Why so many US fast food chains are coming to Canada

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In relatively short order, Canada has become a hotbed for fast food expansion from the U.S.

Shake Shack opened its first Canadian location in Toronto last week, with plans for 34 more restaurants by 2035. Sandwich shops Jimmy John’s and Jersey Mike’s are also among the American chains with sights set on the Canadian market.

The Financial Post breaks down which chains are making a run for the northern border, and why they believe Canadians have a growing appetite for fast food.

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Which chains are coming?

• Shake Shack: The New York City-based burger chain, which started as a hot dog cart in Madison Square Park in 2001, opened its first Canadian location on June 13 in downtown Toronto. Its Canada-only menu items include the “Maple Salted Pretzel Shake” and “I Heart Butter Tart Concrete.”
• Jersey Mike’s: In January, Jersey Mike’s announced an agreement to bring 300 of the sandwich shops to Canada by 2034, beginning with five new locations by the end of this year. The 68-year-old submarine sandwich brand already has two Canadian franchises: in Kitchener and London, Ontario.
• Jimmy John’s: Jimmy John’s, founded in Illinois in 1983, announced in January that it would open its first Canadian location in mid-2024 but offered few other details.
• Crumbl Cookies: The Utah-based Crumbl opened its first Canadian outpost in Edmonton in 2023 and plans to open at least five more in the region.
• Insomnia Cookies: Launched as a cookie delivery service at a university campus in Philadelphia and known for its late-night offerings, Insomnia opened its first Canadian location in Toronto last September. It has since opened a second in Kingston, with plans for another four in Ontario by the end of the year.
• Freddy’s Frozen Custard & Steakburgers: In December 2023, Kansas-based Freddy’s announced plans to open five locations in Alberta.
• Fogo de Chão: The Brazilian steakhouse chain Fogo de Chão opened its first Canadian location in Vancouver in 2023 and will launch nine more in the country, including two in Toronto and Montreal this year.

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What’s behind the expansions?

For one, Canada’s population is booming, having recently surpassed 41 million residents on the back of ambitious immigration policies that will bring half a million people a year through 2026 to help offset the country’s aging workforce.

Canada’s immigration policy is one of the main reasons McDonald’s has made Canada a focal point of its expansion plans. The iconic burger chain plans to add 10,000 new locations globally over the next four years, with Canada among its priority countries.

Canada is one of my top markets

Jill McDonald

“Canada is one of my top markets,” Jill McDonald, president of McDonald’s international operated markets, told investors in December 2023. “Looking at the shift in some of the population that’s going on, we definitely see significant opportunities for growth in Canada, across the country.”

Michael Kark, chief global licensing officer of Shake Shack, said his company has been looking to move into Canada for a while. “We have been eyeing this incredible opportunity in Canada for quite some time and are elated to have found exceptional partners to serve Shack classics and bespoke Canada-exclusive items to our sophisticated neighbours to the north,” he said in a statement back in 2023.

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Michael Haley, president and managing director of international for Inspire Brands, Jimmy John’s parent company, also emphasized Canada’s growth as an impetus for bringing the sandwich chain north.

“Canada is one of the largest sandwich markets in the world,” he said in a statement to the Financial Post. “We are excited to launch the brand in Canada with Foodtastic — a leading Canadian restaurant franchisor.”

How much is the market growing?

The Canadian Franchise Association — citing data from Statista — reports quick service restaurants reached an all-time high market size of US$33.6 billion in 2022, a 22 per cent increase from a year prior.

Meanwhile, in the 12 months leading up to November 2023, these restaurants attracted a whopping 825 million visitors, a 28 per cent climb year-over-year. August and September 2023 were notable outliers, with year-over-year growth at 52 and 47 per cent, respectively.

“Canadians have become more strategic in where they purchase food due to rising inflation and the reduction of discretionary income, causing financial vulnerability to become a key driver in where customers choose to shop,” the article from the Canadian Franchise Association states.

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During the pandemic, fast food overtook full-service restaurants as the top dining-out option among Canadians. According to a Statscan report, in 2021, limited service eateries (which includes fast food and coffee shops) saw record-high sales and profit margins, at $33.6 billion and 6.9 per cent respectively. While sit-down restaurants appear to be making a comeback, fast food remains the go-to choice in times of economic uncertainty.

How successful have other major expansions been?

The fried chicken chain Chick-fil-A made a successful foray into Ontario in 2019, and in February the company announced plans to add 20 restaurants in Alberta, beginning with two locations in Edmonton and one in Calgary. Other recent arrivals, however, haven’t been so lucky.

P.F. Chang’s China Bistro expanded into Canada in 2012, but filed for bankruptcy protection three years later, citing high food and operating costs.

Carl’s Jr. moved into Canada in 2011, with locations across the country, but most of those outside Alberta have since closed.

Krispy Kreme, the once heavily-hyped donut chain, has had a rocky relationship with Canada. It launched here in 2001 with plans for 40 locations, but was down to just six by 2015. Now, the company is growing its Canadian presence again.

More recently, Wahlburgers closed its downtown Toronto location citing a decision that “presented itself organically.” Its Toronto airport restaurant remains open.

• Email: bcousins@postmedia.com

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