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Here's a look at the chains heading north of the border and why they think Canadians have a growing appetite for fast food.
Published June 21, 2024 • 4 minute read
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A bacon cheeseburger sandwich and fries at a Shake Shack restaurant in Chicago, Illinois. Photo: John Locker/Canadian Press/AP File
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In a relatively short time, Canada has become a hotbed of fast food expansion from the United States.
Shake Shack opened its first Canadian store in Toronto last week and plans to open 34 more locations by 2035. Sandwich shops Jimmy John's and Jersey Mike's are other American chains targeting the Canadian market.
The Financial Post breaks down which chains are heading north of the border and why they think Canadians have a growing appetite for fast food.
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Which chains are coming?
Shake Shack: The New York-based burger chain started as a hot dog cart in Madison Square Park in 2001. It opened its first Canadian location in downtown Toronto on June 13. Canadian-exclusive menu items include the Maple Salt Pretzel Shake and I Heart Butter Tart Concrete. Jersey Mike's: In January, Jersey Mike's announced plans to open five locations by the end of this year after signing a deal to bring 300 sandwich shops to Canada by 2034. The 68-year-old submarine sandwich brand already has two franchise locations in Canada, in Kitchener, Ontario, and London. Jimmy John's: Founded in Illinois in 1983, Jimmy John's said in January it would open its first Canadian location in mid-2024 but gave few other details. Crumble Cookies: Utah-based Crumble plans to open its first Canadian location in Edmonton in 2023 and at least five more in the region. Insomnia Cookies: Insomnia, which started as a cookie delivery service on college campuses in Philadelphia and is known for its late-night menu, opened its first Canadian location in Toronto last September. It has since opened a second location in Kingston and plans to open four more locations in Ontario by the end of the year. Freddy's Frozen Custard & Steakburger: In December 2023, Kansas-based Freddy's announced plans to open five locations in Alberta. Fogo de Chao: Brazilian steakhouse chain Fogo de Chao plans to open its first Canadian location in Vancouver in 2023 and open nine more locations across the country this year, including two in Toronto and Montreal.
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What's behind the expansion?
First, Canada's population is booming, recently topping 41 million thanks to an ambitious immigration policy that aims to admit 500,000 people per year by 2026 to supplement its aging workforce.
Canada's immigration policy is one of the main reasons McDonald's has made the country a central focus of its expansion plans: The famous burger chain plans to open 10,000 new restaurants around the world over the next four years, with Canada being one of its priority countries.
Canada is one of my top markets.
Jill McDonald
“Canada is one of my top markets,” Jill McDonald, president of McDonald's international markets, told investors in December 2023. “When you look at some of the demographic shifts, we definitely feel like there's a great opportunity for growth across Canada.”
Shake Shack's chief global licensing officer, Michael Kirk, said the company has been looking to expand into Canada for some time. “We've had our eye on this incredible opportunity in Canada for quite some time, and we're thrilled to have found a great partner to bring Shack's classic and exclusive Canadian bespoke products to our sophisticated neighbor to the north,” he said in a 2023 statement.
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Michael Haley, president and international managing director of Inspire Brands, the parent company of Jimmy John's, also highlighted Canadian growth as the driving force behind the sandwich chain's expansion north.
“Canada is one of the largest sandwich markets in the world,” he said in a statement to the Financial Post. “We are thrilled to be working with Foodtastic, Canada's leading restaurant franchisor, to launch the brand in Canada.”
How much is the market growing?
The Canadian Franchise Association reports that the quick-service restaurant market is expected to reach a record high of $33.6 billion in 2022, up 22 per cent from the previous year, citing Statista data.
Meanwhile, in the 12 months ending November 2023, these restaurants attracted 825 million visits, up 28% year-over-year, with August and September 2023 being notable exceptions, with year-over-year growth of 52% and 47%, respectively.
“Rising inflation and declining disposable income are causing Canadians to think more strategically about where they buy groceries, with economic vulnerability becoming a primary factor in customers' decisions about where they shop,” the Canadian Franchise Association article states.
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Fast food has overtaken full-service restaurants as the top choice for eating out among Canadians during the pandemic, with sales and profit margins at limited-service eateries (which includes fast food and coffee shops) hitting record highs of $33.6 billion and 6.9 per cent, respectively, in 2021, according to a Statistics Canada report. While sit-down restaurants appear to be making a comeback, fast food remains a go-to option in times of economic uncertainty.
How successful have other major expansions been?
Fried chicken chain Chick-fil-A made a successful expansion into Ontario in 2019, announcing plans in February to add 20 stores to Alberta, starting with two in Edmonton and one in Calgary. But other recent expansions haven't been so lucky.
PF Chang's China Bistro expanded to Canada in 2012 but filed for bankruptcy three years later, citing high food and operating costs.
Carl's Jr. entered Canada in 2011 and opened stores across the country, but most of its locations outside of Alberta have since closed.
Krispy Kreme, the once-highly touted doughnut chain, has had a rocky relationship with Canada: The company launched in 2001 with plans for 40 stores, but by 2015 had dwindled to just six. Now, the company is ramping up its presence in Canada again.
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• Email: bcousins@postmedia.com
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