When it comes to dining out, Canadians appear to be less interested in heading to eateries earlier in the day, one of the shifting preferences the head of a major restaurant franchising platform says is affecting the nation's retail real estate map.
Inflation and higher household costs are squeezing household budgets — and that's pushing dining spot operators to rethink choices about the size and locations of their restaurants, according to Foodtastic CEO Peter Mammas.
“People are eating out less at breakfast and lunch,” Mammas said in an interview. “But when they do go out for dinner, they’re treating it more like an occasion. That’s changing where restaurants want to be and how much space they actually need."
Mammas is well positioned to know about the nation's dining out preferences. He founded Montreal‑based Foodtastic in 2016 and has spent the past decade closely watching how Canadians choose their restaurants, so that these days it involves more than 1,200 locations nationwide. Its brands include Freshii, Second Cup Café, Pita Pit, Quesada and La Belle & La Boeuf Burger Bar.
He's looking closely at how diners behave as Foodtastic faces competition from other large franchising enterprises. They include Quebec-based MTY Food Group, whose brands include Built Custom Burgers, Koryo Korean Barbeque and Mucho Burrito, and Ontario-based Recipe Unlimited, owner of the Swiss Chalet, Harvey's burgers and Montana's BBQ & Bar chains.
For quick‑service restaurants, Foodtastic has seen more hungry people coming in, but they're spending less. Overall spending per diner has fallen as customers pull back on portions rather than skipping visits altogether. “You used to see people buying the large burrito or the biggest combo,” he said. “Now they’re choosing the smaller portion," he said. "Traffic is up, but the average cheque is down.”
Moreover, the increased popularity of food delivery has affected how much space restaurants require, he said.
Implications for landlords
That shift in dining trends has implications for retail landlords. With food delivery now accounting for roughly 20% to 50% of sales at many locations, restaurants no longer need large dining rooms to keep their business humming. “Before COVID, third‑party food delivery wasn’t a major part of the business,” Mammas said. “Now you can do a huge volume without needing a big dining room.”
Quick‑service restaurant units are reducing as a result, opening up in smaller locations that once would have been dismissed as too small. Secondary retail corridors, malls and tighter inline spaces are increasingly back in play, particularly where rents are more forgiving.
Foodtastic has leaned into that approach in markets such as Winnipeg, where it is rolling out Jimmy John’s alongside other brands in its portfolio, including Second Cup, Pita Pit and Archibald concepts, with locations designed around takeout and delivery rather than long sit‑down visits.
"For certain concepts, you don’t need prime high‑traffic frontage anymore,” Mammas said. “You can save on rent and still do strong volume because of delivery."
It's a different story for full‑service restaurants. Even as menu prices have held steady, Foodtastic has recorded higher average cheques across its casual and sit‑down brands, including Milestones and Archibald. “It surprised us at first,” Mammas said. “Prices didn’t really go up, but the cheque did.”
The explanation, he said, comes down to dining behaviour. Instead of spending to grab a quick bite during the day, consumers are saving those dollars for evenings out, ordering higher‑priced entrées and turning dinner into something worth leaving the house for.
“Instead of grabbing a hamburger, they’re ordering a steak,” Mammas said. “They’re saving money (by cutting back) on breakfast and lunch, then spending it when they go out for a milestone or a social night.”
That has strengthened demand for space in restaurant‑dense urban areas where eating out is part of a broader social experience. In cities such as Montreal, Toronto and Quebec City, Mammas said, clusters of restaurants continue to outperform standalone sites, even when individual locations are smaller than they once were.
“In the old days, someone would open a restaurant and be upset when another one opened next door,” he said. “Now it’s the opposite. People want to go to an area with lots of restaurants and decide where to eat when they get there."
Site selection shifts
That preference is reshaping the site selection across Foodtastic’s portfolio. Urban pockets with multiple food and beverage operators are increasingly favoured, particularly where compact spaces can still turn strong sales. “It becomes more of a social setting,” Mammas said. “Being near other restaurants actually helps.”
The change is also exposing the limits of older leases signed under pre‑pandemic assumptions regarding traffic counts, size and rent tolerance. Mammas said many struggling locations are weighed down less by weak demand than by rents that no longer line up with how restaurants actually operate.
“A lot of smaller franchisors signed leases where either the site wasn’t great, or the rent just doesn’t work anymore,” he said. “Sometimes the site is good, but the rent isn’t."
Foodtastic has responded by taking a more flexible approach to its real estate portfolio, closing, relocating or reworking locations where the economics no longer pencil out. In some cases, that means swapping one brand for another rather than walking away from a decent site.
“If a site is good but the brand isn’t working, we’ll put another brand in there,” Mammas said. “If the rent and costs don’t line up, sometimes the only option is to get out of the lease.”
Mammas recently oversaw Foodtastic's acquisition of Central Social Hall, an Edmonton‑based casual dining and bar concept with two locations in the Edmonton area, adding the brand to its national restaurant portfolio. The company said it plans to expand Central Social Hall beyond its current Alberta footprint into other Canadian markets over time. In 2024, Foodtastic acquired the six-outlet Archibald Restaurants chain.
“The whole full‑service segment is doing great,” he said. “Quick service is where you’re seeing pressure on the cheque, and that’s forcing operators to rethink their footprint.”