There’s a track record that bodes well for Christian Bullock – he’s been down this road before. Nonetheless, to launch a new restaurant concept is to run, headlong, into a sector fraught with failure, slim margins and fierce competition.
But this is Alberta. And that helps.
The province has long been a seeding ground for Canada-wide restaurant concepts, including dine-in chains such as Boston Pizza, Earls, Joey and Moxie’s, and take-out chains such as Booster Juice. It’s not a coincidence. Alberta boasts low taxes, a booming economy and a population that in 2011 spent, on average, $2,453 on restaurants per household, more than any other province, making it an attractive place to do business. With a profitable base and a refined model, the chains can then spread nationally.
But it’s still a risky business. A 2005 Cornell University study found that just over half of restaurants fail within the first three years, with the rate for independents slightly higher (at 61 per cent) than for franchised chains (57 per cent). And boom times aren’t all good – restaurant owners face higher wages and low unemployment in Alberta, where staff come at a premium.
Mr. Bullock, 38, knows this all as well as anyone. He’s about to co-launch his fourth brand in Alberta.
“[Alberta is] an amazing environment to do business, in many ways. From obviously a great economy – people have money to spend – but most importantly the client is, for us, some of the best in the country,” said Mr. Bullock, a Vancouver resident.
With partners, he founded The Canadian Brewhouse, a pub chain that now has nine Alberta locations, in 2001; Wok Box, a fast-food Asian fusion chain that now has 62 locations, in 2004; and Famoso, a pizza concept with 15 locations, in 2007. Now comes another project, a pub dubbed Butcher, Baker, Fresh Beer Maker set to open this year. And he had no hesitation about where to launch – Edmonton.
Alberta customers have money to spend, and are more forgiving – or less discerning – when it comes to the stumbles of a new restaurant, he said. “Maybe it’s because they’re used to growing chains because there have been so many that have come from Alberta.”
Mr. Bullock is the latest in a long line of entrepreneurs to find success starting a restaurant in the province. Among them is Earls proprietor Stan Fuller, another Vancouverite who said the booming Alberta economy has allowed restaurants to thrive.
“Whenever you get growth because of the energy and a strong economy, people have more jingle in their jeans. And because they want to go out more, they do go out more,” Mr. Fuller says.
His father bought his first A&W in Edmonton in 1957, starting a family dynasty in the restaurant business that his sons have carried on. Stan Fuller launched Earls restaurant in Edmonton in 1982, and has since expanded it to 65 locations in Canada and the United States. His brother, Jeff, launched the Joey restaurant chain a decade later in Calgary. It now has 22 locations. “He is an unbelievably tough competitor,” Stan Fuller said of his brother.
Alberta’s restaurant-friendly atmosphere is spurred by many factors. The province has a young population, plenty of disposable income and no provincial sales tax – a “huge, huge” help, Mr. Fuller said. And Albertans favour chains. The split between independents and chains is 50-50, whereas Canada has twice as many independent outfits, said Mark von Schellwitz, vice-president of Western Canada for the Canadian Restaurant and Foodservices Association.
“If you’re going to be successful, Alberta is probably your best chance at being successful with a new concept,” he said.
Once chains start to grow, things change. Head offices for many Alberta chains are, for instance, in Vancouver. That’s partly because proprietors want to be closer to lucrative U.S. markets, said Paul McElhone, executive director of the School of Retailing at the University of Alberta’s School of Business. And as the companies grow, so too does their business focus, he said.
“Once they go beyond the single owner-operator, then they have multiple locations, they’re quickly no longer in the restaurant business. They’re in the franchise business,” he said, adding: “And that’s where the money is, right?”
Pushing into new markets requires new strategies. Booster Juice was founded 1999 in Sherwood Park, Alta., minutes east of Edmonton. When owner Dale Wishewan expanded in Toronto, he opening several stores at once, “so you don’t become just a small fish in the ocean.” He also avoided high-rent streets and signed Blue Jays slugger Jose Bautista to an endorsement deal. Mr. Fuller says Earls tweaks its model slightly for different markets; Booster Juice doesn’t. “You need to have brand consistency,” he said.
Expanding too quickly can be dangerous. Mr. Bullock has been there. Wok Box did just that and some stores didn’t survive. He’s treading more carefully with Famoso.
“When it’s hot, there’s a lot of people who want it. And if you don’t have people in place to build it, it’s the biggest challenge,” he said. The Famoso chain is what’s hot right now – it doubled the number of stores last year, to 15, and expects to do so again this year. Famoso now has enough office staff for a chain triple its size, all in preparation for its rapid expansion, says Mr. Bullock, who sold his Wok Box stake about six months ago to focus on Famoso and his newest project.
That effort, too, has its own risks. The building, along Edmonton’s Stony Plain Road, is a massive pub that has changed hands and brands several times in recent years. Mr. Bullock and partners bought it and sank more money into it. He hopes it will be next in the line of restaurant chains to start in Alberta and thrive, but remains cautious: “It’s not a chain until we have two stores.”