Exploring the growth of Canada’s restaurant industry

Emerging trends in restaurant financing and development in Canada.

Recently, CWB Franchise Finance co-hosted exclusive networking and learning events in Vancouver and Toronto with Toronto Stock Exchange and The NPD Group, a market research firm that offers consumer shopping trends and market information. These sessions brought together senior level restauranteurs, owners and operators in each market to discuss a number of important trends and recent developments in the restaurant industry.

When it comes to restaurant financing and development in Canada, there are emerging trends such as changes in growth strategies and lenders’ approaches, shifts in regards to sponsorship and the capital stack, as well as an evolution of the “four-wall” experience (e.g., full service consistency with a unique local flavor, modernizing image through revitalization programs and growth in non-traditional formats). This also includes a rise in more specialized lending targeting smaller chains that are more regional or have higher growth aspirations. “This lending and capital is also available earlier in that cycle than ever before,” says Jacob Mancini, Senior Manager, Restaurant, CWB Franchise Finance.  

In addition, there’s more flexible debt and equity available within the restaurant space. Jacob observes that this is due to the fact that it has become more targeted. For example in the form of development loans that target growth and new acquisitions, as well as loan facilities targeting shareholder buyouts or broader organization restructuring.

Within the consumer sector, there is considerable momentum in regards to positive investor sentiment, initial public offerings and additional trading activity, including a subsequent trickle down effect into the restaurant sector.

“We are witnessing solid investor interest, positive investor returns and significant capital raised – approximately $1.7 billion in the restaurant sector on both Toronto Stock Exchange and TSX Venture Exchange in the last three years,” says Ryan Thomas, Head of Business Development for the Diversified Industries at TMX Group.

Robert Carter, Executive Director, Food Service for The NPD Group notes that, overall, the marketplace is stable with $50 billion in spending with not a lot of dramatic growth dollar wise. “So it’s setting up an environment where there’s a ‘steal-share game’ that’s leading to activities like consolidation,” says Robert. He further adds that the emergence of the digital platform, such as digital apps, is another significant trend as consumers seek greater convenience along with the millennial generation as being an important factor in today’s restaurant market.

In the future, restaurant operators need to be much more strategic when it comes to understanding the growth potentials in the market end consumers. Experts don’t expect the market to decline but also don’t believe there will be 5 or 10% level growth either – it will be a relatively flat market. Moreover, when you’re in a market environment that’s not significantly growing, it becomes even more critical to ensure every customer has an outstanding experience – every time. And with this, it’s also important to make sure you have a good understanding of what your brand represents and how you differentiate from your competitors.

CWB Franchise Finance will be hosting similar events this year and into 2018 leading up to the 8th Canadian Restaurant Investment Summit in September 2018 in Toronto. This conference will focus on bringing together restaurant owners and operators, along with key suppliers and partners from across the industry. There will be presentations and sessions focused on industry trends and important segment issues, as well as tremendous networking opportunities. We look forward to seeing you there!