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Burger King, Tim Hortons, and Saving Money

Updated on August 26, 2014

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 Tim Hortons
Burger King Tim Hortons | Source

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?

See results

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

Burger King lunch and Tim Hortons breakfast
Burger King lunch and Tim Hortons breakfast | Source

BK

BK
BK | Source

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.

  1. 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
  2. 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
  3. 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

About DealForALiving

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.

Most Sincerely,

DealForALiving

DealForALiving

DealForALiving
DealForALiving | Source

Comments

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    • Seasons Greetings profile image

      Laura Brown 3 years ago from Ontario, Canada

      Tim Hortons is not just coffee and doughnuts. They began changing it up years ago. They have their own breakfast menu, serve a decent sandwich and all sorts of tea, juice and assorted styles of coffee. It's not a US chain so most people commenting won't know anything about it.

    • Seasons Greetings profile image

      Laura Brown 3 years ago from Ontario, Canada

      Burger King has been here for a few years. The burgers have a good taste but are often served lukewarm. I actually prefer our own Canadian chain, Harveys. Tim Hortons is a Canadian tradition but the coffee has failed to be good for years now. I rarely buy coffee there now. I had heard Burger King had head offices in Brazil. I don't know why moving to Canada from Brazil would be cheaper.

    • DealForALiving profile image
      Author

      Sam Deal 3 years ago from Earth

      Thank you for stopping by, dahoglund. I have the same reality out my way with McDonald's every mile, and only 1 Burger King within 10 miles. I try not to eat fast food that often (I prefer casual dining like pizza or sandwich shops) but I'd like to see a revamped Burger King because it would help our community.

    • dahoglund profile image

      Don A. Hoglund 3 years ago from Wisconsin Rapids

      We live in a fairly small city. The Burger King does not seem to have has much business as McDonalds, but I think more than Hardies. Maybe the Burger King will be better now.

    • DealForALiving profile image
      Author

      Sam Deal 3 years ago from Earth

      Right, and we just need a set of officials that are willing to tackle that task

    • FlourishAnyway profile image

      FlourishAnyway 3 years ago from USA

      The tax system requires intense rework, particularly the corporate sector.

    • DealForALiving profile image
      Author

      Sam Deal 3 years ago from Earth

      A whole lot of mighty tax dollars :)

    • Just Ask Susan profile image

      Susan Zutautas 3 years ago from Ontario, Canada

      It's all about the mighty tax dollar.

    • mary615 profile image

      Mary Hyatt 3 years ago from Florida

      I never heard of Tim Horton's before! I don't eat at fast food places, so I really don't care if this deal goes through or not.

      If BK and McDonalds depended on folks like me, they would go out of business pretty quick!

    • CassandraCae profile image

      Cassandra Kuthy 3 years ago from Ohio

      I used to go to Burger King but I can't support tax dodgers. If the merger goes through I will no longer be eating there.

    • Pawpawwrites profile image

      Jim 3 years ago from Kansas

      The knee jerk reaction, is to try to find a way to keep them from doing it. The answer though, is to fix the (why they are doing it) problem.

      Our tax system from top to bottom needs to be overhauled, including corporate taxes.

    • DealForALiving profile image
      Author

      Sam Deal 3 years ago from Earth

      Thanks for dropping by favored. Ditto on the veggie burger! Back when I cut off all meats, it was not easy finding a veggie burger or tofu dog in a 10 mile radius.

    • DealForALiving profile image
      Author

      Sam Deal 3 years ago from Earth

      Thanks Deborah! It's sounding more and more like it really won't affect anyone. Tim Hortons coffee won't be at BK and I doubt that whoppers will be served with coffee.

    • favored profile image

      Fay Favored 3 years ago from USA

      With my family being in business, I can understand these moves even if I don't necessarily agree with them. BK is the only fast food place I can get a veggie burger. Not sure how this will all play out though.

    • DeborahNeyens profile image

      Deborah Neyens 3 years ago from Iowa

      I never heard of Tim Hortons until yesterday and didn't realize until reading this that it is a doughnut/coffee shop. It's an interesting acquisition but not likely to affect me since I can't even remember the last time I ate at Burger King OR went to a doughnut shop. (I try to avoid fast food.) Good, timely article.

    • Billrrrr profile image

      Bill Russo 3 years ago from Cape Cod

      I hope it happens. BK is a nice company that suffers like a little brother at the hands of a much bigger sibling. BK is NOT number two as you mention; but has slipped to number three in the U.S. behind McDonald's and Wendy's. Hopefully when they buy Tim Horton, they will use TH coffee instead of the junk that they have been serving the last few years (which they buy from Starbuck's and brand 'Seattle's best').

      Borders started selling 'Seattle's Best' a few years ago and look what happened to them!

      The coffee always tastes bitter and burned....which is ok if you like Starbuck's - but where I live in New England there are very few Starbuck's because people in the North love their Dunkin Donuts. I don't. It's way too weak and overpriced. I buy my coffee at Cumberland Farms. You fix it yourself and it always comes out right.

      Well, great job on this Hub. I am voting it up and interesting.

      I don't care if they move 'Corporate' to Canada. It's a global economy today. If the new BK is stronger, we all benefit.

    • suzettenaples profile image

      Suzette Walker 3 years ago from Taos, NM

      I understand too why Burger King is doing this but I do hate to see another American company move to a foreign country. I love Canada and the Canadian people, so that is no problem, but economically it is bad for the U.S. and good for Burger King, Tim Horton's and Canada. We need more American companies to stay here in the U.S. Thanks for an informative and interesting hub.

    • midget38 profile image

      Michelle Liew 3 years ago from Singapore

      It's a little like selling one's soul. But I understand why they made the decision.