Quiznos puts growth on menu

Date: MAR 10th, 2008

Topic: Franchise News

Calgary's booming economy is so attractive that quick-service restaurant chain Quiznos wants to further expand into this market in the next few years.

The company has experienced "rapid development" in 2003, 2004 and 2005, said Greg MacDonald, president of Quiznos Canada.

"We are still in development mode in Calgary," he said. "But we're getting close to build out."

It has 450 stores across the country -- 80 in Alberta and 30 in Calgary.

"We're very careful where we put the next stores ensuring they don't affect other stores," said MacDonald. "We typically will build out anywhere from a store to every 25,000 to 30,000 people. So there's a million people in Calgary. That would constitute close to 30 stores."

Those are traditional stores and don't include non-traditional ones located in such areas as airports, universities and kiosks. The chain currently lacks non-traditional outlets in Calgary.

"We're still going to develop this market. It's such a hot economy," said MacDonald, adding the plan for the next two to three years is to add five to 10 stores in the Calgary market.

He said the expansion will include both traditional and non-traditional stores.

"It's more to what the market can hold. Your whole landscape here is changing so fast. There's so many people moving to Calgary. It's allowing us to put more stores here," said MacDonald.

The Calgary region is fertile ground for the quick-service food industry, said Michael Kehoe, an Alberta-based retail real estate specialist with Fairfield Commercial Real Estate Inc.

"The confluence of high disposable income levels, population growth, youthful family-oriented demographics, time-pressed consumers and the availability of new development sites throughout the region is a very appealing combination for expansion-oriented firms in this category. Calgary has emerged as the drive-thru capital of Western Canada," said Kehoe.

More people have a healthy disposable income "and when you've got disposable income you've got more and more people who are looking to spend their entertainment dollars somewhere. So that means more eating out than you would see in an economy where you've got people pinching their pennies a little bit more," said Dawn Johnston, an instructor at the University of Calgary's faculty of communication and culture who teaches food culture.

The flip side of the booming economy is that people are working a lot and have less disposable time.

"So they are looking for places where they can nourish themselves. They can refuel the engine quickly and easily and affordably," Johnston said. "So you're seeing a lot more of those quick service places where you can get something relatively healthy that's not your standard burger and fries, but at the same time is not going to take a big bite out of either their wallet or their schedule for the day."

MacDonald said the Calgary market has been a success story for the company as franchise owner profitability is up more than 200 per cent over the last two years -- a little higher than the national average for the chain. The average store in Alberta makes close to $100,000 a year in profit. The average investment is $80,000 for a store.

Sales are up, as well. The average sales per Alberta store are up 20 per cent since 2005 while the national average is about 12 to 13 per cent.

The first Canadian store was opened in Vancouver in 1996. The first Alberta store was in Calgary in the late 1990s. A typical store is about 1,200 to 1,400 square feet.

"We look for power centres. We typically like to see lots of workplace population. A lot of our business is done at lunch," said MacDonald.

Sometime this year, Quiznos will also launch a delivery service of its menu items to homes.

Denver-based Quiznos is in its 26th year of business with over 5,000 franchise restaurants in 15 countries.