NEW YORK — Some Burger King customers are finding it hard to swallow that the home of the Whopper could move to Canada.
Investors seemed to welcome the late-Sunday announcement by Burger King that it was in talks to buy Canadian coffee-and-doughnut chain Tim Hortons and create the world’s third-largest fast-food restaurant company. The news pushed shares of both companies up more than 20 percent.
But customers were already voicing their discontent with the 60-year-old hamburger chain because of its plans to relocate its corporate headquarters from Miami to Canada in a deal that could lower its taxes. By Monday afternoon, Burger King’s Facebook page had more than 1,000 mostly negative comments about the potential deal.
Shawn Simpson, who hadn’t heard of the talks until approached by a reporter while he was at a Burger King in New York City on Monday afternoon, said he didn’t like the idea of the company’s paying its taxes to another country.
“For them to take their headquarters and move it across the border is a negative for me,” said Simpson, 44, who was ordering a Double Whopper and onion rings. “It’s an American brand.”
A representative for Burger King, Miguel Piedra, said the comments on Burger King’s Facebook page represent a small fraction of the company’s more than 7 million followers on the social media site.
Burger King isn’t the first company to face fallout over a tax inversion, which is when a company acquires a business in another country, then relocates its headquarters there. Big U.S. companies, including pharmaceutical AbbiVie and Valeant Pharmaceuticals, recently have pursued tax inversions to cut their costs. This month, Walgreen abandoned pursuit of a tax inversion after negative publicity.
President Barack Obama and Congress have criticized inversions, which cut into U.S. government revenue. The Obama administration is considering executive steps it could take to de-incentivize inversions.
Unlike many other companies, Burger King’s move also has the potential to turn off customers, since it’s a familiar brand people. It’s difficult to gauge whether such fallout would hurt the fast-food chain’s U.S. business.
Some analysts say even if some Burger King customers are initially angered, the feelings could quickly fade since there wouldn’t be any significant changes in restaurants. Besides, many Burger King customers who go to the chain for convenience may not care enough about the move to change, said Jonathan Maze, editor of Restaurant Finance Monitor, which tracks the industry.
“It’s going to irritate people, but basically it’s a paper move,” he said.
It’s not clear exactly how much the combination would reduce Burger King’s tax costs. A recent report by KPMG found that total tax costs in Canada are 46.4 percent lower than in the United States.
Both companies cautioned there was no guarantee a deal would happen. But each could benefit from the deal, which they say would create a new holding company with 18,000 restaurants in 100 countries and about $22 billion in sales.
Burger King’s stock surged $5.78, or 21 percent, to $32.89 on Monday, while Tim Hortons’ stock also rose 21 percent, to $76.33.
The combination would give Burger King a stronger position in the fast-growing breakfast and coffee market. Burger King, which has undergone numerous ownership changes since it was founded in 1954, has been slashing costs and increasingly looking for growth overseas under majority owner 3G Capital, which bought the chain in 2010. In its most recent quarter, sales edged up just 0.4 percent at established restaurants in the U.S. and Canada.
For Tim Hortons, Burger King’s a far larger global footprint could help it accelerate its international expansion. It has over 3,630 locations in Canada, 866 in the U.S. and 50 in the Persian Gulf area.
It wouldn’t be Tim Hortons’ first pairing with a U.S. fast-food chain. It was purchased by Wendy’s International Inc. in 1995. In 2006, it completed an initial public offering and was spun off as a separate company.