Restaurant consolidation continues
Cara’s acquisition of The Keg leaves three dominant operators with increasing market share
Cara Operations Ltd.’s deal to buy The Keg restaurants is the latest consolidation move in an industry dominated by three operators that account for one-sixth of restaurant sales in Canada.
Cara, MTY Food Group Inc. and Restaurant Brands International Inc. brought in an estimated $10 billion from a total $60 billion spent at restaurants last year, according to figures from market-research firm NPD Group.
And experts suggest the three are likely to see their market share grow as the industry consolidates further — which could benefit consumers, but see some independent eateries disappear from the competitive landscape.
“They are the three largest restaurant consolidators in the marketplace,” said Robert Carter, NPD’s executive director of food service.
Together, they collectively operate thousands of restaurants in Canada under a variety of banners.
Cara — now the country’s largest full-service restaurant player — runs about 1,200 locations, including Swiss Chalet, Harvey’s and East Side Mario’s.
Canada’s food court king, MTY, owns more than 2,450 locations, with brands that include quickservice staples like Country Style, Mr. Sub, Manchu WOK, Extreme Pita, Pinkberry and Villa Madina.
Meanwhile, RBI — the parent company of Tim Hortons, Burger King and Popeyes Louisiana Kitchen — operates an estimated 4,100 restaurants in Canada.
As the restaurant market is relatively flat, said Carter, restaurant operators are focused on growing their portfolios by bringing established chains into their fold.
In a move telegraphing the intended focus of its portfolio, Cara sold food court staple Manchu WOK to rival MTY in 2014. It also acquired the Pickle Barrel late last year and rotisserie chicken joint St-Hubert the year prior.
RBI, which formed from a merger of Tim Hortons and Burger King, expanded its portfolio by taking over fried chicken brand Popeyes last year.
MTY closed out 2017 by acquiring Im vescor Restaurant Group Inc. — a franchise and licensing business with five banners: Baton Rouge, Pizza Delight, Scores, Toujours Mikes and Ben & Florentine.