Coffee Cafés Perk Up in Canada

Coffee café chains that appear in the Top 200 Canadian Chain Restaurant Report registered a 5.6% sales increase and a 4.5% unit increase in 2013. The segment’s sales and unit performance exceeded the total Top 200 chains’ growth rates by 1.4% and 1.7%, respectively. Despite Tim Hortons being the largest coffee café player in Canada, it is industry leader Starbucks, with annual sales soaring 18.4% in 2013, leading the segment’s growth.

Tim Hortons and Starbucks are not the only ones boosting the performance of the coffee café segment. The most significant expansion is seen by smaller players such as Good Earth Coffeehouse and Bakery, Waves Coffee House and Presse Cafe, with unit growth of 22.2%, 19.4% and 13.3%, respectively. These concepts have launched several initiatives and menu changes in the past year to keep customers coming in the door:

  • Good Earth Coffeehouse and Bakery has sought to differentiate itself from competitors with unique summer salads, such as Roasted Summer Veggie and Turkey Mint. (Facebook 8/1/13)
  • Waves Coffee House added gluten-free baked goods to its menu to cater to customers seeking to avoid the wheat protein. (Facebook 11/18/13)
  • Press Café enhanced its menu with original and seasonally inspired offerings such as a Pulled Pork Presswiche and Lava Caramel and Apple pastry. (Company Website 9/4/13)

In a highly competitive environment, large coffee café chains need to seek out new ways to combat competition:

  • Second Cup, with $191.4 million in sales, looked to retail to help boost their sales and brand awareness. It did so by partnering with Kraft Canada Inc. to introduce packaged whole bean, ground and single-serve coffee in grocery stores all across Canada. Adopting a retail segment into a business model has shown to be highly profitable for other distinguished coffee-café concepts such as Starbucks. (Canada Newswire 9/19/13)
  • Tim Hortons, with $6.2 billion in sales, engaged customers by announcing the Bring it Back campaign. Fans were invited to vote for which classic menu item they would like to see return to the menu for the concept’s 50th anniversary. Choices included the eclair, the sugar twist, the pecan butter tart, the chocolate sour cream-glazed donut and the bread bowl. (Toronto Sun Online 5/15/14)
  • Country Style, with $137.6 million in sales, sought to stimulate repeat business by bringing back its Turn Up A Winner contest. Customers purchasing a hot drink could reveal their prize on special contest cups by turning up the cup’s rim. Prizes included trips, electronics, and free food and drinks. (Company Website 2/19/14)

Source: Technomic Top 200 Canadian Chain Restaurant Report

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Beth Chirban

Beth Chirban is a Senior Research Analyst at Technomic Inc. She manages the firm’s Industry Reports, a global series that identifies major players and marketplace dynamics, keeping foodservice professionals smart about performance and trends. In addition, she is responsible for the tracking of chain restaurant and non-commercial financial data that makes up a large part of Technomic’s custom database, The Digital Resource Library.

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