In what experts say will save Burger King millions of dollars in taxes, the fast food giant is in merger talks with Tim Hortons – and will move its headquarters to Canada, a more tax-friendly country.
Personally, I don’t think anyone will care if BK moves its headquarters to Canada, but I do think there’s something larger at stake: The relevance of the Burger King chain itself.
BK dropped from second among US fast food restaurant chains to third a year ago (behind Wendy’s) and fast food itself is taking a hit. In fact, the Wall Street Journal reported this morning that McDonald’s, the market leader, is losing customers in the 20-30 age range to “fast casual” chains like Chipotle and Five Guys.
Tim Hortons fits into that category. It is known for its coffee, bagels, donuts and sandwiches. It is similar to Panera Bread.
In a joint statement, the chains said they would operate as separate brands and, while that may be true, it wouldn’t shock me if there were some overlap. Burger King isn’t making this move just for tax purposes. It desperately needs something new, while acting with some discipline.
One of the problems BK has faced in recent years is that few in the fast food industry change their menus over and over again as much as it does. BK switches out ad campaigns like a card dealer shuffling a deck and you never really know what’s on the menu until you drive up. (So you don’t.)
However, that means there are few fast food chains more open to change than Burger King. It’s just that it needs to hold firm on some of those changes and consider whether a franchise with the word “burger” in the title has brand permission to do anything else.
There’s much work to be done if this merger goes through. But don’t believe for a second this is only about taxes.