Canadians Want American Restaurants | Food Newsfeed
Catherine Murray

Canadian Diners Hunger for U.S. Restaurants

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By Daniel P. Smith March 2014 Chain Restaurants

For growth-minded full-service concepts in the U.S., there are compelling opportunities that beg to be considered just north of the Canadian border.

While emerging markets in Asia, South America, and other corners of the globe attract robust attention, Canada remains a natural—albeit often overlooked—expansion target for domestic-based full serves, particularly given the nation’s geographic proximity, common language, and shared consumer characteristics with U.S. residents.

Of course, the positive state of Canada’s restaurant scene—a $68 billion industry that accounts for roughly 4 percent of GDP—doesn’t hurt, either. The NPD Group Canada reports that an estimated 47 percent of Canadians over the age of 16 visit a restaurant daily; by contrast, 44 percent of Americans do the same.

Among full serves, which account for one-quarter of Canadian restaurant traffic, promise is particularly high. Though full-service outlets trudged through the economically challenged period of 2009 through 2011, the category has quickly rebounded. Full-service restaurant sales are expected to jump 4.6 percent this year and an additional 5.2 percent in 2015, Canadian Restaurant and Foodservices Association (CRFA) president and CEO Garth Whyte says.

“We’ve got a country where people enjoy dining out,” Whyte says.

As GDP and job growth show a Canadian economy rapidly moving from recovery to expansion—this after already navigating the recession with more aplomb than the U.S.—full-service restaurant brands based in the U.S. will increasingly explore Canadian expansion. And as they do, they’ll discover compelling marketplace opportunities.

Casual Dining Grows Up

During the recession, many Canadian diners traded down to more economical concepts, which sparked strong momentum in casual dining and, in particular, surging growth for chain concepts.

Yet these aren’t your mother’s casual-dining concepts. Appealing to adults more than families, “premium casual” upstarts like Earls Kitchen + Bar, Joey Restaurants, and Moxie’s Grill & Bar carry an upscale, creative vibe featuring sophisticated bar programs, contemporary design, heightened service, and on-trend menus touting healthy dishes, high-quality ingredients, and novel flavors.

“For casual dining, the message is clear: Be more contemporary, more interesting, and have more flair,” says Douglas Fisher, a Toronto-based restaurant consultant with FHG International.

Convenience Wields Power

With nearly 60 percent of all Canadian restaurant meals purchased by takeout, drive-thru, or delivery, convenience has become a powerful force across the Canadian restaurant landscape. In response, full serves promoting innovative delivery and carryout options that are favored by on-the-go diners win big with consumers.

“Having food that travels well is a real opportunity in Canada,” says Victor Salamone, vice president of franchise and sales and development for Famous Dave’s, which opened its first Canadian outlet two years ago in Winnipeg and continues finding success with its to-go options.

Alberta’s Allure Beckons

Once cattle country, Alberta now holds the nation’s highest concentration of growth.

Driven by natural resources and energy, Canada’s fourth most-populous province is the nation’s fastest-growing restaurant province by foodservice sales, recording a 9 percent jump in 2012 alone. Alberta also tops the nation’s per capita restaurant spending at $1,991.

“People in Alberta are generally willing to spend on a nice night out,” says Jeff Dover of fsStrategy, a leading Canadian foodservice consulting firm.

Franchisees Welcomed

For franchising concepts, Canada’s government-backed loan programs encourage entrepreneurship. Any of Canada’s five largest banks can write small-business loans, as can some regional credit unions, says Percy Johnson, national director of Canada for Sunny Street Café, a 14-unit Ohio-based chain seeking growth in the 35-million resident country.

“With easier access to capital and not as much personal commitment required of the loan recipient, there’s an environment of entrepreneurship up here that bodes well for concepts seeking local partners,” Johnson says.

Breakfast Set to Boom

While the U.S. boasts some powerful breakfast concepts, Canada doesn’t have a heavy-handed national player, which appeals to independents or small chains looking to make inroads as well as to heavily resourced players like IHOP, which claims 22 Canadian outlets.

“There’s a lot of runway with breakfast in Canada…and an opportunity for people to get to know breakfast all over again,” DineEquity president of international Daniel del Olmo says, adding that IHOP’s griddle melts have sparked interest in the breakfast category.

A Taste of Americana is Appealing

Canadians have expressed growing hunger for regional American cuisine, such as barbecue-serving smokehouses, deep-dish pizza, or even Tex-Mex fare. Burgeoning interest in American favorites, in fact, is a key factor driving Famous Dave’s northerly expansion.

“Made in the USA is something Canadians, many of whom never make it to the States, are interested in, especially when those items are prepared in an authentic way,” Salamone says.

Ethnic Interests Inspire New Concepts

Ethnic tastes continue to explode in Canada, which brings intriguing opportunity for restaurants incorporating diverse menu items.

While Indian and Asian cuisines remain rather commonplace, more exotic global cuisines have garnered growing interest among Canadian consumers. The CRFA recently tapped African cuisine as one of its top trends, while Fisher notes attention on Middle Eastern foods also is on the rise.

“We’re seeing Israeli coffee bars floating around as well as Egyptian and Jordanian products,” Fisher says.

Meat Moves Over

Spurred by a healthful kick, an accelerating number of Canadians are becoming vegetarian or vegan—perhaps as much as 11 percent of the country’s population, suggests Fisher.

And a tendency to move from traditional game and red meat has created an opening for seafood and, specifically, underused options like mackerel, bluefish, and redfish. “No one’s really doing anything creative in the casual-market segment that’s making quality seafood available to the masses,” Fisher says—suggesting a viable opportunity for another upscale-casual niche to develop.