Should you fancy a burger and crinkle-cut fries, U.S. fast-casual joint Shake Shack is dipping a toe into the Canadian market — however its success may rely upon clients prepared to fork out larger costs.
The chain is beginning with a lone Toronto location, which opens Thursday, with plans to develop throughout Canada with 35 areas by 2025.
“Canada’s been on our radar for about eight years or so,” stated Michael Kark, president of worldwide licensing at Shake Shack, in an interview with CBC Information.
He famous that Shake Shack first examined Canadian waters in 2017 with a pop-up, however stated the chain was taking its time with an entry right here till it discovered the suitable native companions. Toronto-based companies, like chocolatier ChocoSol and bakery Brodflour, are amongst its native suppliers.
“We did not need to comply with those that have are available in and handled [Canada] just like the 51st state,” he stated.
The corporate was initially conceived in New York in 2001 as a high-end sizzling canine cart earlier than it opened its first restaurant in 2010. It now has over 500 areas worldwide.
There is not any denying that Shake Shack is promoting a barely pricier burger — its signature ShackBurger goes for $8.49, or $12.49 for a double patty.
Kark stated the upper prices are partly on account of Shake Shack sourcing a few of its substances domestically. That additionally makes it stand out from different chains — it is “extra like a fine-dining restaurant than a quick-serve restaurant.”
The corporate will serve a handful of things distinctive to its Toronto location, like a maple salted pretzel shake, and it’ll additionally diverge from different fast-casual joints by serving Ontario wine and native beer from Toronto-based Bellwoods Brewery.
“We expect that we will ship an expertise,” stated Kark.
A U.S. burger joint in Canada requires ‘good planning’: analyst
Canada has been a sizzling ticket for premium informal eating places like Blaze Pizza, Chick-fil-A, Chipotle and now Shake Shack, in keeping with Robert Carter, an trade analyst with the StratonHunter Group.
Eating places in that quick-service class signify about $40 billion to $50 billion of the $90-billion restaurant market in Canada, which is in any other case dominated by main fast-food chains like McDonald’s.
“In occasions of financial uncertainty, there’s some shifting occurring,” stated Carter. “Perhaps individuals aren’t going out to the higher-end eating places as a lot, however the fast service does fairly effectively.”
Nonetheless, Canada has seen some colossal failures.
Asian fusion restaurant P.F. Chang’s is standard within the U.S., however its few areas in Canada “sadly failed miserably,” stated Carter — partly on account of a scarcity of demand for such a sequence in a various market the place smaller eating places specialise in ethnic cuisines. And a number of other Carl’s Jr. areas have closed throughout Canada lately on account of points with franchisees.
The important thing to operating a profitable U.S. chain in Canada, stated Carter, comes all the way down to a robust understanding of the market.
“It requires good planning, and requires [a] good Canadian associate to assist determine and just remember to perceive the market.”
Shake Shack is working with Canadian non-public funding companies Harlo Leisure and Osmington, which Kark stated has made the chain’s entrance into Canada “fairly clean.”
Carter famous that the majority eating places are reluctant to cross larger prices onto their clients — as a substitute, manufacturers will introduce numerous reductions to drive site visitors whereas nonetheless providing a deal.
That dynamic is enjoying out within the U.S. proper now, as McDonald’s, Burger King and Wendy’s provide equally packaged offers within the $3 to $5 US vary. CBC Information reached out to a number of chains to see if related offers had been provided in Canada; Wendy’s was the lone chain to supply a $5 breakfast deal.
“That is really a pass-through from the precise prices of meals, the price of labour, the price of lease. So it is turning into a way more tough surroundings to achieve success.”
Shake Shack can be hoping to face out by providing alcohol. However as Carter notes, Canadian customers are consuming much less and alcohol gross sales by quantity have been on the decline in Canada, having slipped by 1.1 per cent in 2022-23 for the second consecutive yr, in keeping with Statistics Canada.
What does that imply for Shake Shack? “I feel they will shortly understand that it doesn’t must be a elementary a part of their enterprise mannequin,” he stated, noting that youthful clients are extra fascinated by “fancy drinks,” just like the custard milkshakes that it provides.
The chain’s plan to open about 35 shops throughout the nation will not have a lot of an influence on different established manufacturers, Carter stated.
“It’s going to be extra among the mom-and-pop unbiased burger locations that will really feel among the pinch.”
