Burger King, Tim Hortons, and Saving Money
Favorite Burger King Items
There's no better time to look at what's good at Burger King:
- 1 Burgers
- 1.1 Whopper
- 1.2 BK Big King
- 1.3 Premium burgers
- 1.4 BK Stacker
- 1.5 BK Toppers
- 1.6 Rodeo cheeseburger
- 2 Chicken and fish
- 2.1 Original Chicken Sandwich
- 2.2 Grilled chicken sandwiches
- 2.3 Fish Sandwiches
- 2.4 Crispy Chicken Jr.
- 3 Vegetarian
- 3.1 BK Veggie
- 3.2 Spicy bean burger
Burger King and Tim Hortons
Per the New York Times:
"Burger King may be the home of the Whopper, but Canada may be the new home of Burger King.
The restaurant operator said on Sunday that it was in talks to buy Tim Hortons, the Canadian doughnut-and-coffee chain, in a potential deal that would create one of the world’s biggest fast-food businesses.
If completed, the deal would mean Burger King’s corporate headquarters would move to Canada, raising the specter of yet another American company switching its national citizenship to lower its tax bill."
At first glance, this isn't the biggest deal in the world? It is however the biggest deal in North America these days, so let's analyze a bit, shall we?
So the #2 fast food chain in America, Burger King, which has all but given up trying to beat McDonald's at their own game is looking to acquire a coffee and doughnut business. With fast food companies like Taco Bell running to open their doors earlier and catch the breakfast crowd, this sounds like a great idea. Burger King has always had a decent breakfast menu with croissant sandwiches, and their coffee is decent already... But imagine if the coffee was borderline gourmet (or at least as good as Wawa or 7-11) and you could get sugary treats that were tastier than what Dunkin Donuts offers? It's a slam dunk isn't it?
But the reasons that Burger King is getting so much press has very little to do with the actual talks of acquiring a coffee shop chain. It's more to the heart of running a business, and there's some lessons to take from it.
Burger King Tim Hortons
Burger King and Taxes
As I mentioned, this isn't just about coffee and doughnuts, the much bigger angle that media companies like the Chicago Tribune are talking taxes:
“The deal would be structured as a tax inversion, which could see a more favorable treatment for Burger King's foreign profits and create the third-largest global quick-service restaurant player,” Scotiabank analyst Patricia Baker said in a note to clients.
Shares of Tim Hortons were up nearly 20 percent at $75.23 on the New York Stock Exchange, while Burger King, which is majority owned by investment firm 3G Capital, rose more than 17 percent to $31.83.
“If Burger King can export itself to Canada, I understand the tax savings are in the order of 13 percent,” said David Baskin, president of Baskin Financial Services, which controls about 180,000 shares in Tim Hortons. “So that's got to be a win for the Burger King shareholders.”
Not only would this Burger King and Tim conglomerate catapult to #3 in the global fast food rankings, but shares are booming at the prospect of Burger King saving 13% on their taxes! For a company that last reported revenue and sales in the neighborhood of $1.1 billion, we're talking about a move that saves over $100 million in taxes. No matter how you slice it, that's a genius move that will get you mentioned in the same breath as a small list of CEOs. Between the immediate tax benefits (if the deal goes through) with the immediate boost to shares, we're talking at a Steve Jobs-like move by a 33 year old CEO and 28 year old CFO. What's not to like?
Oh, that's right, they're going to Canada.
Will this affect you as a Burger King customer?
Will this affect you as a Burger King customer?
In the US, Buy USA?
Naturally anytime a huge brand makes a drastic change, then people are going to be up in arms for one reason or another. But I was surprised how much noise there is from advocates saying that they will be boycotting Burger King if they no longer are an American company. After all, this whole move is to avoid paying the US government taxes that turn into social services for its workers and the public at large. OK, so let's say that's a fair point.
But my personal finance philosophy in how I use my $ is not tied to "Buy USA". It's a global marketplace which means that we have increased competition, better options at cheaper prices, and we also have that thing on top of our necks called a head and a brain which allow us to quantify and choose based on value. I won't lie to you, I haven't been to Burger King in months, and this won't change it either way, unless the coffee improves. But I'm not going to hesitate even a moment because the company would no longer be an American brand.
Burger King lunch and Tim Hortons breakfast
The Personal Finance Lessons
Most importantly in my selfish mind is the personal finance aspect of this story. As most people that have worked for a salary under another owner, my first job and my first paycheck resulted in a lot of taxes being paid to my government. That's continued for years, and I can't be the only one, because articles on paying the least amount of taxes are read by millions and millions of people across the world. Tax Day has become its own holiday with freebies and last minute cram sessions. And at the same time, the IRS has less paid staff to audit tax returns, so you see more articles about the grey area on what you can and cannot claim.
- First, you need to live with integrity. Just as this Burger King move is perfectly legal, the only financial moves you should be making are clear-cut 100% legal
- If you have a legal opportunity to save a significant amount of tax by getting into investments or rental properties, then take a close look because saving on taxes is a form of saving money
- If you want to support a local business, go right ahead. Advocate for it, and support that business so they make the best goods at competitive prices.
What do you think?
So I have some questions for you:
- Would Burger King's acquisition affect the way you buy or do not buy from them?
- What thoughts do you have on the tax implications of the move?
- Have you done anything on your personal taxes to save a significant amount?
- What did I miss when writing this?
Wall Street Journal on Burger King Tim Hortons
I believe that being frugal and making smart money choices is like any other exercise. As we continue to practice good habits in saving money where possible, finding deals for what we want, and having a good time at it, then we become better at dealing for a living.
I'm committed to sharing my experiences with getting the most out of using credit cards, saving and spending tips, and I might even add a slice of perspective without trying to be a psychoanalyst like some other personal finance folks out there.
Please let me know what you think and if you'd like to hear my take on a specific topic.