Revealing the secret ingredient of Tim Hortons' success - The Bottom Line

There’s probably not a farmer in the country who hasn’t driven by a Tim Hortons and thought, “wouldn’t it be great to own one of those franchises?”

Paul House can relate, only in reverse.

“I usually take the back ways coming into the office,” says the former farm boy from Stoney Creek, Ont., near Hamilton.

“I drive by these guys in these big tractors working their land and think, ‘man, I’d love to be driving one of those mothers. When I was younger, I did both. I’d come home from the office, put on my jeans and work on the farm. I was working seven days a week and loving every minute of it. It wasn’t until I was in my 40s that I decided I couldn’t do both.”

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In fact, it was only four years ago that House, 65, sold his interest in his peach farm to his older brother Robert, although he still owns six acres of peaches near Jordan, Ont.

Running a successful franchise is much like farming, says House, who joined Tim Hortons in 1985 and was chief executive officer and president before taking the chair’s reins in 2007.

That’s partly because he learned retailing on the farm. Even as a kid, he sold vegetables and soft fruit straight off the farm and at the Hamilton Farmers’ Market. His mom, the farm’s chief marketer, “treated her customers like gold” and taught her son about the importance of properly displaying products, being relentlessly vigilant about quality, and above all, providing great service.

“All the important lessons of retailing were drummed into my head at a very early age,” House says.

“We had no refrigeration, so when you went to the farmers’ market, you either sold everything or you threw it out. And we sure weren’t throwing anything out.”

Few farms provide the kind of retailing education that House received, but there’s another, deeper reason why he compares running a Tim Hortons franchise to farming.

For customers, every Tim Hortons looks pretty much the same. Not so for House, whose perspective is an operational one. He sees businesses that mirror the character of their owners.

“In any retail business, if you see the staff is friendly and in a good mood, it’s usually because the management is reflective of that mood,” House says.

“But if the management has a negative attitude, you’ll see that in the staff. When I walk into a store, I first look to see if the people behind the counter are smiling.”

In fact, House doesn’t even have to go inside. He can watch how quickly cars move through the drive-through during the morning rush and get a pretty good idea of how things are working inside the building.

“You watch a drive-thru where things are moving right along and it’s a beauty to watch. That’s teamwork at its best.”

There’s another Tim Hortons line-up that the public doesn’t get to see – of entrepreneurs hoping to score a franchise. Even though they cost $430,000 and up, and franchisees must pay at least 17 percent of gross sales for rent, royalties and advertising, there’s no shortage of people who want to own one.

But money alone won’t get you in.

Would-be owners go through an extensive screening process because House and the executive team at Tim Hortons know the company’s success is based not just on the popularity of double-doubles or roll-up-the-rim ads but also on the people running the franchises.

“Our model franchisee is a husband-and-wife team,” House says.

“Like farming, this is a family business and when we interview for franchisees, we are interested in the couple, not just the individual.”

Why? Because Tim Hortons expects its franchisees to be hands-on owners who view their customers as gold. The hours are punishingly long and there’s always some problem – an overflowing toilet or someone not showing up for their shift. Keeping a positive attitude isn’t easy.

“It’s a very hard, seven-days-a-week business and you really need the family committed to that business,” House says.

“If you’re a couple and you both understand what needs doing and you can co-operate, you’re going to be great.”

Simply put, he says, a great franchise is one run by a great team, and great teams are the product of owners who, even on the toughest days, support each other and understand that negativity is a contagious disease.

There’s no denying that the profit margins on Timbits and double-doubles are a lot better than almost anything you can grow on a farm. But a licence to print money?

No, says House. In the end, it’s the operator, and not the business itself, who determines success.

Glenn Cheater is editor of the Canadian Farm Manager, the newsletter of the Canadian Farm Business Management Council. The newsletter as well as archived columns from this series can be found at www.farmcentre.com.