Week of Nov. 23, 2009



Canada “A Good Place to Do Business” For U.S. Franchisors
In a recent Financial Post story, Toronto-based franchise lawyer, Larry Weinberg and his industry peers offered their take on the franchise situation in the Great White North. “I think the word is getting out that Canada is a good place to do business,” Weinberg, who recently co-chaired the American Bar Association’s Annual Forum on Franchising held in Toronto, was quoted as saying. He attributed the change to the slow-to-recover U.S. economy combined with Canada’s relative strength during the recession, which is luring franchise operators north. Weinberg says that after attending franchise conferences all over the U.S., “the impression I’m left with…is that things are doomier and gloomier there than here.” He added, “Many of these franchise chains are looking beyond the U.S., some for the very first time, because there isn’t anything going on at home.” Here is a quick look at some U.S.-based chains looking to expand further into Canada.

• Tampa, Fla.-based fondue-restaurant franchisor, The Melting Pot, awarded its first Canadian franchises to Edmonton entrepreneurs, Cory and Heidi Wagner, who are opening units in Edmonton, Calgary and Vancouver. “We felt it was a logical starting point and perhaps a safer starting point for international expansion,” Dan Stone, director of Franchise Development, was quoted as saying in the Post. Stone said that The Melting Pot, which caters to group celebrations such as anniversaries, birthdays and other special or corporate occasions, has plans for about 15 fondue restaurants in Canada, including an East Coast rollout.
• Mississauga, Ont.’s Little Caesars (Canada) is part of Detroit-based Little Caesars, which is owned by Ilitch Holdings Inc., and is described as the world’s largest carry-out pizza chain franchise. It is already well established with locations in six provinces but has aggressive expansion plans underway, with a goal of having locations in every province, the Northwest Territories and the Yukon. Open for lunch and dinner, the grab-and-go pizza locations have a relatively small footprint (450 to 850 square feet).
• Buffalo Wild Wings, based in Minneapolis, is the operator of some 540 U.S. locations. The chain is “looking to extend its reach outside of the United States. Canada is a very attractive market for us to do so,” Matt Brokl, associate general counsel for the company, says in the paper. Its restaurants feature a variety of boldly flavoured, made-to-order menu items, including Buffalo-style wings, served in a neighbourhood atmosphere that includes an extensive multi-media system, a full bar and an open layout. The concept appeals to sports fans and families.
• The 292-unit Bruegger’s Bakery Café chain out of Burlington, Vt., has completed the acquisition of the restaurant operations of Toronto-based Timothy’s Coffees of the World Inc., through a subsidiary called Threecaf Brands Canada Inc. (Click here to read more under the heading Timothy’s Sold to Two U.S. Companies – Expansion Planned in Canada.) The acquisition includes Timothy’s World Coffee, mmmuffins and Michel’s Baguette Bakery Café, of which 12 are corporately owned and 128 are franchised.

Australia’s Gloria Jean’s Coffees Zeroes In On Canada
Gloria Jean’s Coffees, a specialty coffee franchise based in Australia, is close to selecting its master franchisor in Canada. More than 60 different Canadian groups responded when it became known that the company was planning a move into Canada in 2010. Gloria Jean’s Coffees has more than 900 stores in some 40 countries worldwide. Commenting on its potential partners in Canada, co-owner Nabi Saleh said that many candidates are well known, successful and celebrated businesses or businesspeople with a good record. “We tend to be extremely cautious in the selection of our franchise partners to ensure that our choice is based on unity and alignment of our vision and values,” the company head is quoted as saying the National Post.
• Gloria Jean’s Coffees has already moved into the U.S. market, closing a deal late last year through its U.S. affiliate, Praise International North America Inc., for the purchase of more than 200 U.S. retail and franchise operations from Diedrich Coffee Inc., as well as some of the It’s a Grind coffeehouses. The U.S. move marked a return to the company’s roots since owners Nabi Saleh and Peter Irvine started their business by buying the Australian rights for the Gloria Jean’s brand from its original owners, Brothers Gourmet Coffees in 1995. In 2005, they acquired the rights for the brand worldwide, excluding the U.S. and Puerto Rico, which they ultimately acquired through Praise International in March of this year.

Credit Card Issuers Face “Heavy-Handed Action” If Voluntary Code Ignored
Canada’s big banks and credit card companies were threatened with “heavy-handed regulations” if they ignore the proposed voluntary code of conduct designed to protect merchants from rapidly rising processing fees for electronic payments and higher premium card charges. The voluntary code is now in a 60-day consultation period. Federal minister of finance, Jim Flaherty, stated, “If we are unsuccessful with the voluntary code, then we can create an involuntary code. We have the power to do that.” The new guidelines would permit merchants to cancel their contracts with a payment processor without penalty. During the past year, Visa and MasterCard have issued new premium cards with greater consumer benefits, but they require higher processing fees from merchants. The code specifies that banks should issue these cards only if their customers ask for them. Visa and MasterCard have already started an aggressive push to enter Canada’s debit market to compete against the non-profit Interac, which dominates the debit sector and charges a nominal flat fee to merchants for each debit transaction. Merchants will also be allowed to route purchases through a cheaper payment network, even if a card is c-branded.
• The Canadian Restaurant and Foodservices Association (CRFA) welcomed the announcement. CRFA president and CEO, Garth Whyte, said, “This is an important step in addressing concerns of our members about unfair business practices. Our members are unhappy about current credit card fees and rules that are costly to their customers and businesses, and they are confused and anxious about the rollout of new Visa and MasterCard debit cards.” CRFA said it will participate fully in the consultation process regarding the new code.

McDonald’s Focusing on Technology – Testing New Drink Dispenser
McDonald’s Corporation is focusing on new technology to improve efficiency and speed up service, in addition to testing new products and remodelling restaurants worldwide. Today’s consumers are more selective and they’re staying in more and spending less, investment analysts were told at a meeting held at its headquarters in Oak Brook, Ill. McDonald’s has plans to invest US$2.4 billion on capital projects next year, including remodelling 2,300 existing restaurants. Speed is a big focus of the projects, including introducing larger warming trays that hold 50 per cent more burgers and installing software that speeds up ordering. CEO Jim Skinner was quoted in The Wall Street Journal saying, “When you look at our performance over the last six-and-a-half years going into 2008, before we had a declared recession, we did extraordinarily well. People are trading in to McDonald’s — not trading down to McDonald’s. We expect, because of the investment we made during the downturn, that we will come out the other end in better shape.” A new fountain-drink dispenser that can pour more than 100 different drinks from a single machine will now be tested by McDonald’s early in 2010. The Coca-Cola Company developed the new machine, dubbed “Freestyle,” some four years ago and it has been testing it at 53 U.S. restaurants, including McDonald’s, Burger King, Wendy’s, Jack in the Box and P.F. Chang units. The current Freestyle is designed for customer self-service, but Coca-Cola and McDonald’s are a developing a fast-food version suitable for crews. “We’re very optimistic about the future of beverage innovation at McDonald’s,” said Karen Wells, vice-president of Menu and Strategy at McDonald’s, to Dow Jones Newswires. “We are working hard to become our customers’ preferred beverage destination.”

Toronto Restaurant Fined $5,000 For Absence of Certified Food Handler
A Toronto Justice of the Peace has ordered a maximum fine of $20,000, including $5,000 for not having a certified food handler on the premises, against Chandra’s Takeout Restaurant and Catering in Scarborough, Ont. Jim Chan, food safety program manager at Toronto Public Health, told the Toronto Star he was surprised that the maximum fine had been imposed for not having a certified food hander, which usually results in fines ranging from $200 to $1,000, but he still supported the maximum fine penalty. The restaurant management pleaded guilty to the infractions. According to the Toronto Public Health website, the location had been inspected seven times in the past 18 months, had been issued two yellow (conditional) passes, and, finally, was issued a red (failed) pass on Aug. 24, at which time charges were laid. The restaurant was fined $5,000 for each of the four infractions, the other three being: failing to control a pest/insect infestation; failing to protect food from contamination; and obstructing Toronto Public Health’s red closure sign while the restaurant was shut down on Aug. 28. The City of Toronto is only one of three jurisdictions in Ontario that insists on having at least one certified food hander on the premises during operations.

A la Cart Inc. Acquired by United Brands
The advanced foodservice patient meal-delivery systems company, A la Cart Inc., based in Charlotte, N.C., has been acquired by Unified Brands of Jackson, Miss., one of 40 Dover Corporation companies. Bill Strenglis, president of Unified Brands, commented, “A la Cart is the premier brand and leader in advanced food meal-delivery systems for the healthcare market segment. As the newest brand in our family, A la Cart meets our strategic initiative of gaining market share in growing segments.” United Brands is represented by dealers and distributors across Canada.

Driving Culinary Tourism To P.E.I.
Toronto’s recent Royal Winter Fair was the launching pad for a new Prince Edward Island culinary tourism promotion campaign that will see more than eight million potato bags inked (or tagged) with the slogan: “Pack Your Appetite for Prince Edward Island Potatoes.” The P.E.I. Potato Board, together with the Department of Agriculture and the Department of Tourism, are sponsoring the drive, which will also include in-store promotions and advertising as well as the chance for two people — with the appropriate PIN number on their “Pack Your Appetite” potato sack — to win a trip for four to the Island.

Pizza Nova Gives Back
Pizza Nova recently presented its “Rising Star Scholarship” to seven Scarborough, Ont., Variety Village athletic students as part of its annual “That’s Amore Pizza for Kids” event, which has raised more than $700,000 for Variety. In addition, Pizza Nova provided funds from the sales of pizzas in October to benefit the UNICEF Schools for Africa program, helping fund the creation of a clean water source for an entire school in Rwanda. “Giving back to the community that supports us has always been of the utmost priority for Pizza Nova,” said Stephanie Angelone, vice-president, Sales and Marketing. “But it is also our duty as fortunate Ontarians to support those international communities who can’t even fathom the idea of picking up the phone and ordering a pizza for dinner.”

Online Tourism Marketing Conferences Hits Montreal, Jan. 25- 29
Online Revealed, Canada’s online travel marketing conference, will be held from Jan. 25 to 27 at the Delta Centre-Ville in Montreal. The 5th annual Online Revealed, sponsored by A Couple-of-Chicks e-Marketing, Mississauga, Ont., will feature two keynote speakers, digital marketing visionary Geoff Ramsey, CEO and co-founder of eMarketer and innovation expert Jeremy Gutsche, the author of Exploiting Chaos and host of Trend Hunter TV. Online Revealed will be immediately followed by Canada’s e-tourism conference, Canada-e-Connect, from Jan. 27 to 29, at the same location. Canada-e-Connect is the Tourism Industry Association of Canada’s vehicle for online and web-based trends, tools and technology that can help catalyze growth in the tourism sector. The program, developed by technology experts in Canada’s tourism industry specifically, is presented in association with Connecticut-based PhoCusWright, a global leader in travel industry research and strategic intelligence.

MAFSI Reports U.S. Q3 Sales Down -11.5 per cent; Canada Down -4.9 per cent
The Business Barometer of the Atlanta-based Manufacturers’s Agents for the Foodservice Industry (MAFSI) shows that Canadian foodservice equipment and supply sales declined -4.9 per cent in the third quarter of 2009, outperforming the U.S., which suffered a -11.5 per cent sales decline. By product category, furnishings sales declined -11.8 per cent in the U.S., with equipment down -2.5 per cent, tabletops fell -8.2 per cent and supplies were down -5.7 per cent. However, MAFSI reports that the U.S. results were not as severe as the second quarter sales decline, which dipped -12.8 per cent, indicating that the foodservice industry may have reached the bottom of its economic downturn. For the fourth quarter of 2009, MAFSI predicts a U.S. sales decline of -10.4 per cent.

FMI and GMA Partner For Supply Chain Conference, Jan. 31 to Feb. 2
The 2010 Supply Chain Conference, sponsored by the Food Marketing Institute (FMI) and the Grocery Manufacturers Association (GMA), will be held from Jan. 31 to Feb. 2 at the J.W. Marriott Desert Ridge Resort in Phoenix. Themed “Bringing It All Together,” this inaugural conference combines FMI’s annual retailer-oriented Supply Chain Conference and the GMA’s supplier-oriented Information Systems and Logistics/Distribution Conference (IS/LD) into one event.

Roller Grills Boost Sales For C-Stores in U.S.
According to a study by Chicago-based Technomic Inc., roller grills in convenience stores are boosting foodservice sales in the segment as a growing number of new products are developed. “Gone are the days of the shrivelled hotdog, whose origins and expiration date were unknown,” commented Technomic’s C-store foodservice program director, Tim Powell. “Today, we see C-stores with 100 per cent beef hotdogs, Johnsonville bratwursts and Ruiz Foods Tornados [available in some 60 varieties], among other branded, premium-positioned roller-grill items. ”More than 60 per cent of C-store foodservice operators in the U.S. have roller grills — second only to microwaves and coffeemakers in foodservice equipment. The grills account for approximately 15 to 20 per cent of the US$10 billion C-store foodservice market.
• Technomic reports that the typical roller-grill consumer in a C-store spends more money, rates C-stores more highly, visits them more often and is more concerned about the quality, visual appeal and temperature of the food than the average C-store foodservice consumer. Moreover, roller-grill consumers are more inclined to purchase items as part of a combo meal and also are more likely to want to substitute or alternate items in a combo meal.

Housekeeper Injuries “One of the Top Issues for 2010” — Unite Here
Of all types of hotel workers, housekeepers suffer the highest rate of injury, according to a study published in the American Journal of Industrial Medicine, by John Wiley & Sons, Inc. The study, commissioned by the international hotel workers’ union, Unite Here, and conducted by four U.S. universities, found housekeepers suffer 7.9 work-related incidents per 100 workers, such as musculoskeletal disorders and acute trauma injuries. Next in line were cooks/kitchen workers and dishwashers, averaging six injuries per 100 workers. Paul Clifford, president of the Greater Toronto Area Unite Here Local 75, told the Toronto Star, “From our experience, the findings are very consistent with what our membership in Canada has experienced. [Workload reduction among housekeepers] is always a prominent collective bargaining demand. There is indication that this is one of the top issues for 2010.”

B.C. Restaurateurs Still Hopeful of HST Reduction
British Columbia restaurants could get a break on the provincial government’s Harmonized Sales Tax (HST), due to be implemented July 1. Finance minister, Colin Hansen, who is scheduled to meet with restaurant industry executives, announced a surprise rollback of the HST late last week on new housing, raising the pre-HST ceiling from $400,000 to $525,000, after having stated that no changes would be contemplated. British Columbia Restaurant and Foodservices Association president and CEO, Ian Tostenson, has been warning that the restaurant industry will face widespread layoffs if there is no relief, since it will see little reduction in costs with the new tax while its customers will face increased provincial HST on dining bills. If an HST reduction is deemed not available, Tostenson suggests several other possibilities, including a holiday on provincial liquor taxes, reduced small-business taxes or even having the province pay part of companies’ municipal tax bills. (Click here to read more under the heading Ontario HST to Exempt Restaurant Meals Under $4.)


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