Pizza is hot in the Great White North

Sept. 6, 2007
Although often considered a distinctly American food, despite its Italian origins, pizza is popular with the United States' neighbors to the north.
And while the three largest U.S. pizza chains, Pizza Hut, Papa John's and Domino's, all have a presence in Canada, homegrown chains rule the roost.
Toronto-based Pizza Pizza, the largest Canadian pizza chain, has maintained an average 5 percent same-store sales growth since the company went public in 2005. Comps for the U.S. Big Three, on the other hand, have remained relatively flat or declined over the past year.
Pizza Pizza operates more than 500 locations, primarily in Ontario, including more than 100 in the Toronto area alone. The company also filled more than 28 million customer orders in 2006.
Abbotsford, British Columbia-based Panago Pizza booked sales in excess of $120 million in 2006 through the more than 155 stores it operates. Although the privately held company doesn't release further financial information, officials say the company's comparable-store sales increases are more than twice the industry average.
Additionally, Moncton, New Brunswick-based Pizza Delight, which operates more than 100 pizzerias in Eastern Canada, recorded a comparable-store sales increase of 5.2 percent in the second quarter of 2007.
And comparable-store sales at Vancouver, British Columbia-based Boston Pizza rose 6.7 percent for the period, from April 1 to June 30, giving the company an average 6.6 percent comparable-store sales increase for the year to date.
The company has booked comps averaging 6.5 percent each year for the past 10 years with annual sales topping $647 million in 2006. The company operates 275 restaurants in Canada, with locations in every province. It also claims to open a new restaurant in Canada every 10 days.
"We feel there is room to grow the chain for many more years to come," chief executive Mike Cordoba said in August. "And we believe that Boston Pizza will continue to outperform overall growth in the full-service restaurant sector."
Some operations looking south
Canada is a federation comprising 10 provinces and three territories and is the second-largest country in the world by total area. Further, the country's current unemployment rate of about 6 percent is near a 30-year low.
The country has a population of more than 32 million people, an increase of more than 5 percent since 2001, according to a 2006 census, and according to the CIA World Factbook, Canada has a per capita income of $29,800.
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According to a Discovery Channel report, Canadians eat 23.1 pounds of pizza per person each year, slightly higher than the 23 pounds per person consumed in the United States.
While Canada-based pizza chains have made inroads north of the U.S. border, American-based chains continue to increase their presence in the market. Although Dallas-based Pizza Hut doesn't release store counts for Canada, the company is a major pizza player.
Domino's operates more than 270 stores in Canada, the company's fifth-largest market, and Papa John's, which opened its first Canadian store in 2005, operates just 16 restaurants there.  
Operators believe the Canadian market is far from saturated. Panago, which operates mainly in western Canada, opened its first store in Toronto earlier this year.
"Next year, Panago will serve more than 13 million pizzas at more than 165 locations across Canada, and the modern new location in Toronto – Canada's biggest market – is an important part of that expansion plan," Panago CEO Sean DeGregorio said.  
Pizza Pizza, which operates mainly in eastern Canada, recently acquired the Edmonton, Alberta-based Pizza 73 chain. The company plans to use the acquisition as a springboard to expansion in western Canada.
And at least one chain has been eyeing the United States. Boston Pizza began expanding into the United States by setting up operations in Dallas in the 1990s under the name Boston's The Gourmet Pizza.
The company currently has more than 50 locations in 21 states ranging from California to New Jersey. Locations are on tap for Arkansas, Illinois, Maryland, Montana and Utah.
"Boston's is going through a major growth period and it's an exciting time for the entire franchise organization," Doug MacDonald, president of Boston's The Gourmet Pizza, said earlier this year when the company announced plans for several new locations. "Our sister company, Boston Pizza, is the No. 1 casual-dining brand in Canada – our goal is to be the No. 1 casual-dining brand in the United States."

Topics: Marketing , Operations Management

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