By Vince Sgabellone
Over the last two years, many U.S. foodservice brands announced their entry or expansion plans for Canada, a robust market where visits are growing year over year. Our CREST consumer-tracking data shows Canada’s traffic growth is among the fastest across the 12 countries we track. It’s also one of only three markets that have reached 2019 traffic levels. Inaugural locations for expanding brands have opened with great fanfare, long lineups, and excitement among resident foodies.
It will take time before these new entrants make a measurable impact. In the meantime, Canadian restaurateurs are not sitting back to cede the market to these upstarts. Looking at our latest ReCount restaurant census data, the industry added 343 net new locations in 2023, in a landscape with 62,000 locations. Unit counts have grown in each of the last three years despite the challenging economic environment, reinforcing the attraction for new brands.
But what comes first, unit count or traffic volume? It’s hard to say as both are evident. Our CREST data for the 12 months ending May 2024 shows traffic grew three per cent, or two points more than unit counts. Consider next, chains make up 57 per cent of the total locations and grew one per cent, while independents fell by about half a per cent. This moved counter to traffic, revealing independents advanced nine per cent, about four times the rate of the chains. And finally, unit growth is attributed entirely to the QSR segment, while FSR was flat, but our data reveals FSR traffic growth is outpacing QSR.
As the industry continues to re-set following pandemic unit retraction, and the cost of borrowing comes down, expect to see continued expansion into areas of the market where the traffic is growing the most.
If you’re a regular follower, then you know I have frequently mentioned the rise of global cuisine. When it comes to this subset of the market, our ReCount and CREST data align. QSR Mexican and QSR other global (mostly Mediterranean) are among the fastest-growing sub-channels in ReCount, with growth concentrated in small chains and independents. These small subsets of the market are contributing to the discrepancy mentioned earlier, as the corresponding segment of the market in CREST grew by double digits.
These new cuisines represent the future of foodservice in Canada. They’re preferred by younger demographics who seek new and bold flavours, as well as by immigrants looking for cuisines from their home country — or opening restaurants if they don’t find what they are looking for.
Some evidence shows the established brands are ceding their place in the market, a bit. The nine largest brands with more than 500 units each, representing 13,000 units collectively, added just 31 doors in 2023 and have effectively remained flat since 2019. As a result, they have lost two points of traffic share to the smaller brands. Don’t expect this situation to continue as these brands defend their well-earned territory fiercely, against each other and the newer arrivals. In the meantime, the next time you see an empty restaurant with an opening-soon sign in the window, expect a small chain or independent to move in.
