Chief Corporate Officer, RESTAURANT BRANDS INTL INC
Tim Hortons' new boss on China and fighting with franchisees | Extended interview
Tim Hortons' new boss, Duncan Fulton, the new CCO of parent company Restaurant Brands International, talks about the coffee ...
About Duncan Fulton
In a December 2018 interview, Duncan Fulton, then recently appointed Chief Corporate Officer of Restaurant Brands International, discussed the company's priorities and challenges. He stated that the number one priority established by the executive team was rebuilding the relationship with Tim Hortons' restaurant owners, acknowledging that the brand had experienced "a little bit of a slip" in recent years. Fulton described Tim Hortons as having "an incredible iconic place in Canadiana and culture" and argued that every restaurant in the world would want the brand's status. He also addressed international expansion, particularly in China, saying there is "nothing but opportunity internationally" and that the company would tailor the brand market by market, such as offering a churro instead of a donut if a local market wanted it. Fulton also spoke about growth strategies, noting that the company was testing a dedicated kids menu for Tim Hortons, which he called "Canada's Family Restaurant." He characterized Restaurant Brands International as "fundamentally a growth company," citing its stock price increase since its IPO as evidence. In a separate 2012 appearance at the Banff Media Festival, while serving as Senior Vice President of Communications and Corporate Affairs at Canadian Tire Corporation, Fulton described branded and digital content as "the game changer" and "the heart of all marketing." He said that companies can influence but no longer control content creation, as people will create and share content regardless.
Transcript (22 segments)
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Interviewer0:00
I'll grab a large coffee with one and a half cream please and two coffees, thank you very much. Well, thanks for doing this. It's really nice to see you again. You've arrived at a really interesting time, in something of a maelstrom. What is it that's going on at Tim Hortons and what is the solution to fix certainly the PR problems going on right now?
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Duncan Fulton0:21
I think it's obvious that Tim Hortons as a restaurant brand has an incredible iconic place in Canadiana and culture. In fact, I'd argue in a very, very competitive industry, every restaurant in the world would kill to have the kind of brand status that Tim Hortons has. So undoubtedly, there's a ton of opportunity for growth, there's a ton of opportunity to build back a little bit of the slip that the brand has had in the last few years and to rebuild the relationship with restaurant owners, which has been a top priority of the new president that's come in.
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Interviewer0:59
Coming into a situation like this, how do you rank the priority of addressing that slip in the brand that we've seen in the last couple of years?
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Duncan Fulton1:08
I think the number one priority that's been established by the executive team has been the relationship with the restaurant owners. Right, so if you look at how the business operates every day, you have more than 1,500 Canadians and new Canadians who own and operate restaurants like this.
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Interviewer1:30
You've had a really interesting career, and we'll get into that in a little bit, from politics to Canadian Tire. But in leaving Canadian Tire and coming to an organization like this, what was it about RBI and what they were trying to do here that didn't make you say 'I'm staying out of that fight'? What made you want to get involved and try to address this?
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Duncan Fulton1:49
Restaurant Brands International has a reputation, if you read the newspapers, of being a company that aggressively manages costs through zero-based budget, cost cutter, they're going to come in and increase their profit margin but they're going to do it by slashing costs. It took me two weeks on the job to figure out that is anything but that. I was invited to their Global Leadership offsite a couple of weeks in. There were 800 slides presented on the Burger King and Tim Hortons growth strategy for the next three years. Not one slide about cutting costs. Every single slide was data analytics backing up purposeful, deliberate investments that are going to drive product innovation, product quality, restaurant experience, brand communications. So I said this to our CEO, Daniel Schwartz, 'I'm amazed at what I saw.' And he looked at me and he said, 'What people don't know is we are fundamentally a growth company at RBI.' And they've seen an enormous amount of success with that. I mean, the stock went from what, three bucks when they took it? I think when they IPO'd back in, it was $3 and now it's $60 plus on the US. So they are a growth company in every sense. And I think being able to tell that story and being able to live the brand promise that's out there in the market is very, very important.
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Interviewer3:08
Part of the perception that a lot of Canadians have had is that it's this foreign company that's just coming in to try to carpetbag profits out of this country and get out of here. How important is Tim Hortons to the bottom line and to the culture at RBI?
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Duncan Fulton3:21
Well, Tim Hortons is, despite its size, about half the business. It was a very strategic acquisition back in 2014. It's fundamentally a Canadian brand. Wait a second, it's half the business at RBI? Yeah, about that. Burger King is probably what, 15 to 20,000 restaurants, correct, and Tim Hortons has about 4,500 restaurants. Tim Hortons is a great business, it's a great culture, it's great for customers, it's great product. RBI bought Tim Hortons because of both the Canadian and global expansion opportunities. There's a ton of expansion opportunities still in Canada, urban, suburban, and rural. The same is true internationally. You've just seen our announcement with our partner in China. So getting Tims right, I think we're on a good track here.
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Interviewer4:13
You talked about the data analytics and the number crunching that went into strategy and development within RBI. At Tim Hortons, is part of the issue with the franchisees that the data analytics may not have been explained as well as it could have, that that relationship wasn't nurtured, and instead they were too focused on the numbers instead of the relationships with the people running restaurants like this?
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Duncan Fulton4:37
I don't think it was that. But you know, the new president of Tim Hortons, Alex Macedo, who's been enrolled for about seven months now, he's admitted to restaurant owners in recent media interviews. He said, 'Listen, we could have done a better job for a couple of years here.' And this brand is unlike any brand in this space anywhere in the world. Being able to understand the power of this brand, the expectations of our guests, their relationship with the restaurant owners, the incredible power they bring to the business, I think Alex and the whole executive team has said, 'Look, we could have done a better job, and we're now totally committed to doing that.'
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Interviewer5:18
I want to talk about China because I think on the face of it, this iconic Canadian brand has done very well here. It hasn't done as well in the United States. What is it that the numbers and the data tell you about China and that expansion that you think this is going to be a success?
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Duncan Fulton5:33
I'll draw on a bit of my past experience when I worked for the Canadian Prime Minister and we would travel the world. What we saw anywhere we went in the world was the power of Canada as a brand. Everything about Canada, the clean air, the society, the rights that we have as a society. Every country we went to said, 'We need a little bit more Canada here in our own country.' Tims is the epitome of a Canadian brand. So being able to take a bit more of Canada into another country, being able to design a restaurant that has some Canadian elements in it, taking the maple leaf abroad, taking the quality of our coffee abroad, that's going to stand up to any coffee of any competitor anywhere in the world. It's a great opportunity for the brand all around the world.
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Interviewer6:22
Do you believe though that at the end of the day, other people will want to come in, sit down, and drink Tim Hortons coffee in a restaurant like this, or will the user experience, the customer experience, have to fundamentally change to become something distinctly Chinese for it to be a success?
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Duncan Fulton6:38
I think the customer experience has to change in the local market. We work with master franchisees in different markets that are experts in the market that say, 'Listen, this has to stay, this has to change, has to be tailored for a local flavor, it has to be tailored for local guest experiences.' So there's a brand standard that you want to maintain, but you want to be flexible. And if you're in a market that wants a churro instead of a donut, then do a churro. And that happens today in Spain.
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Interviewer7:10
When you look at where Tims is, not just the dealings with the franchisees and the expansions to China and expansion even within Canada, the retail environment is pretty fierce. You guys are up against McDonald's. Breakfast menus are the big thing in fast food right now. What are you guys doing to try to close that gap a little bit and address that war?
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Duncan Fulton7:31
If you want to have in retail or in restaurant quarter after quarter after quarter of sustainable growth, you need platforms to grow on. Limited time offers are short-term fixes. So whether it's with a restaurant experience or product quality or brand communications, you need platforms. One of those for us is a new kids menu. We're Canada's family restaurant. We have more kids that come here with their parents than any one of our competitors, yet we don't have a dedicated kids menu. We have products they love, but we don't have a dedicated kids menu the way you would think of it from other places. So we've been in market, we're about to in the coming weeks go live with testing in market. There's new packaging, there's new products, there's products for kids that are differentiated from what you get at other quick service restaurants. And I think it's going to be one of many platforms that help drive sustainable growth in the business.
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Interviewer8:27
Coming weeks, and you'll pick your test across country? Certainly we will. We like to go out depending on the test with anywhere from 20 to 100 restaurants. Test big store, small store, operationally how easy it is to do, customer reaction, urban, suburban, and then we tweak it. And then when we're ready to go live along with our restaurant owners. I'm mostly surprised you haven't done this before. I mean, like you say, kids come here all the time.
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Duncan Fulton8:50
No, it's a huge opportunity. It's low-hanging fruit. The kids are all here. We don't have to attract kids to come here. Kids are coming here after soccer, after hockey, after baseball with their parents. So it's just capturing the market that's here and giving them a differentiated menu that moms and dads want to give their kids, that's healthy, that doesn't have artificial color in it, there's fun packaging, it's fun.
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Interviewer9:13
Picking up on that, just to close things off, is the growth opportunity international expansion or is it here at home, not just addressing that slippage but expanding the brand here?
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Duncan Fulton9:23
I've seen the data that the team has put together. There is a ton of growth still in almost every urban market in Canada, certainly in suburban, certainly in rural. The question is again purposefully deciding where do you pick and invest for the biggest return. There's competitive decisions that are made there, there's upgrade decisions on real estate. And internationally, there's nothing but opportunity internationally in taking this brand and tailoring it market by market and making it famous worldwide.
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Interviewer9:55
Well, listen, we're going to have to get it there. It's great to see it and thanks for doing this and talk again soon.
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Duncan Fulton9:58
Thanks for coming to the restaurant. Appreciate it.