parkinson is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow him on Twitter at @parkinsonglobe.