Tim Hortons Closes All St Louis Locations

MAPLEWOOD, MO — Show Me Hospitality, the St. Louis developer for Tim Hortons, has closed its last four locations in the area after Tim Hortons USA terminated its franchise agreements for all six St. Louis-area restaurants. Two others closed at the end of November. The latest restaurants to close are in St. Louis, Maplewood, Frontenac, and O'Fallon, Ill.

The Canadian fast food restaurant known for its coffee and doughnuts recently became a multinational subsidiary of the Brazilian investment firm 3G Capital. The firm also owns Burger King, Heinz, and Kraft Foods. After the change of ownership, the chain wanted local franchise owners to commit to a much more aggressive expansion plan that was called for under previous agreements, the developer said.

"Show Me Hospitality closed the two restaurants in November only after sale agreements were secured for certain locations and Tim Hortons refuted its right of first refusal to acquire the St. Louis area restaurants," the developer said in a statement. "Instead, Tim Hortons threatened all parties with legal action if the sale transactions proceeded. The franchiser has rights to assume leases and continue operation of the restaurants, but has not responded."

The developer says the closings are the fault of the franchiser to meet its obligations and that Tim Hortons is in breach of its contract with Show Me Hospitality. The developer has filed suit in U.S. district court and is seeking $50 million in damages and lost business opportunities.

“Show Me Hospitality built a restaurant operations and real estate business for the long-term. Never did we imagine when we signed on with the original Tim Hortons ownership group, prior to the acquisition by 3G Capital, that we would close all of our restaurants in little more than two years,” said Show Me Hospitality president Eric Sigurdson. “In this challenging situation, our greatest regret is not being able to serve our loyal customers and, by actions of the franchiser, not being able to operate a business with the ability to meet all obligations to our creditors, professionals, and partners that so loyally supported us.”

The developer's lawsuit alleges that Tim Hortons tried to tear up the agreement it had signed with Show Me Hospitality before its merger with 3G Capital, and when the developer balked, Tim Hortons retaliated by not approving new locations (five were planned), failing to provide critical branding and advertising, and blocking new capital investment.

According to Scott Korzenowski, the developer's lawyer, “Tim Hortons wanted my client to invest an additional $20 million and commit to developing 200 restaurants in 10 years, for their desired ratio of one restaurant per 15,000 people in the territory. To put this in perspective, McDonald’s has approximately 130 restaurants in the St. Louis region that were opened over several decades. Show Me Hospitality is an extremely experienced group, with extensive years of restaurant and real estate experience, who learned only after investing millions of dollars that the new owners had no interest in honoring the original agreement.”

Other franchisees have filed suit against Tim Hortons over similar allegations, including a $500 million class action lawsuit filed this past June. Show Me Hospitality said they will work with their more than 50 employees to help them find new jobs.

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