When the Kentucky Fried Chicken outlet closed in Ottawa’s Hintonburg neighbourhood last May, community members held a mock wake at a tavern next door. One resident wore a chicken mask; others read poems about the departed. The event turned serious when a church leader reminded the flock that KFC had been an affordable dining option for the poor before the area gentrified.
One year later, local burger joint Hintonburger has moved into the old KFC outlet and business is booming. Customers now pay $7 for a hand-made burger instead of KFC’s “Toonie Tuesday” specials but “this is definitely an improvement and great news for the neighbourhood,” said Jeff Leiper, the wake’s organizer.
It’s a similar story at Mia’s Indian Cuisine, which opened earlier this month to brisk business at another former KFC outlet in Ottawa’s west end. The exterior bucket sign is gone, the interior is completely renovated, and the aromas of bhaji and tandoori have replaced the smell of deep-fried poultry.
“We made it 10 times better,” said Mostofa Mia, one of four children of restaurant owner Samsu Mia.
Across Canada, a host of restaurateurs are proving there’s life after the local KFC kicks the bucket.
In March, 2011, Priszm Income Fund, the largest Canadian franchisee of the U.S. fast-food chain, filed for bankruptcy protection. About 15 per cent of Priszm’s 428 KFC outlets have since been abandoned.
Priszm’s largest landlord, Scott’s Real Estate Investment Trust , with 188 KFCs, was stuck with 44 disclaimed KFC leases as the receiver sold off the fast-food operator’s assets.
But 14 months later, Scott’s has leased 34 of those outlets to new tenants, ranging from large U.S. chains to single-location eateries. It expects to fill the rest within a year.
“We’re ahead of plan,” said Scott’s chief operating officer Kevin Salsberg.
The reclaimed outlets are in good locations and have taken on average four months to be renovated and re-leased, faster than expected. The changeovers have cost Scott’s a 5- to 10-per-cent hit on rents, but “we’re thrilled with the results,” he said. “We’ve done a good job keeping occupancy high and backfilling with excellent tenants.”
Priszm’s wind-up has also removed uncertainty hanging over Scott’s, whose stock has mostly recovered after falling by 39 per cent in 2011.
Scott’s and Priszm used to be part of Scott’s Hospitality, founded by the late entrepreneur George Gardiner, which opened its first “Scott’s Chicken Villa” under the KFC banner in 1962 and owned hotels, Black’s photo shops, the Manchu Wok fast-food chain and 6,000 school buses before being dismantled in the 1990s. Entrepreneur John Bitove bought the KFC operation in 1999 and split the restaurant and real estate assets into separate businesses.
While Priszm endured years of disputes with KFC owner Yum Brands Inc. and was squeezed by costly renovations demanded by the franchisor, Scott’s bought new retail buildings and diversified its tenant base.
Shoppers Drug Mart now leases 32 per cent of its space, and the variety has increased as new restaurants have leased the disclaimed KFC outlets. Dixie Lee Chicken has taken 11 of the outlets while other KFC franchisees have signed up for five. Pizza Pizza, Starbucks, Subway and A&W have taken locations, along with the independents such as Burger Palace in Olds, Alta., Boss Hog’s Smokin’ Chophouse in London, Ont., and China Factory in Windsor, N.S.
Some are completely changing the real estate while others are keeping some of the vintage look. In Carleton Place, Ont., Dixie Lee removed the signature KFC parapet but kept the red-and-white awning.
As for Hintonburger, it has drawn some double-takes by passersby since it moved into the former KFC outlet in January, from a tiny nearby shack it had outgrown. The owners spent $100,000 on interior renovations, removing the takeout counter and adding a dining area and bathroom. At first they left the exterior almost untouched, with its weather-beaten cedar shingles and white gable. Now they are planning to change the roof and install a new sign. While some residents are sentimental about the old KFC bucket, its days are numbered.
“I’d like to get rid of that for sure,” said Hintonburger co-owner Thomas Williams “We still get customers confusing us with a KFC. Some people are disappointed. They’re looking for a nine-piece bucket.”