The Canadian quick-service restaurant (QSR) market is undergoing a significant transformation, with smaller chains and independent operators emerging as key drivers of growth and innovation. According to a new report from Circana, The Rise of Small QSR Chains and Independents in Canada, the evolving dynamics of the QSR segment reflect changing consumer preferences, the popularity of global cuisine, and the digital advancements reshaping the industry.
“The rise of smaller QSR chains and independents reflects a broader shift in consumer behavior and market dynamics,” said Vince Sgabellone, foodservice industry analyst at Circana. “With Gen Z and ethnic communities leading the charge, the foodservice industry is ripe for transformation. Operators who are willing to adapt, innovate, and cater to evolving tastes will shape the future of this space. Those who hesitate may find themselves left behind.”
Key Findings from Circana’s Research:
Smaller Brands Leading the Charge
From 2019 to 2023, smaller chains have experienced impressive growth, adding approximately 900 units. In addition, independent operators have successfully rebuilt their presence, adding 1,000 units, even after facing pandemic-related disruptions. Meanwhile, major QSR chains collectively struggled, adding fewer than 200 units during the same period, highlighting the shift in consumer preferences toward smaller brands.
Gen Z and Ethnic Communities Driving Trends
Gen Z, which now accounts for over 20% of total foodservice visits, is a significant factor in the success of smaller QSR brands. This demographic commands a 30% share of visits to non-major chains, with a strong preference for authentic global cuisine and brands that align with their values. Additionally, ethnic consumers, who represent approximately one-third of all foodservice visits, are increasingly gravitating toward newer QSR brands offering authentic global flavours.
Digital Innovation Gives Smaller Operators an Edge
Smaller chains are leveraging digital tools more effectively than their larger counterparts. Focused on online ordering and digital marketing, these operators are using third-party aggregators at twice the rate of major chains, giving them access to a broader digital customer base. As a result, digital ordering now accounts for a higher proportion of visits to non-major chains compared to major chains. This advantage is partially due to the limited drive-thru infrastructure of smaller operators and the higher concentration of digitally savvy Gen Z consumers.
Mastering On-Premises Dining Experiences
While major chains dominate the grab-and-go morning meal occasion, smaller chains are excelling in creating on-premises dining experiences that cater to consumers’ growing desire for social interactions during lunch and supper. Many consumers perceive these smaller operators as offering higher quality or more unique dining environments, setting them apart from the larger, more traditional chains.
The growth of smaller QSR chains and independents in Canada signals a pivotal shift in the foodservice industry. By focusing on global flavors, digital innovation, and an elevated in-person dining experience, these operators are reshaping the future of the Canadian quick-service restaurant market.
About Circana
Circana is a leading advisor on the complexities of consumer behavior. Through advanced analytics, superior technology, cross-industry data, and deep expertise, Circana helps nearly 7,000 of the world’s leading brands and retailers unlock business growth. Circana’s insights guide clients in meeting consumer demand, outpacing the competition, and driving innovation.
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