NEWSLETTER :

Wendy’s Becomes Latest U.S. Fast-Food Chain to Plot Outlet Growth in Canada

 

Wendy’s is the latest U.S. fast-food chain eager to serve more burgers and fries to hungry Canadian diners who are spending more money than ever on quick-service food, a phenomenon that could lead to more demand for restaurant real estate in Canada's most populous areas within hours of the American border.

Wendy’s, the third-largest U.S. hamburger chain behind McDonald’s and Burger King, said it is aggressively seeking franchisees to expand throughout Quebec, the second-most populous province in Canada. Wendy’s already operates 12 restaurants in Quebec, with a 13th scheduled to open later this year.

This summer, rival fast-food purveyor Chick-fil-A Inc. said it would open its first restaurants outside the United States in Toronto, with plans to open at least 15 restaurants within five years. 

Over the past three years, Canadians have increased the percentage of money they've spent at restaurants and bars, according to an analysis by restaurant consultant Aaron Allen & Associates, which also noted that Canadians spend just 36 percent of their food budgets eating out, compared with 50 percent of Americans.

"The growth is impressive, but there’s still room for expansion," the Aaron Allen report said.

Numerous U.S. fast-food chains operate restaurants in Canada, according to Statista, a market research statistics website. Subway has the most locations, at 3,200, followed by McDonald’s, A&W and Dairy Queen.

Wendy’s entered the Canadian market in 1975 and operates 360 restaurants throughout Canada. The company said a "significant" portion of its future growth in the country will be in Quebec, which counts Montreal as its largest city with 1.7 million residents. 

"We’re looking at the profitability of our restaurants and year-over-year sales growth, and it’s been a phenomenal turn for Canadians eating fast food," said Angela Coppler, Wendy’s senior director of development and franchise recruiting for North America.

Wendy’s plans to operate at least 50 restaurants in Quebec within five years, she said, noting that rival McDonald’s has more than 300 locations there.

The typical Wendy’s in the U.S. does $1.6 million in business annually. That figure rises to more than $2 million in Canada and is even higher in Quebec, she said. Its Canadian menu is similar to its U.S. version, with a few exceptions. In Canada, it offers poutine fried with bacon, a portabella mushroom burger and chili cheese nachos. None of those are available at its U.S. locations.

Wendy’s, based in Dublin, Ohio, also recently unveiled a new, smaller building design for its restaurants, which "provide more access to real estate and reduce investment" for franchisees. At 2,000 square feet, those restaurants are 50 percent smaller than a traditional Wendy’s, and are built to be expanded to up to 6,000 square feet, Coppler said.













Chick-fil-A, based in Atlanta, is banking on Toronto, which is in the province of Ontario west of Quebec. Company President and Chief Operating Officer Tim Tassopoulos cited the city’s "vibrant restaurant culture" as a reason for launching its Canadian operations there.

Industry trade group Restaurants Canada said restaurants in Toronto generated $33 billion in sales last year.

Like Wendy’s, the company also uses a franchise model. Net Lease Advisor -- which helps investors identify opportunities in single-tenant properties -- said Chick-fil-A restaurants are typically located at the front of major shopping centers.

Coppler isn’t surprised at the growing popularity of the Canadian market. According to Restaurants Canada, dining at a restaurant is the No. 1 preferred activity in the country for spending time with family and friends.

Fifty percent of customers dine inside Wendy’s Canadian restaurants, compared to only 30 percent in the United States.

"Canada is appealing to any food brand, and we’re seeing a lot of brands looking at Canada for growth," she said. "It’s a little different culture, and Canadians really enjoy eating out."