Week on Aug. 23, 2010



MTY Food Group to Acquire 95-Unit Groupe Valentine
Montreal-based MTY Food Group Inc., through its MTY Tiki Ming Enterprises Inc., has entered into a binding agreement to buy all of the shares of the 95-unit Groupe Valentine Inc. — a quick-service restaurant chain specializing in hotdogs, fries and hamburgers — for $9.3 million in cash. The transaction is scheduled to close in September. The acquisition will include seven real-estate properties, including Valentine’s head office and an 8,300-square-foot distribution centre. Valentine has 86 franchised and nine corporate-owned restaurants with annual system sales of $29 million. The transaction will be funded from MTY’s cash on hand. “This deal will expand our current franchise business and is in line with our strategy to acquire profitable franchise systems,” MTY founder and CEO, Stanley Ma, is quoted as saying in the Montreal Gazette. “Valentine will complement our existing banners, which will benefit from Valentine’s experience in the quick-service industry.” MTY spokesman Jean-Francois Dube also commented on the acquisition in a CBC News report, saying, “There’s a fit in that Valentine is located in strategic and geographical regions where MTY is not currently present. So they can expand the other banners in areas where Valentine is now. And, they can migrate to Ontario.” Dube added that MTY has a fast-food hamburger and fries brand called Franx Supreme, which is marketed as “the French Canadian food specialist.” He admitted that, while it is profitable, Franx has not grown. He said both Franx and Valentine will be kept operating in the short-term but could be consolidated at a later date.

In its most recent financial report, MTY Food Group reported for the second quarter, ended May 31, that revenue rose 51 per cent to $17.3 million, reflecting higher franchise fees and royalties generated by outlets opened in the last 12 months and from last year’s $16.5-million acquisition of the 490-unit Country Style in Ontario. Earnings were $3.8 million, up 31 per cent from $2.9 million a year earlier. Same-store sales were marginally lower in the quarter. MTY added 79 restaurant units in the first half of fiscal 2010 and closed 44. MTY Food Group currently operates 1,605 quick-service restaurants, primarily franchised, across Canada with 25 banners of which 21 are fully owned and four are under exclusive license agreements. Banners include Country Style, Cultures, Tiki-Ming, Madina Mediterranean Cuisine, Thai Express and Yogen Fruz.

Buffalo Wild Wings Coming to Canada
Buffalo Wild Wings Inc. — a casual-dining chain that specializes in wings, beer and sports — is coming to Canada. The first two Canadian franchise agreements for the Minneapolis-based sports grill and bar have been signed. “We are a large brand now in the United States, and it seemed to make sense to look at the international market,” Sally Smith, company CEO, told foodserviceandhospitality.com, while visiting Toronto to finalize lease agreements for Ontario locations in Oshawa and Mississauga. “Of course, we looked to our neighbours to the north and thought, Canadians like wings, Canadians love beer and they love sports, so [there’s] a lot of the same demographics that we have throughout the States.” The typical Buffalo Wild Wing location runs at almost 6,000 square feet and offers seating for 300 sports fans who can enjoy the game on as many as 30 large-screen televisions while indulging in New York-style chicken wings, burgers, apps, salads and a wide selection of beer. Plans have been mapped to open 50 to 70 units across the country within the next five years, with the first units set to open in Ontario in spring 2011.

First Western Bâton Rouge Franchise Opens in Calgary
The first Bâton Rouge Restaurant and Bar in Western Canada has opened in the new development of Quarry Park, located in the southeast region of Calgary. A franchise of Imvescor Restaurant Group, Moncton, N.B., the 7,600-square-foot standalone restaurant features rich wood and red leather, a pressed tin ceiling and a brightly tiled bar. The franchisees are Maria Kostaras, Paul Mason and Jordan Thomson with chef Eric Deletroz in the kitchen. “As a Canadian restaurant brand, Bâton Rouge is thrilled about its first restaurant opening in Western Canada,” said Kevin Friesen, chief operating officer. “Bâton Rouge restaurants is currently offering interesting investment prospects as well as stimulating franchising opportunities. People can soon expect to see the Bâton Rouge name stretch from coast to coast.” Imvescor owns franchised and corporate stores throughout Canada, under four brands: Pizza Delight, primarily in Atlantic Canada in the family/mid-scale segment; Mikes and Scores restaurants, chiefly in Quebec in the casual-dining, take-out and delivery segments; and Bâton Rouge, which caters to the casual-dining segment in Quebec and Ontario.

Coolbrands to Merge with U.S. Foodservice Hygiene Company Swisher
Coolbrands International Inc., Markham, Ont., has agreed to merge with Wayne Huizenga’s hygiene solutions company, privately-held, Swisher International Inc., in a share-swap deal worth about $103 million. The deal is expected to close in November following a shareholder vote; when completed, Coolbrands’ shareholders will become 52 per cent owners of Swisher, and the merged company will be public. North Carolina-based Swisher focuses on foodservice, health care and retail hygiene and sanitation. Coolbrands, which originally operated under the Yogen Früz banner, has been sitting with some US$65 million of cash for the past three years after selling its ice-cream business to Nestle SA. Huizenga, who has raised several companies, including Blockbuster Inc., Waste Management Inc. and AutoNation Inc., to Fortune 500 status, will become chairman of the new company. His business partner, Steve Berrard, will become the company’s new CEO. Under terms of the deal, all outstanding shares of Swisher will be exchanged for 57.8 million shares in CoolBrands.

Sysco Reports Quarterly Sales Gains
Houston-based Sysco Corporation finished its 2010 fiscal year July 3, recording an adjusted 5.8 per cent increase in sales to US$10.3 billion for the fourth quarter. Operating income was $584 million in the fourth quarter, an increase of 0.4 per cent, compared to the prior year period. For the full year, sales of US$37.2 billion were down 0.9 per cent, compared to the prior year. Full-year operating income of US$2.0 billion increased 3.3 per cent. “Volume trends improved as the year progressed, and we executed at a high level both in supporting our customers and improving productivity in all aspects of our business,” Bill DeLaney, president and CEO, said. “While the extent, pace and consistency of the economic recovery is not clear, the foundation of Sysco’s business is strong.”

Encouraging News at Krispy Kreme
Krispy Kreme, Winston-Salem, N.C., “is writing a new chapter, largely out of Wall Street’s eye: a profitable and growing restaurant company,” writes financial writer David Milstead of The Globe and Mail. Krispy Kreme’s CFO, Doug Muir told attendees at the recent annual meeting this year’s profit “is not going to be breathtaking, but it should be another step in the right direction.” He added, “I think we’ve reached an inflection point at which things are starting to get better instead of getting worse.” The company still operates three locations in Canada, one in Mississauga, Ont. and two in Quebec (Ville de Quebec and Greenfield Park.). At that annual meeting, CEO Jim Morgan said, that by closing unprofitable locations, Krispy Kreme boosted cash flow, which it then used to cut debt, from US$123-million to the current US$43-million. With about US$20-million in cash on hand, net debt is roughly US$23-million. First-quarter profits of US$4.5-million more than doubled the net of US$1.9-million in the prior-year quarter despite a revenue decline of 1.2 per cent to US$92.1-million. Same-store sales rose 3.4 per cent, the sixth-consecutive quarterly increase.  

Urban A&W Concept Launches in Vancouver
The Vancouver-based A&W Food Services of Canada Inc., has launched a new national concept for urban areas. The idea of its new “urban A&W concept” is to bring the brand to a new group of customers living and working in city centres. According to a company release, the launch of the first location, at 778 Robson Street in Vancouver, will soon be followed by more openings in the city as well as some sites in Toronto and Montreal. “We are excited about this new A&W restaurant concept for our urban customers,” says Paul Hollands, A&W president and CEO. “We are committed to providing A&W’s great taste, quality and service to a new generation of busy, fun-loving customers.” In addition to its Burger Family, A&W’s urban restaurants will offer salads and several new chicken sandwiches as well as free Wi-Fi, self-serve ordering kiosks and a significant waste-reduction initiative. As part of a strategic commitment to reduce waste, the new restaurants will feature environmentally conscious packaging such as reusable french-fry baskets, smaller food wrappers, reusable frosted mugs and stainless steel cutlery instead of paper or plastic wares.

Sobeys to Open Head Office in Stellarton, N.B.
Grocery retailer Sobeys, a division of Empire Company Limited, Stellarton, N.B., has announced the construction of its 55,000-square-foot, three-storey office building in Stellarton, across the street from the current head office. The original building was constructed as a warehouse in the 1930s and became the company headquarters in 1946. The new building, which is expected to finish by September 2011, will feature more efficient use of space, improved meeting and teleconferencing facilities, energy-efficient natural lighting, solar hot-water technology and reflective roofing to reduce the need for air conditioning. Sobeys operates more than 1,300 stores across Canada under the Sobeys, IGA, Foodland, FreshCo, Price Chopper and Thrifty Foods banners. Recently, Sobeys opened a new high-tech 500,000-square-foot Ontario Distribution Centre in Vaughan, Ont. The state-of-the-art automated facility is featured in a video on the company website.

NCCR President to Retire in December
The National Council of Chain Restaurants (NCCR), Washington, has announced Jack Whipple, president, will be retiring at the end of the year, after 34 years of service in the industry. The 40-year-old NCCR is a division of the National Retail Federation (NRF), often described as the world’s largest retail trade association. NCCR members include many of the largest and most respected quick-serve and casual-dining companies. Prior to joining NCCR in May 2006, Whipple spent 25 years with McDonald’s Corporation, holding several government-relations positions, including director of state government relations and vice-president of government relations. “On his watch, NCCR has become the preeminent trade group representing chain restaurants,” said NRF CEO, Matthew Shay.

Pizza Pizza’s Customers Play Name Game
Pizza Pizza Canada is challenging customers in three Ontario test cities, Kitchener, Waterloo and Cambridge, to name its new cheesy garlic bread. “The Pizza Pizza team always appreciates the feedback we receive,” says Pat Finelli, chief marketing officer for Pizza Pizza. “That’s why we’re asking our customers to submit creative and cheesy names for their chance at bragging rights while enjoying the taste test and brainstorming with friends.” Free samples of the hand-stretched bread, which is covered in garlic, herbs and a four-cheese blend, are being handed out with any pizza that’s more than $10; customers are asked to submit their name suggestions at pizzapizza.ca/cheesyname, until Sept. 12. A team of judges will choose the winner who will receive a $1,000 cash prize and year supply of the cheesy bread.

DiRōNA to Celebrate 20th Anniversary in Toronto
Program highlights for the Distinguished Restaurants of North America (DiRōNA) 20th anniversary celebration are now posted on the organization’s website. The Toronto event will be held from Sept 19 to 21 at the Fairmont Royal York hotel. “Attendees will be treated to unforgettable cuisine and a magnificent experience,” said DiRōNA co-founder and Hall of Fame Award winner, John Arena. The event will include two gala dinners, with the first prepared by 2010 DiRōNA Hall of Fame inductee, Vancouver chef Pino Posteraro, and the second — a  Japanese-themed traditional Kaiseki dinner — by Kimio Nonaga, winner of Iron Chef Japan in 2002. DiRōNA speakers will include: Michael Beckley, senior vice-president of Development, Marriott Hotels & Resorts Canada; Rob O’Neill, chairman, O’sNeill Hotels & Resorts Ltd.; Ed Romanowski, president and CEO, Bellstar Hotels & Resorts Ltd.; Michael McAdams, president, Environics Research Group Ltd.; and Lyle Hall, managing director, HLT Advisory Inc.

Harvey’s Hamburger Named
After more than 19,000 nationwide entries in its Burger-with-Your-Name-On-It contest, Harvey’s (Canada), Vaughan, Ont., has named its new premium burger the Great Canadian. The patty, which is personalized by each customer before being topped with a bistro-style bun, was named by Chris Hossein of North York, Ont., who won the contest, $10,000 and a year’s supply of Great Canadian burgers. From June 21 to July 19, Canadians logged onto a Harvey’s Facebook page to submit their favourite names. A panel of judges narrowed the entries down to the top three submissions, with Great Canadian being named the winner after a national run-off vote. Amy Rawlinson, senior brand manager, Harvey’s Marketing said “Chris’ winning entry really speaks to the connection Canadians have with Harvey’s and our 50-year heritage of serving our best-tasting burgers to Canadians. We think it’s a great fit.”

June Travel to Canada Up 1.5 per cent to 2M trips
Travel to Canada increased 1.5 per cent to 2.0 million trips in June from May, while the number of trips by Canadian residents abroad declined 1.1 per cent. U.S. travel to Canada rose 1.4 per cent in June, compared to May. Same-day car trips by American residents increased 1.1 per cent, while overnight travel by U.S. residents to Canada rose 1.7 per cent. The largest increase took place in overnight plane travel, which increased 4.4 per cent from May to June. Residents of countries other than the United States took 374,000 trips to Canada in June, up 1.6 per cent from May.

Marriott Courtyard Planned for Edmonton Airport
A new 189-room Marriott Courtyard Hotel has been announced as part of the extension of the Edmonton International Airport (EIA) to be completed in the fall of 2012. Platinum Investments Ltd., announced that the eight-storey, 190,000-square-foot hotel will feature regular, executive and presidential suites, 10,000 square feet of banquet and meeting facilities, a full-service restaurant and lounge, fitness facilities, an indoor pool and whirlpool spa, wireless Internet services and airline service check-in. The hotel will connect to the airport via a heated pedway. Platinum spokesman Rahim Meghji said the company was excited and honoured to be partnering with EIA on such an important project. Platinum Investments Ltd., is an Edmonton-based family run company that owns and operates high-quality hotels and industrial properties in the region.

Realstar Opens G2 Prototype Days Inn
Realstar Hospitality, Toronto, has announced the opening of its first G2 Days Inn prototype in Regina, the new-build 99-room Days Inn – Regina Airport West. The smoke-free hotel features rooms equipped with a microwave, mini-fridge and a 42” flat-screen LCD TV. Hotel facilities include a fitness centre, a free Daybreak Café breakfast, an indoor pool with waterslide and free parking. “Days Inn – Regina Airport West is a perfect addition to our existing portfolio of hotels,” said Don Rosten, CEO of d3h Hotels Inc., and part owner of this and five other Days Inn locations. “The G2 prototype is designed to meet the needs of today’s travellers, providing them with a new standard in affordable lodging. We couldn’t be more pleased to welcome this new hotel to the brand,” added Irwin Prince, president and COO, Realstar Hospitality.


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