In a scenario where you step into a vibrant, chef-led eatery that appears unique, the reality may unveil a different story. This seemingly independent restaurant is part of a larger conglomerate owning more than a dozen similar establishments. The concept of restaurant groups, though not new, is gaining prominence as the industry faces challenges post-pandemic due to declining alcohol sales and reduced customer spending.
According to Vince Sgabellone, an analyst specializing in the food industry at Circana Canada, there is strength in numbers for these restaurant groups. Unlike traditional restaurant chains with identical branding across all locations, patrons at restaurants within a group may not realize they are dining at a venue under a larger corporate umbrella. However, as these groups expand, there is a risk of homogenization, where distinct restaurants may start to resemble each other.
The growth of the restaurant group model is hard to quantify, as it is not specifically tracked by organizations like Restaurants Canada or Statistics Canada. Data from Circana reveals that between 2020 and 2024, smaller chains and independent restaurants, including those within restaurant groups, expanded at a faster rate than large chains in Canada. This trend aligns with a shift in consumer preferences away from the traditional chain restaurant concept, as noted by experts like Bruce McAdams from the University of Guelph.
One major advantage of restaurant groups is their enhanced buying power, allowing them to achieve better economies of scale compared to independent establishments. Calgary’s Concorde Entertainment Group exemplifies this by operating a central commissary kitchen that produces ingredients for all its locations, ensuring cost-efficient operations and consistent quality standards.
The group model also offers benefits in terms of market dominance and risk mitigation. By establishing multiple restaurants in close proximity, companies can monopolize specific regions, leveraging economies of scale while maintaining localized appeal. Furthermore, having diverse restaurant concepts under one group provides a safeguard against fluctuating consumer preferences and economic uncertainties.
While the restaurant group model presents numerous advantages, there are also potential drawbacks. Concerns about standardization and loss of independent charm arise as these groups expand. Despite these challenges, consumers can benefit from lower prices resulting from group purchasing power and enjoy a sense of familiarity and reliability when dining at recognized establishments affiliated with larger groups.
In the current economic climate, where rising costs and shifting consumer behaviors pose challenges to the restaurant industry, the growth of the restaurant group model is expected to continue. Industry experts emphasize the resilience and advantages of operating within a larger group during challenging times.
