Despite promising to maintain significant employment, Burger King has dumped three-hundred and fifty of the Tim Horton’s corporate workforce. The cuts mainly focused on the company’s headquarters and regional offices.
The layoffs were within the 20 per cent restriction Burger King promised to Industry Canada to maintain certain job levels.
Industry Minister, James Moore approved to the acquisition of Tim Horton’s by Burger King, provided the company agree to a list of commitments that would insure overall economic benefit for Canada.
With an estimated 2300 employees at the nine head and regional offices, the job cuts translate to approximately 15 per cent of the corporate work force.
“When a firm acquires another firm, they want to take control of their operation and how the company is run, so that they can integrate it with their own company as fast as possible.” explains Dr Shavin Malhotra, Associate Professor at Ryerson’s Ted Rogers SCHOOL OF MANAGEMENT.
“One way to expedite an integration is to lay off some of the senior managers, then bring in your own managers.”
The company is required to maintain employment levels of non-restaurant employees as a part of the list of commitments it made to get final approval on the $12.5 billion deal last August.
The iconic Canadian restaurant left employees blindsided after announcing layoffs throughout the company’s headquarters and regional offices earlier this week.
Although the company headquarters remains in Oakville, staff outside the restaurants were not fully protected by Burger King’s promise to maintain jobs across Canada for at least five years.
This acquisition made Burger King the third largest restaurant company, with $23 billion in sales across 18 000 stores.
The Brazilian Investment firm 3G Capital, owns approximately 70 per cent of the merged company and is known for stripping the assets of acquired companies to increase profits.
Thousands of layoffs happened at food corporation Heinz and beer company Anheuser-Busch after being bought by 3G Capital.
It is very common to see job cuts during a full firm acquisition. The acquiring firm must make back the money of buying a company at a premium, while unifying the organizational cultures of the two corporations. This is usually done by laying off senior management.
Reactions to the job cuts can be seen across all social media platforms.