Calgary's restaurant scene isn't dying it's changing

In Calgary, restaurant closures often make the news.

Most recently, it was the demise ofButtermilk Fine Wafflesthat made headlines. Prior to that, there was widespread reporting on the closure of the Bears Den. That came on the heels of The Belvedere going belly-up.

The loss of these well known venues brought heartbreak for the customers who loved them, the staff who suddenly found themselves out of a job, and the owners who poured their creativity, their capital and their pride into the ventures.

Taking these stories in isolation, however, could leave you with the impression that it's a terrible time to run a restaurant in Calgary. And certainly, it's a notoriously competitive industry, with thin margins and lots of flux.But, when you add up all the closures, it's outnumbered by the number of new restaurants opening. On balance, the total number of restaurants continues to grow.

There were more than 5,900 restaurants operating in Calgary and the surrounding area last year, according to licensing records from Alberta Health Services. That's up from about 5,500 in 2015. And, compared with the rest of Canada, Albertans continue to spend nearly the most, per capita, on dining out. (Only British Columbians spend more.)

So what's going on?

The reality, say industry watchers,is that restaurants aren't dying. They're changing. And this is part of a broader trend that extends far beyond Calgary.

Customers, increasingly, are looking for different things particularly speed, value and unique experiences when they go out to eat.There's still room for traditional restaurants, of course, but their market share is being squeezed by a new style of dining that's more in tune with modern lifestyles and budgets.

Welcome to the age of fast casual.

The rise of limited service

This shift in the restaurant industry has been well documented across North America it's sometimes dubbed the "Chipotle effect" in the United States.

The top 250 "fast casual" restaurants in the U.S. enjoyed sales growth of nearly 14 per cent in 2014. And while that slowed to a (still healthy) rate of nine per cent in 2017, fast-casualcontinues "to outpace other industry segments," according to a recent industry report.

A similar trend has been observed in Canada, and the change has been especially pronounced in Alberta.

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Five years ago, Albertans led the country in spending at "full-service" restaurants, defined as the type of place where a server takes your order, brings your food to the table and presents you with the bill at the end of the meal.

During the depths of the latest recession, though, we started spending less at these types of establishments.

Spending at "limited-service" restaurants,meanwhile,continued to grow.

So while British Columbia surpassed Alberta in terms of total restaurant spending a few years ago, we're still No. 1 when it comes to limited-service joints.

Albertans now shell out roughly $1,180 per person, per year at restaurants in this category, which includes everything from fast food and coffee shops to the more upscale places where you order at a counter and the food is prepared fresh before your eyes.

"There's an increasing interestin seeing that food made, andthat's something those fast-casual restaurants or thoselimited-service restaurants have really nailed," said Dawn Johnston, a communications professor at theUniversityof Calgary who specializes in food culture.

"They'redoing it quickly, but they're using better ingredients thanwhat we typically associate withfastfood."

It's this niche where chains like Mucho Burrito and Freshii have found success, but also a plethora of local, independent shops like Veg-In YYCand Heart's Choices Market Cafe.

It's also the business model at the centre of a restaurant-market hybrid that's common in Europe but only just starting to appear inCalgary.

The arrival of food halls

Avenida Food Hall andFresh Market opened barely a month ago but already it's packed with customers, even at 2:30 p.m. on a Thursdayafternoon.

"People are coming in droves," said general manager KenAylesworth.

The facility in the southeast community of Lake Bonavistais home to 42 vendors, 26 of which provide full meals on a counter-serve basis. Customers can then take their food and sit in a common area to dine.

But don't call it a food court, says Aylesworth, who notes the experience is quite different from what you'd find at your local shopping mall.

"We actually have chefs Red Seal chefs that have their own restaurants here, and a realmyriad of food types and products," he said.

Arce Morales is one of the vendors who offers full meals.At his Oishidesu Ramen Shack, you can get a made-to-order bowl of noodle soup with Wagyu beef for $13.

Morales has opened more traditional, full-service restaurants in the past but said this style of shop appealsto him now because it's cheaper, easier and more in line with what customers are demanding.

"Nowadays because of the higher rents and the labour costs the operationalcosts are actually really, really high," he said. "But the good thing about the market is thateven the newest business owners, they can actually start with a very, very low capital."

As one of dozens of tenants in the food hall, Morales said he also benefits from the exposure of walk-bytraffic and doesn't have to worry about the non-culinary logistics of running a restaurant. Tasks like cleaning the bathrooms and taking out the trash are handled by the landlords.

"So all you have to do is to just focus on your craft, and put the best product you have out there," he said.

The concept may still be new to Calgary, but another food hall is already in the works.

Former mayor Dave Bronconnier, through his company Interloq Capital, aims to build a $5-million facility in the East Village, with construction set to start as early as next year.

Industry analysts say there's a dual appeal in fast-casual restaurants these days, as many consumersfind themselves short on both money and time.

'Abig trend is just our lack of time'

Donna Dumont, a professor with the Bissett School of Business at Mount Royal University, says it's no surprise that investment dollars are flowing into these types of facilities.

"Consumers'lifestylesare different and those restaurants that can meet the needs of consumers are the ones that are going to be successful," she said.

"Abig trend is just our lack of time. We all have very busy lives, sowe're looking increasingly at conveniences ... and so these limited-services restaurants really meet those needs: good value and quicker."

So while some well-known and long-running restaurants may have shut down in recent years, they've been more than replaced by a variety of upstarts.

But it's not necessarily an either-or thing. Limited-service restaurants are often an offshoot of entrepreneurs' more traditional ventures.

"There are certain restaurants and chefs that are expanding into that (limited-service) format," said Johnston, with the U of C. "So they can still have their traditional, full-service, brick-and-mortar restaurant but can also take advantage of bringing their brand and their excellent-quality product out to a different audience."

In addition to his stall at Avenida Food Hall, for example, Morales also operates a standalone bubble-tea shop.

And, as much as he believes in the food hall concept,Aylesworth doesn't believe it will everfully replace the traditional, sit-down style of dining.

"Going to a (full-service) restaurant is never going to go away," he said. "But the buying public has said very clearly that they like new and different things."

Johnston agrees.

"People are always going to want to, at some stage, eat in that traditional sit-down restaurant environment," she said.

"The social aspects of it are really important ...but I think even traditional restaurants are starting to realize that they need to offer some less expensive, set menus and speedier options at lunchtime to get people in and out while still doing what they're best at."

Regardless of the format,she said opening a restaurant remains an "extraordinarily difficult" undertaking.

The competition is fierce, the risk of failure high and your success often hinges on the caprice of amateur online reviews.

"It's astounding that anybody goes into that business when you see how risky it can be," Johnston said.

"But I'm so glad that some brave souls still do, because I think Calgary's got a really exciting food scene and chefs and owners who are recognizing the need to be innovative and flexible in the format the restaurant offers."

Calgary: The Road Aheadis CBC Calgary's special focus on our city as it passes through the crucible of the downturn: the challenges we face, and the possible solutions as we explore what kind of Calgary we want to create. Have an idea? Email us at calgarytheroadahead@cbc.ca

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