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F&H’s Top 100 report includes specialty operators who capitalized on innovation to stay ahead of the game

Ask any Canadian to list top contenders for a national dish, and it’s a good bet poutine makes the cut. The savoury pairing of crisp fries and squeaky cheese curds smothered in gravy has become a Canadian staple. The unexpected delicacy — appearing on menus in mom-and-pop shops, upscale restos and specialty “poutineries” — has received plenty of attention recently from news media, including The Globe and Mail and Top Chef Canada. Even literary magazine The New Yorker had something to say about it in 2010.

Poutine is in the spotlight now, but some folks have been perfecting the dish for decades. Toronto-based New York Fries (NYF) has been selling the Quebecer creation for 20 years. In 2010, the specialty fry shop made the most of the poutine buzz, strengthening its already solid position in the market by adding two new poutine-inspired items to the menu. Jay Gould, president of New York Fries, says the Canadian appetite for potatoes, cheese and gravy has been growing steadily. “Our poutine sales have increased by about 10 per cent annually for the past 20 years. Around the time of the Vancouver 2010 Olympics there was a lot of media coverage about Canadians and poutine, and we realized it made up nearly half of our sales. That was very compelling, and we decided to expand the menu,” he says.

In August 2010, NYF introduced braised beef and butter chicken poutine at two of its corporate stores. The launch was so successful, the new items hit all corporate locations by November 2010 and are now available at 95 per cent of the chain’s franchises. “We F&H’s Top 100 report includes specialty operators who capitalized on innovation to stay ahead of the game focus on how we can grow while continuing to be a specialty operator. This is it,” Gould says.
“We’re developing more poutine options and our franchisees are happy about where we’re going. This has been a game changer.”

While 2010 was a year of strong sales and product innovation, the chain actually shrunk in units, closing more than 30 locations in Famous Players cinemas when the cinema company was bought out by Cineplex. Despite the closures, the company ended its year with $64 million in sales — not far off from the previous year — and it added 10 new international stores. “We had solid sales growth in 2010,” Gould says. “Our franchisees don’t care if we add 50 new stores. They want their same-store sales to grow. That’s our focus, and it’s working.”

NYF isn’t the only specialty operator boasting strong sales and innovation on F&H’s 2011 Top 100 Report.  Mississauga, Ont.-based Extreme Brandz, which includes Extreme Pita, Mucho Burrito and Pur Blendz, spent the year developing its core brand values, health and wellness, to great success. So great, in fact, that Extreme Pita recently became the first national QSR to receive Health Check certification by the Heart and Stroke Foundation of Canada.

“Our new menu launched system-wide in April 2011, but we spent all of 2010 analyzing our food, challenging suppliers to reformulate products and working with the foundation to make sure we met the guidelines for certification,” says Alex Rechichi, Extreme Brandz president and CEO. The company asked its protein, dressing and bread suppliers to find ways to reduce sodium and also introduced a number of gluten-free options.

In addition to its menu revamp, the results of a usage and attitudinal study — conducted by a third party — in early 2010, influenced company direction. “We have a good sense of where we stand in the market and the overall perception of our brands. We’re incorporating the feedback into our strategy for the next three years,” Rechichi says. “There are challenges in having multiple brands, but we take what we learn from one and apply it to another. We’ve worked to diversify because we see opportunities.” Offering healthy, fresh choices as well as options to customize items to meet special dietary requirements, will continue to drive Extreme’s business development.

Rechichi notes that, while 2010 was an exciting year, it wasn’t without challenges — namely, working through the tail end of a tough economic cycle. “We made a concerted effort to stay true to the strength of our brands and to provide value in price, quality, health and unique experiences, not just discounts,” he says. That effort proved beneficial: Extreme opened 10 Mucho Burrito locations in 2010 and reported $90 million in sales, a $2-million-increase over 2009.

Consumer wellness and healthy-eating trends were also major factors for frozen dessert specialist Burlington, Ont.-based Dairy Queen in 2010. The Mini Blizzard, launched in August last year, was a huge initiative for the brand prompted by an increasing demand for snack-sized options and general trends toward portion control. The Mini made up for about a quarter of Blizzard sales in 2010 — significant enough to keep it on the menu.

“Product innovation is very important to our customers, and we introduced new items and new flavours in 2010,” says Denise Hutton, Dairy Queen’s vice-president of Marketing. Ice-cream lovers were offered three new Blizzard flavours — caramel brownie, strawberry golden Oreo and Oreo brownie earthquake — to choose from at various times during the year. The company also celebrated the 25th anniversary of its signature dessert in 2010. In April — the official anniversary month — customers who purchased one Blizzard at regular price could buy a second for 25 cents. Throughout the year, Dairy Queen offered 25 Blizzard flavours in honour of the longtime favourite treat. (between 12 and 14 varieties are usually available.)

Overall, 2010 was a successful year for the brand, which reported $506 million in sales for its 638 units (including Orange Julius) in Canada. Of course, there were obstacles along the way, too. “The recovering economy was still a factor for us last year, as it was for many in the foodservice industry,” Hutton says. “Rising gas prices combined with a rainy and cool summer also presented challenges. The summer is our most important season and the weather is a huge indicator for us in terms of sales.” Moving forward, Dairy Queen will continue to provide everyday value to customers and incorporate health-wise items into its product offering.

Promoting healthy choices has been a part of the company mandate for Markham, Ont.-based Yogen Früz since its inception 25 years ago. “We’ve always promoted the healthy attributes of our products. Seeing so many QSRs now adding smoothies and other healthy alternatives to their menus lets us know we’re in the right space. We’re very excited about the future,” says Aaron Serruya, company president. For Yogen Früz, 2010 was the year of the Nü Mix, when a handful of what Serruya calls “funky new flavours”— such as chai latte and apple pie — were added to the selection.

The Nü treats, just like the originals, are made with natural ingredients and have been well received by customers that, overall, include more males than ever before. It was a positive year, with $288 million in sales (compared to nearly $268 million in 2009). The company also opened new international locations. Yogen Früz sales have been up for the past five years, but Serruya concedes that the economic downturn made it difficult for potential franchisees to obtain financing.

Despite the unstable economy, Yogen Früz is set to launch a brand in 2011, and 2010 was a year dedicated to research and preparation for that expansion. Over the next year, the company plans to bring back 25 Yogurty’s stores, a self-serve frozen yogurt concept it bought in 1989 when all units were converted to Yogen Früz stores.

“We’ve already launched in Mexico, and now we’re focusing on Toronto and the GTA. Yogen Früz is in cinemas and malls, and Yogurty’s is more of a street-front, neighbourhood destination,” Serruya says of the concept that he hopes will draw on the success of its sister stores, serving frozen yogurt once again. That, after all, is the company’s specialty.

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