Tim Hortons loyalty program faces investor lawsuit over hidden costs

Tim Hortons’ loyalty push is now at the center of a securities lawsuit that turns a familiar app perk into a Wall Street dispute. Investors say the chain’s rewards design pushed more discounts onto the customers using it most, while parent Restaurant Brands International Inc. failed to show that the traffic generated by Tims Rewards was enough to pay for the giveaways.

Restaurant Brands launched Tims Rewards in Canada on March 20, 2019, and expanded it to the United States on April 10, 2019. The program promised a free hot brewed coffee, hot tea or baked good after every seventh paid visit. The complaint alleges that the plan was not producing sustainable revenue growth because the discounting tied to the program was not being offset by enough extra traffic, even as the company promoted its turnaround strategy and loyalty platform.

The investor case covers Restaurant Brands stock purchases between April 29, 2019 and October 28, 2019. On October 28, the company acknowledged that Tim Hortons’ comparable sales had slipped into negative territory and that discounting linked to Tims Rewards was only slightly more than offset by traffic. In everyday terms, the lawsuit says the bill for loyalty was being paid by the very customers the program was designed to attract, while investors were not told the economics were weakening.

The loyalty fight sits alongside a broader record of app-related controversy at Tim Hortons. In a separate privacy case, Canada’s federal and provincial privacy regulators found the company had collected highly personal geolocation data from app users without consent. The settlement that followed gave eligible users a free hot beverage and a baked good and applied to customers who used the app between April 1, 2019 and September 30, 2020.

More recently, Tim Hortons sent erroneous Roll Up to Win emails in April 2024 telling some customers they had won a Tracker Targa 18 WT 2024 boat and trailer worth about $64,000. The Quebec class-action registry says the case was filed on April 19, 2024, and a Quebec judge later authorized the class action for Quebec residents only, saying the error could damage public trust in mobile app contests. Tim Hortons called it a technical error, and the plaintiffs’ lawyer said the company did not even offer a free coffee.