In a scenario where you step into a trendy chef-led restaurant, it may seem like a unique independent establishment at first glance. However, upon deeper investigation, it unveils itself as just one part of a larger restaurant group owning multiple establishments.
The concept of restaurant groups has been prevalent for years, but their significance has been growing, particularly in the aftermath of the pandemic, marked by reduced alcohol sales and customer expenditure. The appeal of being part of a larger entity lies in the advantages it offers, such as enhanced purchasing power and risk mitigation.
According to Vince Sgabellone, a food industry analyst at Circana Canada, operating within a group provides a competitive edge, especially when compared to standalone restaurants. While chain restaurants maintain uniformity across their outlets, restaurant group businesses often camouflage their affiliation within a broader corporate structure.
The expansion of the restaurant group model has been notable, with smaller chains and independent restaurants experiencing faster growth rates than large restaurant chains in Canada between 2020 and 2024, as per Circana data. This trend, as highlighted by experts like Bruce McAdams, reflects a shift in the perception of chain restaurants among the newer generations.
The appeal of diversifying restaurant concepts rather than replicating the same model nationwide has gained traction. This diversification strategy enables restaurants to cater to evolving consumer preferences and fosters innovation within the industry.
One significant advantage of restaurant groups is their economies of scale, allowing them to streamline operations and maintain consistency in quality and offerings. Companies like Concorde Entertainment Group leverage their size to establish a centralized kitchen, ensuring cost-effectiveness and quality control across their various establishments.
While the restaurant group model offers numerous benefits, it also poses challenges, including the risk of losing uniqueness and succumbing to a corporate structure. Nonetheless, consumers can benefit from this model through potentially lower prices resulting from group-level procurement efficiencies.
In the current economic climate, the restaurant industry is navigating challenges like rising costs and shifting consumer behaviors. As a result, the restaurant group model is likely to continue expanding, offering stability and resilience in uncertain times.
