Taxes, profits are incentives for Burger King purchase of Tim Hortons

BUFFALO, N.Y. (WIVB) – At the Tim Horton’s Cafe and Bake Shop on Elmwood Avenue in North Buffalo, Richard and Jennifer Carotenuto of Buffalo reacted to Burger King’s buyout of Tim Hortons, calling the deal hard to swallow.

Jennifer is worried about the quality of the coffee.

“The only number one place that has the best coffee. BK doesn’t, McDonald’s doesn’t. Nobody else does. Just Tim Horton’s.”

With a deep loyalty to Tim Horton, the Hall of Famer who played for the Buffalo Sabres nearly 40 years ago, many Western New Yorkers seem to be concerned about Burger King’s buyout being centered on taxes.

RELATED | Burger King says the companies will continue to be run independently, and will expand Tim Hortons into new markets

Richard feels strongly about the move “because they own businesses in the United States, they should keep everything in the United States, not across the river.”

Even though the deal will mean slightly lower taxes for the combined companies, Williamsville financial adviser Anthony Ogorek believes it is all about the bottom line.

”What it’s about is greater profitability and creating a global brand,” he said.

Ogorek, president of Ogorek Wealth Management, said both companies can play off of each others’ strengths. While Tim Hortons is the smaller of the two fast food chains, it turns a larger profit, and Burger King, with many more stores, can provide the new merged company with the global reach for spreading Tim Hortons’ brand name, which is almost solely concentrated in Canada, and a few United States markets, such as Buffalo.

“This is an opportunity for Tim Hortons also to be known as a global brand,” Ogorek said, adding the Ontario-based chain needs a lot of marketing might behind it, “and needs some money behind it, and that is what they are going to be getting from this deal.”

Will that eventually bring Tim Hortons to cities such as Los Angeles or Dallas? Ogorek’s said the entire morning menu is getting more global and more competitive, pointing out in years past, coffee shops just sold coffee, and they were successful.

“Now you go into Starbucks and you are expecting to spend two, three, four, five dollars for something depending on the size, and whatever it is. Who would think they would be able to do that?” said Ogorek.

With Canada’s lower corporate taxes the apparent incentive for locating the new merged company across the border, lawmakers on both sides of the border are discussing larger implications of this business deal.

Ohio Senator Sherrod Brown is calling for a boycott of Burger King and Tim Hortons in favor of Wendy’s and White Castle, which just happen to be headquartered in his home state.

Congressman Brian Higgins (D-Buffalo) said the deal seems to demand the reform of the U.S. tax code.

“Any company benefits tremendously by locating in the United States, but it speaks to the need for comprehensive tax reform in the United States, as well.”

Peggy Nash, a New Democratic Party member of Canada’s Parliament from Toronto promised to take a closer look at the deal, itself, to make sure it is good for Canada.

“What we are asking for is some clarity and some transparency through the Investment Canada Act, should this proposal go forward,” said Nash, pointing out that some corporate deals have cost Canadian jobs in favor of profits.

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