Competition has loomed over Jersey Mike’s push into Canada from the start.
The U.S. sandwich chain revealed its Canadian ambitions just over a year ago on the same day as rival Jimmy John’s. And when Jersey Mike's opened its first Toronto store in Union Station, fellow American fast-food brand Shake Shack had already set up shop a few doors down.
Ken Otto, chief executive of the Redberry Restaurants franchisee firm that brought Jersey Mike's to Canada, chalks up the rivals' similarly timed arrivals to coincidence and maintains it "didn't take any wind out of our sails."
"There's lots of room for many players in Canada," he said in an interview.
That theory is about to be tested as several U.S. companies and a few from farther afield, including Chinese crispy burgers brand Bingz and Japanese coffee chain % Arabica, expand within the Canadian market.
Jersey Mike's has promised to open 300 Canadian restaurants by 2034, while Jimmy John's will add 27 by the end of 2026. Shake Shack has 35 on the way by 2035, by which time U.S.-based Italian restaurant Fazoli’s hopes 25 will be in operation.
Food marketing experts say U.S. interest in Canada likely stems from their proximity and similar tastes, but none of that will matter if brands — new and old -- can't navigate the competition and delight diners.
"If we have 20 new restaurants open up, it doesn't mean (customers) can eat 20 times more or spend 20 times more on food," said David Pullara, a marketing instructor at York University, who has worked for Starbucks and KFC-operator Yum Brands.
"We only have so much money to spend on fast food and on food in general, and so I do think it's a zero-sum game."
To win at that game, entrants expanding here not only have to make noise as they enter a country, but also deliver the same experience customers had when visiting in the U.S. or elsewhere, he said.
That means ensuring star menu items make their way across the border, prices aren't exorbitantly higher, locations are easy to find and Canadians are aware the company is around.
Brands that head north need only look to Massachusetts-based café chain Dunkin' to see what can go wrong. While the company once had hundreds of Canadian locations, it departed in 2018, after Quebec franchisees successfully sued the company for not sufficiently promoting the brand.
Redberry Restaurants, which runs more than 220 Burger King locations and 32 Taco Bell stores, is confident Jersey Mike's won't have trouble breaking through because of its attention to detail.
The chain tops sandwiches with "the juice" — a blend of olive oil, vinegar and seasonings — and slices meat and cheese on-site by the order.
Some staff spend three months in the U.S. learning the art of sandwich making, which spans lessons on how to wrap an order without ingredients spilling out and slicing meat to the right thickness.
"That's a huge part of our success," Otto said.
While customers want freshness from their orders, Pullara argues most don't want to pay more or wait longer because of it.
When chains first enter a market, lines tend to be longer as people flock to be among the first to get a taste of the restaurant.
On opening day for the first Jersey Mike's location in Toronto, a line snaked out the store, even during hours outside the lunch rush.
The nearby Shake Shack, which hosts one of the worldwide chain's few cocktail bars, was so full it had no available seats.
Canadian stalwarts need to keep their guard up and monitor these developments as much as their own businesses, said Pullara.
"They can't let their operational standards fall. They can't let their product quality suffer. They just have to constantly be bringing their A-game," he said.
"Because if they don't, that opens up an opportunity for someone to be dissatisfied and gives them a reason to consider an alternative one day."
Once someone gives a new brand a try, Pullara said they start to compare whether they like it better than their usual fast-food chain. If they do, the incumbent chain may have lost a customer forever.
It gets even more dangerous when that scenario keeps repeating.
"If you get enough of these players, you're going to see more consolidation," Jo-Ann McArthur, president at Nourish Food Marketing, a Toronto-based advertising agency.
"That's what usually happens."
In the fight for market share, she expects new and old chains to heavily push loyalty programs, value menus, limited-time offers and Canada-exclusive menu items.
Incumbents will be able to lean on the fact that they're engrained in so many Canadians' daily routines and have vast networks of restaurants with a strong Canadian supply chain.
Because new brands tend to have smaller store counts, they don't always build out a whole Canadian supply chain. Instead, they often ship in product from the U.S., McArthur said.
Jersey Mike's sources ingredients all throughout North America, Redberry's Otto said.
Another advantage homegrown brands have, McArthur said, is that they can use the "buy Canadian" sentiment emerging from the Canada-U.S. trade spat to sway diners into visiting their establishment.
But Pullara isn't so sure it will do much to tip the scales in the fast food battle.
"If you're doing errands and you say, 'It's lunch time. I'm hungry,' I'm not sure how many people's first thought is 'Let's find a Canadian place to eat,'" he said.
"I don't think anybody's thinking, 'Let's not eat at U.S. chains.'"
https://ca.finance.yahoo.com/news/big-ambition-big-competition-u-110012903.html
