Week of Jan. 24, 2011



Continued Unit Growth Planned at A&W
Despite a difficult economic setting for restaurateurs across the country, A&W Food Services of Canada Inc. vice-president of New Restaurant Expansion, Graham Cooke, is happy to have opened 26 new restaurants in 2010, compared to 22 in 2009, 20 in 2008 and 16 in 2007. Of the 26 new restaurants, 15 opened in Ontario, which remains the focus of the company’s growth and represents the first time more than half of A&W’s new national restaurant openings occurred in Canada’s largest province. Cooke expects the surge of new restaurant growth to continue for at least three to five years. “We introduced a multi-site development program in Ontario and Quebec in 2009, and interest from existing and new franchisees has been enormous,” he says. “We have since introduced the same program into B.C. and Manitoba. We are now essentially sold-out in these two western provinces.” Among the 26 new openings this year, five were downtown locations — three in Vancouver, one in Calgary and one in Toronto — which represent the first wave of A&W’s new urban concept stores that appear in densely populated areas. The urban outlets are typically smaller than their suburban counterparts, feature china dinnerware, real cutlery, aluminum trays and self-order kiosks. The first downtown Montreal location at Concordia University is scheduled to open in April.

Yum! Brands to Sell U.S. A&W, Long John Silver’s
Louisville, Ky.-based Yum! Brands Inc. plans to sell its Long John Silver’s and A&W All-American Food restaurant chains, which represent 1,630 franchised units and about US$900 million in sales. Yum’s current portfolio includes more than 37,000 restaurants worldwide, including Taco Bell, Pizza Hut and KFC, which is expected to expand in the U.S. and international markets. Yum’s international operations account for about 65 per cent of the company’s profits, according to financial analysts, while Long John Silver’s and A&W together account for less than one per cent of the company’s operating profit. Long John Silver’s and A&W were acquired by Yum! for US$320 million in 2002; the intent was to co-brand them with the company’s core chains. Canadian A&W restaurants are independent from Yum! and operate through the Vancouver-based A&W Revenue Royalties Income Fund. Taco Bell, Pizza Hut and KFC are operated in Canada by Priszm Income Fund, although all its 232 restaurants in Ontario and British Columbia are expected to be sold to a numbered company owned by a European franchisee of Yum! Restaurants International for about $46.4 million. (See story below.)

Priszm’s Sale of 232 Restaurants to Close Feb. 28
According to reports from the Priszm Income Fund last week, 7716443 Canada Inc., an affiliate of Soul Foods Group, a U.K.-based franchisee of Yum! Restaurants International, has satisfied its due diligence and financing conditions with regard to the potential sale of all of the company’s restaurants in Ontario and British Columbia. The transaction is subject to customary closing conditions, adequate landlord and material contract consents, any approvals as required by law and by the company’s governing documents as well as consent to the transaction by Yum! Restaurants International and Priszm’s senior debt holder. Although there is no guarantee the required approvals will be obtained, or that the remaining conditions satisfied, the transaction is scheduled to close Feb. 28, unless the parties agree otherwise. The company also reported that it remains in discussions with its senior debt lender and franchisor on various options to restructure the business, which may include the sale of all assets. The company’s interim agreement with its franchisor, Yum! Restaurants International, with respect to the franchise agreements for 70 restaurants expired on Jan. 15, as did its interim agreement to defer unpaid continuing fees.

Mobile Payment Rolls Out at All U.S. Starbucks Stores
Starbucks smartphone mobile payment system is being rolled out across the Seattle-based company’s U.S. stores. All customers have to do is download a free app, flash their cellphone at a register scanner and their purchase is complete. Tested for more than a year in select markets, this extension of the chain’s loyalty card program will be available in nearly 6,800 U.S. Starbucks locations and the more than 1,000 Starbucks outlets in Target retail stores. “Today, one in five Starbucks transactions is made using a Starbucks Card, and mobile payment will extend the way our customers experience and use their Starbucks Card,” said Brady Brewer, vice-president of Starbucks Card and Brand Loyalty. The mobile payment system is available for select BlackBerry smartphones, Apple iPhones and certain iPod devices. It’s estimated one-third of Starbucks’ U.S. customers use smartphones.

Arby’s Chain Expected to Go Up for Sale
The executive team at the Atlanta-based Wendy’s/Arby’s Group is considering selling the underperforming Arby’s roast-beef sandwich brand, which has nearly 3,700 outlets worldwide. The sale, which has an estimated value of between US$400-million and $600-million, would undo a 2008 deal engineered by billionaire investor Nelson Peltz. Peltz’ Triarc Cos, Arby’s parent, bought Wendy’s for US$2.2 billion to create the third-largest publicly held fast-food chain. Roth Capital Partners analyst Anton Brenner estimates Arby’s North American restaurants, which generate the bulk of the chain’s revenue, have had some of the restaurant industry’s worst results.

Target Stores Target Food and Grocery Sales
The fact that the Minneapolis-based Target Corporation is entering the Canadian market by buying up to 220 Zellers could mean new competition for grocery stores and the home-meal replacement market. In addition to having Starbucks locations in more than 1,000 Target retail stores, Target has substantially expanded its food and grocery marketing. SuperTargets, which primarily sold groceries, were introduced in the ’90s, and, two years ago, grocery areas were introduced to about 450 of the brand’s 1,750 traditional multipurpose stores; another 400 are planned for 2011. Annette Miller, Target’s senior vice-president for grocery, told The New York Times she expected an expanded food department to eventually move into most Target stores. The format, dubbed P-Fresh (Prototype-Fresh) adds 90 per cent of the food categories and approximately 60 per cent of the SKU counts available at the company’s SuperTarget stores. Same-store sales in the converted stores are said to be up by six per cent to 10 per cent. According to the Times, the grocery section is laid out with islands stacked with fresh vegetables and bakery items, surrounded by refrigerated cases filled with meals such as pizza, burritos and chicken. Target also carries sandwiches and quick lunches in stores near office buildings.

‘World’s Highest’ Restaurant Opens in Dubai, U.A.E.
At.mosphere opened this past weekend in Burj Khalifa as the ‘highest restaurant’ in the world’s tallest building in Dubai, U.A.E. The eatery, which is 1,350 feet high and sits on level 122, can hold more than 210 guests and features a lounge, smoker’s lounge, grill and private dining area. “At.mosphere is about offering the best in dining. Every aspect of the restaurant has been carefully designed and executed — be it the elegant decor, warm ambience, food choice and service standards,” said Mohamed Alabbar, chairman of the development company Emaar Properties PJSC. Emaar Hospitality Group manages the operation led by CEO, Marc Dardenne; Gabriele Babini, director of operations; and Dwayne Cheer, executive chef. The kitchen is run by a team of 20, while the front-of-house brigade is 91-strong. Guests can expect to pay a minimum of Dhs650 ($176) to eat at the new record-breaking hotspot.

Student Chefs Prepare for Almost Famous Competition
Canadian student chefs are preparing to test their culinary skills at the upcoming S. Pellegrino Almost Famous Chef Canada Regional Competition. The Toronto competition and tasting reception will be held Feb. 7 at the Calphalon Culinary Center. Eight students from schools across the country — including the George Brown, the International Culinary School at the Art Institute of Vancouver, École hôtelière de la Capitale and L’Institut de tourisme et d’hôtellerie du Québec — will prepare dishes for a judging panel that will include Jeff Dell, Milestones executive chef and James Chatto, senior editor, Food and Drink magazine, among others. The winners will move on to compete against U.S. chefs at the final competition in Napa Valley, Calif. in March.

B.C. Expo Trends Breakfast to Benefit BCHF
Business and personal health will be the subjects of the morning at the Trends 2011 Breakfast being held as part of the B.C. Foodservice Expo. The two-hour event, which benefits the British Columbia Hospitality Foundation (BCHF), will include breakfast and networking opportunities. Author and health reporter Dr. Art Hister along with Robert Carter of the Toronto-based NPD Group, will discuss market intelligence as well as physical wellness. “The BCHF is delighted to be the beneficiary of the Trends 2011 Breakfast,” says Alan Sacks, business development manager for the organization that helps hospitality industry workers faced with financial problems due to a medical condition. “In addition to receiving valuable funding to assist the beneficiaries of the Foundation, this event provides us with the opportunity to let people in the hospitality community know that there is a foundation specifically looking after hospitality workers.” The Vancouver Convention Centre will be the home of the breakfast on Jan. 31 and the Foodservice Expo, which runs from Jan. 30 to 31. For more details, click here.

HAC Conference to Coincide with CRFA Show, March 7
Reps from the Canadian Restaurant and Foodservices Association (CRFA) have announced that members from the Hotel Association of Canada (HAC) will be visiting the CRFA Show prior to their own annual hospitality conference. The CRFA Show organizers have created a special seminar program for HAC attendees on the first day of the show, March 6. The program includes time to tour the tradeshow floor, a special seminar targeted for the hotel industry and a reception and networking event. “The HAC has long enjoyed a close relationship with our hospitality partners at the CRFA,” said Tony Pollard, president. “By holding the two events at the same time, both associations are able to offer even greater value to our members.” The HAC conference takes place March 7 at Toronto’s Sheraton Centre Hotel, while the CRFA Show runs from March 6 to 8 at the Direct Energy Centre at Exhibition Place.

Canadian Travel Up, Visitors to Canada Down
Travel abroad by Canadians increased 2.3 per cent to 4.7 million in November, but travel by foreign residents to Canada decreased 2.3 per cent to two million, according to Statistics Canada. The number of trips by Americans to Canada decreased 2.1 per cent to 1.7 million, with the largest decrease being logged in same-day car travel, which was down 4.3 per cent compared to the previous month. Overnight travel by American residents to Canada declined 0.7 per cent in November to one million trips, while overseas residents took 357,000 overnight trips to Canada in November, down 3.2 per cent compared to October. Travel to Canada by residents of eight of the top 12 overseas markets declined in November, although travel by Hong Kong residents rose 10.6 per cent — the largest increase among the top overseas markets.

Three Elite Ascend Collection Hotels Announced
Three Canadian boutique hotels have recently been selected to become a part of Choice Hotels International, Inc.’s elite Ascend Collection of historic, boutique and unique properties. The announcement affects the 106-room Chateau Moncton, New Brunswick’s 112-room Chateau Saint John, Quebec’s 44-room Hotel Royal William. Chateau Moncton and Chateau Saint John are owned by Bernard Cyr of Chateau Saint John, Inc. and Chateau Moncton, Inc., while the Lambert/Beliveau family of Quebec owns the Hotel Royal William. The new properties join the network’s other Atlantic Canada hotel, Inn on the Lake, Fall River, just outside Halifax. “Despite the challenging economy, Ascend Collection is enjoying rapid growth, thanks to its proven record in driving business to member properties,” said Stacy Ragland, vice-president of Ascend Collection, which launched in 2008, and now has more than 40 member lodgings in Canada, the U.S. and the Caribbean. “Our new Canadian hotels are representative of the network. Rich in history and local character, they provide the type of authentic, high-service experience travellers are looking for today.”

First Canadian MainStay Suites Opens in Edmonton
Choice Hotels has opened the first extended stay MainStay Suites hotel in Canada with the 119-room MainStay Suites East Edmonton/Sherwood Park. The hotel features a business centre, a fitness centre, free high-speed wireless Internet, daily continental breakfast and complimentary guest parking. Guestrooms feature a fully equipped kitchen with granite countertops, hardwood flooring, 37-inch flat-screen televisions, large work areas and sofa beds.

Renovations Completed at Days Hotel & Conference Centre, Toronto
The newly renovated full-service Days Hotel & Conference Centre in Toronto is complete. The 290-room site offers free continental breakfast, free high-speed Internet, an on-site restaurant, a free 24-hour on-site business centre, 14 meeting rooms, a heated indoor pool and an exercise room. The 10-storey Realstar Hospitality property will be managed by Bilal Mawagdeh. “This great new addition helps broaden our distribution of hotels across the city of Toronto,” said Irwin Prince, president and COO, Realstar Hospitality.


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