Tim Hortons and Restaurant Brands International

In March 2018, an analyst at an investment management firm in Toronto, Ontario, had to decide whether or not to recommend that his firm establish a position in shares of Restaurant Brands International Inc. (RBI). Formed after the merger of Burger King and Tim Hortons Inc., RBI was led by the private equity firm 3G Capital. RBI was a powerhouse–the third-largest, quick-service restaurant chain in the world. Although RBI was performing well and seemed to present an attractive investment opportunity, the company was facing issues from disgruntled franchisees, who were dissatisfied with the cost-cutting measures implemented at Tim Hortons Inc. as part of 3G Capital’s acquisition. This led to class action lawsuits from franchisees as well as a business slow-down, as measured by same-store sales figures. With not much time left, the analyst had to determine and present a decision to the rest of his team on whether or not to invest in RBI.

This case can be used in an early managerial accounting course at the undergraduate or graduate level. The case provides an opportunity for students to analyze the relationship between a company’s strategy and the use of accounting metrics in evaluating the performance of employees and stakeholder groups, such as franchisees. In particular, it examines the impact of implementing cost-cutting measures on a company’s long-term success in specific cultural circumstances. Students should incorporate both qualitative and quantitative factors in the discussion. After completion of this case, student will be able to<ul><li>identify the relationship between a company’s strategy, key stakeholders, and accounting measures of performance;</li><li>analyze the effectiveness of evaluation metrics and the impact of such metrics on a company’s long-term performance;</li><li>understand how culture affects the implementation of performance measurement and incentive systems; and</li><li>discuss the importance of managing difficult situations with key stakeholder groups for a company’s performance.</li></ul>

• management accounting, management control systems, performance measurement, incentives