Stan Fuller is already looking forward to a grand opening scheduled for this fall. His Earls restaurant on Edmonton’s Jasper Avenue will have had a facelift costing in the order of $5 million by then. Maybe that’s not such a huge deal for a company with 60 restaurants in five provinces and two states, and annual revenues in the $260-million range. Yet this particular opening figures to be attended by not just everyone in Earls’ own corporate universe, but also by honchos from Joey, Saltlik and Cactus Club Cafe—arch-competitors in a burgeoning new restaurant category known as “premium casual” that’s pretty much unique to Canada. The gathering of rival clans is fitting when you consider this Earls location nestled amid uptown apartment towers happens to be the cradle that rocked the baby way back in the 1980s.
A lot of things change in three decades—except in the restaurant industry. Across North America, mostly the same chains are beating each other up over the same share of the consumer dollar, and doing it with surprisingly static concepts, menus and physical plants. That’s not the case, however, with Earls and the brace of mostly Vancouver-based chains it helped spawn. “We were pretty close to Applebee’s or Chili’s,” says Fuller of the original Edmonton location. “They’re still like that. But if you walk into an Earls today, you wouldn’t recognize it came from those humble beginnings.”
Still further from those humble beginnings is the Cactus Club Cafe location that opened this spring overlooking Vancouver’s English Bay, the latest laser cannon in a mounting arms race among the premium-casual chains. Opened at a cost of $7.5 million on a one-of-a-kind spot leased from the city’s parks board, the glass pavilion seats almost 300 people on two levels and a patio that spills out toward the city’s most crowded beach. (Another recent Cactus Club opening, overlooking the Olympic cauldron, seats 700.) The special menu from “Food Concept Architect” Rob Feenie, an Iron Chef America winner and Canada’s most famous celebrity chef, features dishes like sake-soy marinated sablefish, and there’s a wine list specifically tailored to the location. Since it opened in early March, Cactus Club’s signature hostesses—clad in the tiniest of dresses and rumoured to be recruited by mall-cruising talent spotters—have graciously dealt with hours-long lineups almost from the minute the doors open at 11 a.m.
Cactus Club skews younger than its competitors, captivating the 20-something condo set, says Vancouver-based market researcher Steve Bengtson. Its 22 restaurants are all located in B.C. and Alberta, but the chain is now scouting locations in Ontario, where its premium-casual competitors have a head start. If Vancouver is the model for what might happen, eastern cities can look forward to a dramatic reshaping of the restaurant environment. Over the past few years, several of the B.C. city’s most prominent street corners and property developments have been snapped up by one or another of the chains, pushing many other national and international restaurant names off to the sidelines or right out of town.
In a small way, the eastern invasion has already begun. When Earls began opening locations in Greater Toronto in 2008, the restaurants were instant sensations, combining unexpected menus and happening bar scenes with what analyst Robert Carter, director of food services for restaurant industry consultant NPD, terms a “great server experience.” The arrival also provoked alarm from some people, including Toronto Life magazine’s restaurant columnist, James Chatto, who didn’t dislike the food, but rued the dawn of “gigantic, expensive, systematic, mass-produced fuelling stations that feign an individuality and an artistry they don’t really possess.”
Earls will open a restaurant in London, Ont., this summer, while the remarkably similar Joey chain, operated by Fuller’s brother, Jeff Fuller, enjoys its highest revenues at two Toronto-area locations. Yet another Fuller brother, Stewart, operates Saltlik locations, also similar, in Calgary and Banff. (It gets still more incestuous; the Fuller family helped stake Cactus Club co-founder Richard Jaffray and still owns a share of that chain.) “Ontario is our major thrust,” says Fuller. “The problem now is finding premium locations with the right landlords.” Despite their family ties, the chains are famously combative with each other, especially when it comes to securing the locations. “I would have to say it’s no-holds-barred competition,” says Fuller.
Meanwhile, the Ontario assault is farther along at two slightly downmarket competitors: Calgary-based Moxie’s Classic Grill, owned by Vancouver’s Gaglardi family, and Milestones Grill + Bar, which launched in Vancouver in 1990 and, beginning in 1998, was acquired in stages by Cara Network, based in Vaughan, Ont. At the same time, eastern-based firms such as SIR Corp. and Imvescor Restaurant Group are attempting to fight back by nudging chains like Jack Astor’s and Baton Rouge upmarket.
So what exactly is the premium-casual category? Compared to traditional casual chains, the restaurants are more elaborate, the servers more polished and the wine and bar programs more evolved, says Carter. Their appeal is more to adults than to families, and their bars account for an outsized proportion of revenues. Although burgers and pizzas are on the menu for those who want them, food offerings are more similar to the kinds of independent chef-driven restaurants found in the better areas of big cities. Pasta drizzled with truffle oil, anyone?
Indeed, if Cactus Club sprang to a whole new level after Feenie was brought on in 2008, Earls had already started that ball rolling years before by hiring Iron Chef competitor Michael Noble, and Joey has since responded with an Iron Chef competitor of its own, Chris Mills. In many western Canadian cities, says Bengtson, residents consider the local Earls among the best restaurants of any kind. They annually clean up in the casual dining category in Vancouver magazine’s critics’ poll, for example. When that magazine’s longtime food columnist, Jamie Maw, squired New York magazine’s Gael Greene around town, one of her favourite stops proved to be Cactus Club.
Paradoxically, it was adventurous tastes and the low penetration of chain restaurants on the West Coast that caused premium casual to evolve there, says Carter. People like the Fullers looked to the more creative independent restaurants when developing their concepts. Fuller himself traces the beginnings of the Earls concept to the original Jasper Avenue location. It was really just a beer-and-burgers joint, he says, and there are only two ways to go with burgers: “cheap, or ultra-fresh and handmade.” Family patriarch Bus Fuller, who at 82 is still active behind the scenes, thought there was no money in cheap, so fresh it had to be. Meanwhile, Earls became one of the first restaurants to serve draft beer at a time when such brews were still largely confined to dark beverage rooms with terry tablecloths.
The Fullers soon moved their base to Vancouver, even as another Vancouver-based chain, The Keg, began to deviate from steakhouse norms with slick decor, elaborate bars and a more diverse menu. Soon after, restaurateur Wayne Holm and a partner launched the Milestones chain. Holm ultimately sold out to Cara, moved to Toronto to run the company’s food-service side and only recently returned to Vancouver. With its beer-and-burgers background, Earls proved to have an early knack for building in a bar scene at its restaurants, but it was the emergence of Cactus Club as a major player that cemented that aspect as a key part of the premium-casual formula. A change in B.C.’s liquor laws allowed for larger bar areas at a time when Vancouver’s bar scene was underdeveloped and the economy was booming, turning spots like Cactus Club’s splashy new restaurants into de facto bars. “Bar sales moved from 25% to 30% of sales to 40% to 50%,” says Holm of Earls, Joey and Cactus Club. Of course, this also necessitated much higher capital costs. “Instead of spending one dollar of capital to create two to three dollars of sales, they were now spending three to four dollars to create five dollars in sales.” Milestones opted not to make the investments required, says Holm.
Although both Fuller and Carter think there is still room for expansion in western Canada, the chains have little choice but to look east or south if they hope to continue their rapid growth. With regards to the U.S., Carter is leery. Both Joey and Earls have a few locations across the border, mostly in Washington state, and Fuller says these deliver results on par with their Canadian counterparts even if the brands don’t enjoy the same recognition. But Carter notes that American restaurant customers are much more price sensitive, and will be harder to coax upmarket than Canadians have proven to be. Only 44% of Americans visit a restaurant every day, compared to 47% of Canadians, and most parts of the country do not lack for appealing bars. Although the premium-casual category doesn’t exist in the U.S., there is an emerging category called fast casual, comprised of chains like P.F. Chang’s and Chipotle Grill, and characterized by a mildly elevated food and service experience. (These, in fact, are eyeing expansion in Canada.)
In eastern Canada, however, Carter foresees nothing but sunny skies for premium chains. For one thing, Canadian restaurant visits, which have been more or less flat over the past five years, are forecast to increase from 6.5 billion in 2011 to 7.1 billion in 2016, with the full-service casual-dining segment among the biggest winners. That’s largely due to increased patronage on the part of baby boomers, who happen to possess the fatter wallets and more sophisticated palates to which the premium-casual category caters. “You hear about comfort foods,” he says. “We do not see that as a trend at all.”
Holm, meanwhile, expects the western-based chains to thrive even if it has to be by taking a bigger share of a static pie. They are entering a market with a lot of tired brands, and the companies that own them are too capital-strapped to compete, he suggests. Even beyond those ultra-cool new premises, the western brands have raised their games in menu and food quality. “They are armed with some of the best training methods in the industry and great business tools to manage their day-to-day performance.”
Fuller echoes some of this when describing the effect that purpose-built 10,000-square-foot locations costing six and seven million dollars can have on the restaurant ecology. “On one hand, it’s extremely
He expects customer growth to come on two fronts: “from people who will go out more often because they have that kind of entertainment facility for the first time,” and “at the expense of other restaurants that haven’t reinvested in the business.” If the future unfolds as Fuller hopes it will, you don’t want to be one of those.
Photographs by Anna Lisa Sang; Grant Harder; Shannon Mendes.