Restaurant Brands International Inc., one of the world’s largest quick service restaurant companies with nearly $45 billion in annual system-wide sales and over 30,000 restaurants in more than 120 countries and territories, reported 2.3% comparable sales growth in 2024 compared to the previous year.
In reporting its financial results on Wednesday, the company said total revenue of $8.4 billion for the year rose from just over $7 billion in 2023. But net income fell from $1.718 billion in 2023 to $1.445 billion in 2024.
RBI owns four of the world’s most prominent and iconic quick service restaurant brands – TIM HORTONS®, BURGER KING®, POPEYES®, and FIREHOUSE SUBS®.
Josh Kobza
Josh Kobza, Chief Executive Officer of RBI, said: “I am proud of our performance this year, reflecting the strong foundations we’re building across our businesses and the dedication of our teams and franchisees who are executing the fundamentals of quality, service, and convenience with excellence.
“As we look ahead, we remain focused on thoughtful marketing, operational improvements, and modern image to enhance the guest experience, drive franchisee profitability, and deliver long-term growth for our brands and shareholders.”
The company said it completed the acquisitions of Carrols Restaurant Group Inc. and Popeyes China on May 16, 2024 and June 28, 2024, respectively. Its consolidated results include Carrols and PLK China revenues, expenses and segment income from their acquisition dates.
“Following the Carrols and PLK China Acquisitions, RBI established a new operating and reportable segment, Restaurant Holdings (RH), which includes results from the Carrols Burger King restaurants and the PLK China restaurants. RBI reports results under six operating and reportable segments consisting of the following: Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK), Firehouse Subs (FHS), International (INTL) and RH,” it said.
“RBI plans to maintain the franchisor dynamics in its TH, BK, PLK, FHS and INTL segments (“five franchisor segments”) to report results consistent with how the business will be managed long-term given RBI’s plans to refranchise the vast majority of the Carrols Burger King restaurants and to find a new partner for PLK China in the future. RH results include Company Restaurant Sales and expenses, including expenses associated with royalties, rent, and advertising. These expenses are recognized, as applicable, as revenues in the respective franchisor segments (BK and INTL) and eliminated upon consolidation.”
Collage of different images containing 1 promotional poster of White Spot burgers, 2 images of White Spot burgers, and 2 images of kids that benefit from the help of Variety - the Children's Charity. (CNW Group/White Spot Hospitality)
White Spot, BC’s iconic restaurant chain, is turning burgers into a catalyst for change with its latest fundraising initiative in support of Variety – the Children’s Charity.
From February 18 to 21, $2 from every burger sold – whether for dine-in, or takeout – will go directly toward helping children and youth in BC with disabilities and complex medical needs, said the brand in a news release.
“This initiative gives families the opportunity to enjoy White Spot’s famous burgers while making a meaningful impact. Every bite supports children and families who rely on Variety for essential programs, services and more that they may not otherwise have access to,” it said.
“White Spot has been a proud supporter of Variety since 1966, raising more than $2 million through various fundraising efforts. This year’s campaign leads into Variety’s Show of Hearts Telethon airing on Global BC, Sunday, February 23 – an event White Spot has championed since its inception. Beyond fundraising, White Spot team members also volunteer their time to provide meals to the event crew.”
“At White Spot, giving back to the community isn’t just something we do – it’s part of who we are,” said Trent Carroll, president of White Spot. “We’re honoured to support Variety’s mission and provide our guests with the opportunity to make a real difference, all while enjoying great burgers together.”
Variety plays a crucial role in the lives of BC families, stepping in where healthcare systems may not, to ensure children have access to life-changing support, said the brand.
Andrea Tang
“We are incredibly grateful for our longstanding partnership with White Spot,” said Andrea Tang, CEO of Variety the Children’s Charity. “With deep roots in the BC community, White Spot shares our commitment to making a life-changing impact for children and families. Right now, too many kids are waiting for the critical supports they need to thrive. Thanks to White Spot’s generosity, we can reach more families and provide the essential therapies, resources, and equipment kids need—when they need it most. Together, we are changing lives.”
Headquartered in Vancouver, White Spot is Canada’s longest-running restaurant chain. Founded in 1928, when Nat Bailey launched Canada’s first drive-in restaurant at Granville and 67th, the 97 year-young chain serves more than 17 million guests annually at 132 White Spot and Triple O’s (their premium quick-service restaurants) located throughout B.C., Alberta, Ontario and Asia.
Retail Insider is streamlining its Canadian retail news from around the web to include a handful of top news stories that can be viewed quickly during the day. Here are the top stories from the past 24 hours.
Shake Shack at Toronto's Yorkdale Shopping Centre. Photo: Shake Shack
US-based fast-casual restaurant Shake Shack officially opens its third Toronto location at the Yorkdale Shopping Centre on the morning of February 12. The highly anticipated launch marks the brand’s third location in Canada, following successful openings at Yonge-Dundas Square and Union Station in Toronto. The Yorkdale outpost introduces Shake Shack’s signature ShackBurgers, crinkle-cut fries, and hand-spun shakes to one of the country’s busiest and most upscale shopping destinations.
Yorkdale Shopping Centre, known for housing Canada’s highest concentration of luxury retailers, continues to expand its foodservice offerings with the addition of Shake Shack. Positioned on a mezzanine level near the mall’s food court, the restaurant occupies a space formerly used by Illy Café, alongside an area that was once part of the historic Eaton’s department store. This elevated location offers diners a spacious indoor patio overlooking the shopping centre, creating a unique dining experience.
Shake Shack at Toronto’s Yorkdale Shopping Centre. Photo taken from food court escalators. Photo: Shake ShackPositioning of Shake Shack at Yorkdale in Toronto. Lease plan via Oxford Properties
A Local Artistic Touch
As part of its commitment to community engagement, Shake Shack has collaborated with Toronto-based queer Mestizx/Latinx illustrator Vivian Rosas to bring an artistic element to the Yorkdale location. Known for her bold, inclusive, and empowering illustrations, Rosas’ artwork enhances the space while reinforcing Shake Shack’s values of inclusivity and representation.
Menu Highlights and Signature Offerings
Shake Shack has built its reputation on high-quality ingredients and carefully crafted menu items. Guests at the Yorkdale location can enjoy:
100% Canadian Angus beef burgers with no antibiotics or added hormones
Crispy chicken sandwiches made with responsibly raised chicken
Golden crinkle-cut fries, a signature fan favourite
Hand-spun frozen custard, crafted with Canadian dairy, real cane sugar, and cage-free eggs
Shake Shack at Toronto’s Yorkdale Shopping Centre. Photo: Shake ShackShake Shack at Toronto’s Yorkdale Shopping Centre. Photo: Shake Shack
Shake Shack’s Expansion in Canada
The launch of Shake Shack at Yorkdale is part of a broader growth strategy in Canada. Shake Shack Canada, a partnership between Toronto-based investment firms Osmington Inc. and Harlo Entertainment Inc., has ambitious plans to open 35 locations across the country by 2035. Beauleigh Retail Consultants negotiates Shake Shack’s leases.
Shake Shack first entered the Canadian market in June 2024 with a flagship location at Yonge-Dundas Square. A second restaurant opened in Union Station in December 2024, quickly becoming a popular stop for commuters and downtown shoppers. With Yorkdale now added to its portfolio, the brand is expected to continue its rollout in major cities across the country in the coming years.
Globally, Shake Shack has grown from its origins in New York City’s Madison Square Park in 2004 to more than 500 locations in cities such as London, Hong Kong, Tokyo, and Mexico City.
Shake Shack at Toronto’s Yorkdale Shopping Centre. Photo: Shake ShackShake Shack at Toronto’s Yorkdale Shopping Centre. Photo: Shake Shack
Yorkdale Shopping Centre’s Continued Growth
Yorkdale Shopping Centre remains one of Canada’s most dynamic retail destinations, consistently attracting top-tier brands and premium dining options. The addition of Shake Shack aligns with the mall’s strategy of expanding its food and beverage offerings to complement its retail mix.
Yorkdale is home to several full-service restaurants that continue to attract shoppers and diners, including The Cheesecake Factory, Earls, and Joey. These establishments provide visitors with diverse dining choices, contributing to the centre’s reputation as a premier shopping and lifestyle destination.
Meanwhile, Yorkdale is also experiencing notable retailer movements:
Nespresso is relocating to a new space formerly occupied by Allbirds, directly across from Uniqlo.
Massimo Dutti is introducing a new concept store within the mall, following the debut of its redesigned format at Royalmount in Montreal last fall.
Luxury expansion continues with Oxford Properties redeveloping a new luxury wing in the centre of the mall. Several luxury retailers have already opened in the new space, including Loewe, Brunello Cucinelli, Loro Piana, Versace, and Jimmy Choo. Upcoming openings include Maison Margiela, Rimowa, Saint Laurent, and Dior, with construction currently underway.
La Maison Simons is set to open a two-level store in the fall of 2025 within the former Nordstrom location, adding a significant new fashion anchor to the mall.
Nespresso relocation to the former Allbirds space at Toronto’s Yorkdale Shopping Centre. Photo: Craig PattersonToronto-based apparel brand Kotn recently opened a pop-up at Yorkdale. Photo: Craig Patterson
First Capital owns, operates and develops grocery-anchored, open-air centres in neighbourhoods with the strongest demographics in Canada.
KEY HIGHLIGHTS FROM THE FOURTH QUARTER:
Same Property NOI growth of 3.4%, excluding bad debt expense (recovery) and lease termination fees
Strong leasing activity, including lease renewal spreads of 12.7%
Total portfolio occupancy of 96.8%, representing an increase of 60 basis points year-over-year
Announced a 3% increase to monthly distributions on December 16, 2024, effective January 2025
Adam Paul
“Early in 2024, we outlined our strategic plan to investors. I am pleased to say that we are tracking well against the metrics we presented and remain well positioned to achieve our three-year objectives,” said Adam Paul, President and CEO.
“Touching specifically on two key metrics, FCR delivered 2024 normalized OFFO per unit growth of nearly 6% (15% reported) in 2024 versus the plan’s annual average target of at least 3%.
“Turning to the balance sheet, debt to EBITDA also improved significantly throughout 2024 and is similarly tracking well against our plan.”
Here’s some of the highlights of the financial results, according to the REIT.
FOURTH QUARTER OPERATIONAL AND FINANCIAL HIGHLIGHTS
Same Property NOI Growth: Total Same Property NOI increased 2.7% over the prior year period. Same Property NOI excluding bad debt expense (recovery) and lease termination fees increased 3.4%. The growth was primarily due to higher base rent.
Portfolio Occupancy: On a quarter-over-quarter basis, total portfolio occupancy increased 0.3% to 96.8% at December 31, 2024, from 96.5% at September 30, 2024.
Lease Renewal Rate Increase: Net rental rates increased 12.7% on a volume of 749,000 square feet of lease renewals, when comparing the rental rate in the first year of the renewal term to the rental rate in the last year of the expiring term. Net rental rates on leases renewed in the quarter increased 18.5% when comparing the average rental rate over the renewal term to the rental rate in the last year of the expiring term owing to higher contractual growth rates negotiated for the renewed lease terms.
Average Net Rental Rate: The portfolio average net rental rate increased by 0.6% or $0.15 per square foot over the prior quarter to a record $24.00 per square foot, primarily due to renewal lifts and rent escalations.
Property Investments: First Capital invested approximately $57 million into its properties during the fourth quarter, primarily through development and redevelopment.
Property Dispositions: During the fourth quarter, First Capital continued to execute on its strategy, with $105 million of dispositions completed or under firm agreement, including (i) 1629-1633 The Queensway, Etobicoke (ii) its 50% interest in 200 West Esplanade, North Vancouver and (iii) Sheridan Plaza, Toronto which is an all cash transaction and scheduled to close by the end of the first quarter of 2025.
Balance Sheet and Liquidity: First Capital’s December 31, 2024 net debt to Adjusted EBITDA multiple was 8.7x, an improvement from 9.9x at December 31, 2023. First Capital’s December 31, 2024 liquidity position was approximately $0.9 billion, including $698 million of availability on revolving credit facilities and $159 million of cash on a proportionate basis.
Operating FFO per Diluted Unit of $0.32: Operating Funds from Operations of $67.7 million, or $0.32 per unit, remained consistent with prior year. On a year-over-year basis, NOI increased $5.1 million, or $0.02 per unit, primarily driven by higher base rent, largely offset by higher interest expense and corporate G&A for a total of $4.8 million, or $0.02 per unit.
FFO per Diluted Unit of $0.31: Funds From Operations of $67.5 million increased $9.4 million, or $0.04 per unit, over prior year. The increase was primarily driven by a year-over-year increase in other gains (losses) and (expenses) of $9.5 million. These other gains (losses) and (expenses) are comprised primarily of mark-to-market (non-cash) gains and losses related to derivative financial instruments employed by First Capital to reduce its borrowing costs and fix the rate of interest on certain variable-rate term loans. Over the life of each loan, the cumulative gain or loss on the related derivative instruments is expected to net to $Nil.
Announced 3% Distribution Increase: On December 16, 2024, the REIT’s Board of Trustees approved a 3.0% distribution increase to a monthly rate of $0.074167 per unit from $0.072 formerly. Equating to an annualized rate of $0.89 per unit, the increase was effective for the January distribution to unitholders of record as of January 31, 2025, and will be paid on February 18, 2025.
Net Income (Loss) Attributable to Unitholders: For the three months ended December 31, 2024, First Capital recognized net income (loss) attributable to Unitholders of $32.1 million or $0.15 per diluted unit compared to $173.8 million or $0.81 per diluted unit for the prior year period. The decrease in net income over prior year was primarily due to a $167.6 million increase in the fair value of investment property in the fourth quarter of 2023 versus a $3.6 million increase in fair value recognized in the fourth quarter of 2024, on a proportionate basis.
ANNUAL OPERATIONAL AND FINANCIAL HIGHLIGHTS
Same Property NOI Growth: Total Same Property NOI increased 4.4% over prior year, inclusive of a $5.5 million settlement with Nordstrom with respect to the early termination of its lease at One Bloor East in June 2023. Same Property NOI excluding bad debt expense (recovery) and lease termination fees increased 3.3%, primarily due to higher base rent in 2024 relative to 2023.
Portfolio Occupancy: On a year-over-year basis, total portfolio occupancy increased by 0.6%, to 96.8% at December 31, 2024, from 96.2% at December 31, 2023.
Lease Renewal Rate Increase: Net rental rates increased 12.5% on 2,372,000 square feet of lease renewals when comparing the rental rate in the first year of the renewal term to the rental rate in the last year of the expiring term. Net rental rates on leases renewed during 2024 increased 17.3% when comparing the average rental rate over the renewal term to the rental rate in the last year of the expiring term primarily owing to higher contractual growth rates negotiated for the renewed lease terms.
Growth in Average Net Rental Rate: The portfolio average net rental rate increased $0.66 to a record $24.00 per square foot representing year over year growth of 2.8%. The strong growth was primarily due to rent escalations, renewal lifts, acquisitions and dispositions.
Property Investments: First Capital invested approximately $223 million into its properties during 2024, primarily through development, redevelopment and the acquisition of the remaining 50% interest in Seton Gateway.
Property Dispositions: During 2024, First Capital completed or entered into firm agreements for $317 million of property disposition and related transactions. Reflecting FCR’s disciplined approach to asset sales, the collective transaction values equated to an in-place yield that is less than 3% and an average premium to IFRS carrying value of more than 50%. FCR remains on track to meet the key objectives of its three-year business plan, where the ongoing disposition of development sites and select low-yielding income properties will be an important contributor. As at December 31, 2024, the Trust classified $197 million of investment properties as held for sale.
Advancing ESG initiatives: First Capital continued to demonstrate leadership in Environmental, Social and Governance (“ESG”) matters throughout 2024, which included the following highlights:
Recognized by the Globe and Mail as one of “Greater Toronto’s Top Employers” for 2024
Named one of “Canada’s Top Small and Medium Employers” for 2024
Included in the Globe and Mail’s “2024 Report on Business Women Lead Here” list
Selected for inclusion in “The Career Directory” for 2024 as one of Canada’s Best Employers for recent graduates
Highest ranked public REIT in the Globe and Mail’s comprehensive ranking of Canada’s corporate boards for 2024
Awarded “Gold 2024 Green Lease Leader Recognition” by the Institute for Market Transformation (IMT) and the U.S. Department of Energy’s Better Building Alliance
Only REIT listed as a top 30 Canadian company in Sustainalytics ‘Road to Net Zero’ Ranking for our strong low carbon transition rating management score
Achieved a 19% reduction in Scope 1 & 2 absolute GHG emissions since 2019 base year (2019 to 2023)
Hosted our second Collaboration for Climate Action Forum in November 2024, bringing together major retail tenants and peer landlords for a solutions focused discussion around the decarbonization of retail buildings in Canada
Unveiled a new public art installation at Centre Wilderton in Montreal titled “JASPER” by Michel Archambault as part of FCR’s long running Art Program which now stands at 33 public art installations across the portfolio
Raised more than $400,000 for Community Food Centres Canada through FCR’s Thriving Neighbourhoods Foundation in 2024
Operating FFO per Diluted Unit of $1.36: Operating Funds from Operations of $291.0 million increased $37.7 million , or $0.18 per unit, over prior year. The increase was primarily due to higher NOI of $23.1 million driven by base rent, straight-line rent and lease termination fees, partially offset by higher interest expense of $11.4 million due to the increased activity of debenture issuances in 2024 and higher interest rates. Additionally, interest and other income increased $21.9 million owing to the recognition of a $9.5 million assignment fee related to a small development parcel located in Montreal as well as a density bonus payment of $11.3 million in connection with a previously sold property, recognized in the first and third quarters of 2024, respectively.
FFO per Diluted Unit of $1.35: Funds from Operations of $289.7 million increased $45.7 million, or $0.21 per unit, over the prior year. The increase was primarily driven by higher Operating FFO of $37.7 million and a year-over-year increase in other gains (losses) and (expenses) of $8.0 million.
Net Income (Loss) Attributable to Unitholders: For the year ended December 31, 2024, First Capital recognized net income (loss) attributable to Unitholders of $204.9 million or $0.96 per diluted unit compared to ($134.1) million or ($0.63) per diluted unit for the prior year. The increase in net income was primarily due to a $376.4 million decrease in the fair value of investment property for the year ended 2023 versus a $49.6 million decrease in fair value recognized during the year ended 2024, on a proportionate basis.
With the announcement (and subsequent delay) of the 25% tariffs announced by the Trump administration and the retaliatory tariffs placed on a list of US imports by the Canadian government, Canadians are going through a range of emotions and many Canadians are looking to control what they can by “voting with their wallets” and choosing to buy more products that are Made In Canada, says Field Agent Canada.
“This could have significant impacts on the Retail and CPG industries as many of the items on the counter tariff list were Consumer Packaged Goods that seemed to target the powerful US CPG companies that might be able to bend the ear of the Trump administration,” said the company on a blog on its website.
Field Agent Canada said it wanted to get a read on the potential impacts for Retail and CPG. Between February 2 and 4, it surveyed 1083 Canadians about how the tariff threat would impact their shopping for Grocery, HABA and Alcoholic Beverage items.
“The numbers are quite remarkable with 80% or more saying that they would start checking labels to see where items were made and significant numbers saying they would be much more purposeful about buying Canadian products or alternative products produced in other countries other than the US (think buying French wine instead of California wine),” said Field Agent.
Source: Field Agent Canada
“In fact, only about 15% of respondents told us that they would continue to buy their favourite brands regardless of the tariffs – that’s very bad news for companies selling US manufactured or grown products.
“Other non-retail actions that Canadians are considering include 29% saying they would cancel US streaming services such as Netflix; 65% saying they would only consider non-US brands of automobiles; and 68% saying that they would not even visit the United States for upcoming vacations.
“There is also potential blowback for US retailers and foodservice chains with significant proportions of respondents indicating that they would not shop at specific US retailers and / or restaurants. For example, 28% said they would no longer shop at Amazon and 40% said they would not eat at US-based restaurant chains.”
Source: Field Agent Canada
Field Agent said the potential for upheaval in our industry is significant. Supply chains will need to adjust as velocities on US products slow and Canadian products pick up speed. US retailers will need to communicate to Canadians how they support Canadian manufacturing and suppliers and support Canadians through hundreds of thousands of jobs. Brands that are not clearly communicating on-pack where their products are made will likely be assumed by consumers to be American, whether that is true or not.
“Canadians are rallying in ways that they have not done in literally generations. Standing up for what is right is as Canadian as beavers and maple syrup and this may be something that unites us all in a way that many of us have never seen,” it said.
“However, we need to find a balance – an “all or nothing” approach to US products will have impacts on the hundreds of thousands of Canadians that rely on US companies to support their families. There is no clear “right” or “wrong”, but it will be fascinating to see how this inflexion point affects the Canadian retail, packaged goods and foodservice industries in the weeks and months to come.”
Recently, Peavey Industries LP, Canada’s largest farm and ranch retail chain, officially announced the closure of all its stores nationwide. This decision follows the company’s filing for creditor protection under the Companies’ Creditors Arrangement Act (CCAA), granted by the Court of King’s Bench Alberta.
The closures will affect 90 Peavey Mart stores and six MainStreet Hardware locations, with liquidation sales set to begin immediately. This marks the end of a nearly six-decade-long legacy for the Alberta-based retailer, which has been a staple in Canada’s rural and suburban retail market.
Here’s the notice it has posted on its website.
Dear Valued Customer,
We want to alert you to fraudulent activity involving fake social media profiles and websites falsely claiming to be Peavey Mart.
Our official website is peaveymart.com, but it is not accepting orders.
Our liquidation sales are in-store only.
We will never ask for credit card payments online/ phone.
Please be cautious and verify sources before engaging with any online offers. If a website is not peaveymart.com, it is NOT our website. Similarly, if a social media page does not carry the verified ‘Peavey Mart’ name and checkmark, it is NOT affiliated with us.
If you believe you have been a victim of fraud from a fake website impersonating Peavey Mart, we strongly advise you to:
Immediately contact your credit card company to report the fraud.
Work with them to resolve the situation and protect your funds.
Contact your local RCMP department non-emergency line and create a police report.
Your security is important to us. Stay vigilant and thank you for your continued support.
A new consumer study by Caddle, in partnership with the Retail Council of Canada (RCC), provides fresh insights into how Canadians plan to shop for Valentine’s Day in 2025. While participation in the holiday is seeing a decline, spending intentions remain strong, with an increasing emphasis on sustainability and local shopping.
According to the survey, 37% of Canadians plan to celebrate Valentine’s Day this year, a decrease from 39% in 2024 and a more significant drop from 48% in 2023. However, among those participating, spending remains resilient. About 85.2% of shoppers plan to maintain or increase their Valentine’s Day budget, up from 83.6% last year.
Over half of those celebrating (55.6%) plan to spend more than $50 on gifts, dining, and other Valentine’s Day-related expenses. The most common spending range is $51-$100, accounting for 33.1% of shoppers.
In-Store Shopping Remains Dominant
Despite the rise of e-commerce, Canadian consumers still favour brick-and-mortar stores for their Valentine’s Day purchases. The survey found that 73.5% of respondents prefer shopping in physical stores, with only 13.6% making purchases exclusively online. Additionally, 56% of shoppers will make a dedicated shopping trip for Valentine’s Day purchases, an increase from 51% in 2024.
Among those seeking inspiration for their purchases, 39% find ideas from products seen in stores, while flyers (28.7%) and social media (28.1%) are also influential sources.
Valentine’s flowers at a retailer in Toronto. Photo: Dustin Fuhs
Dining Out Leads Spending Categories
Restaurants remain the top spending category for Valentine’s Day, with 41.1% of shoppers planning to dine out. Other major spending categories include food, alcohol, and candies (40.4%) and flowers or decorations (28.5%). Entertainment and activities, such as concerts or movie nights, account for 16.5% of spending.
Sustainability and Local Shopping on the Rise
The study highlights a growing interest in eco-friendly shopping, particularly among younger consumers. Approximately 28% of respondents are seeking sustainable packaging or environmentally friendly products. Gen Z leads this shift, with 44% prioritizing green options.
Local and independent retailers are also benefiting from this trend. More than half of Canadians (54%) prefer to shop at small businesses for Valentine’s Day, while 27% remain loyal to larger retailers, and 19% are undecided.
Last-Minute Shopping Gaining Popularity
Canadians are showing a growing tendency toward last-minute shopping. Only 28.2% of shoppers plan to make purchases 2-4 weeks before the holiday, a steep decline from 47.1% in 2024. Meanwhile, 12.1% will wait until a few days before Valentine’s Day, up significantly from 7.1% last year.
Key Takeaways for Retailers
The study says retailers should take note of these shifting behaviours. With in-store shopping still dominant, businesses can drive sales by enhancing physical retail experiences, curating eye-catching displays, and promoting exclusive in-store deals. Additionally, given the increasing consumer preference for sustainable and local shopping, retailers should emphasize eco-friendly offerings and support for small businesses in their marketing efforts.
As Valentine’s Day spending intentions remain strong despite declining participation, retailers have an opportunity to attract shoppers by catering to these evolving preferences.
Toronto-based health-focused snack brand Rawcology is taking proactive steps to safeguard its operations in response to potential U.S. tariffs and the looming end of the de minimis exemption. Co-owners Megan Loach Tomulka and Tara Tomulka are assessing their supply chain, distribution channels, and pricing strategy to navigate the uncertainty caused by policy shifts under U.S. President Donald Trump’s trade agenda.
Rawcology is not alone in facing these challenges. A collective effort among Canadian consumer packaged goods (CPG) companies has emerged to share insights and strategies. “There’s a real sense of camaraderie and urgency in the industry right now,” said Megan Loach Tomulka. “We’ve seen multiple initiatives come together, including webinars and online registries, aimed at connecting Canadian businesses with domestic and international suppliers.”
Rawcology co-owners and sisters. Left-to-right: Megan Loach Tomulka, Tara Tomulka, Laura Powadiuk. Photo: Rawcology
One such initiative involves Arlene Dickinson and Anthony Lacavera creating an international supplier database to help Canadian businesses identify alternatives to U.S.-based suppliers. Additionally, founders from brands such as Knix and Mini Mioche have launched online registries to showcase Canadian manufacturers.
“We’re seeing an unprecedented effort to highlight Canadian businesses and strengthen our supply networks,” added Loach Tomulka. “It’s about ensuring we can continue to grow despite the challenges these tariffs could bring.”
Supply Chain Disruptions and Ingredient Sourcing
Rawcology relies on several ingredients sourced from the U.S., including organic banana puree, natural organic flavours, organic tapioca syrup, and organic peach puree. With the threat of a 25% tariff on these goods, the company is now looking for Canadian alternatives.
“We’re doing everything we can to avoid passing these costs onto consumers,” said Tara Tomulka, who oversees ingredient sourcing. “For example, we had a Canadian supplier for our organic peach puree, but they faced crop issues due to weather conditions, which forced us to source from the U.S. Weather plays a huge role in organic farming, making it difficult to secure stable suppliers.”
The company has been leveraging its industry network to identify alternative suppliers within Canada. “It’s been incredible to see the support from other brands,” added Tara. “We’ve been reaching out, asking, ‘Do you know who carries this ingredient?’ and working together to secure Canadian sources. But it’s not easy—organic ingredients are already scarce, and minimum order quantities present another challenge.”
Cost Management: Absorbing or Passing on Increases?
With potential tariff-driven cost increases, Rawcology must evaluate whether to absorb them or pass them on to consumers.
“We’re already positioned as a premium organic brand, so our consumers are cost-sensitive,” said Megan. “Our mission is to make nourishing organic food more accessible, which means we work hard to keep our price points reasonable. Passing the cost onto the consumer is a last resort.”
Instead, the company is considering alternative strategies, including reducing trade spend, re-evaluating marketing investments in the U.S., and shifting to Canadian suppliers whenever possible. “It’s a difficult industry with small margins, and every decision counts,” Megan added.
Photo: Rawcology
The De Minimis Exemption and U.S. Direct-to-Consumer Sales
Another major concern for Rawcology is the potential removal of the de minimis exemption, which currently allows Canadian businesses to ship products under $800 to U.S. consumers without import duties.
“Around 32% of our direct-to-consumer sales go to the U.S., and most orders fall between $75 and $125,” Megan explained. “If this exemption is removed, our U.S. customers could face additional shipping costs, which would impact our online sales.”
To mitigate this, Rawcology is exploring options such as stocking larger quantities in a U.S.-based fulfillment centre. “By shipping in bulk and storing inventory in the U.S., we could reduce the impact of tariffs at the retail level,” Megan noted. “This approach would ensure our products remain competitively priced for American consumers.”
Exploring New Markets and Strengthening Domestic Presence
Despite these challenges, Rawcology sees an opportunity to strengthen its position in Canada and expand into new international markets.
“One of the biggest takeaways from this situation is that we need to focus on winning in our own backyard,” Megan emphasized. “We’ve identified gaps in our presence in Quebec and British Columbia, and we’re working on increasing distribution there.”
Beyond Canada, the company is looking to expand its footprint in Europe, where it already has a distributor. “We’re well-positioned for the European market because we meet their stringent food safety standards,” Tara noted. “We just passed our organic EcoCert audit, and that certification makes it easier to enter new international markets.”
Consumer Support for Canadian-Made Products
While the potential tariffs pose significant challenges, one positive outcome has been an increased consumer preference for Canadian-made goods.
“I was at a demo at a Sobeys location on the weekend, and at least 50% of customers asked where our products were made,” Megan shared. “When I told them we manufacture in Toronto, many said, ‘Great, I’ll take two bags.’ Some even bought just to support Canadian businesses.”
This growing sense of economic nationalism could provide a boost for Canadian brands. “There’s definitely a rallying cry to support local manufacturing and products,” Megan added. “At the same time, we need to strike a balance—our American customers are still important to us, and we don’t want to alienate them.”
Looking Ahead: Navigating the Future
As Rawcology adapts to these potential trade shifts, the company is exploring all possible solutions, including working with U.S. co-packers to manufacture products stateside.
“We’re considering a hybrid approach,” Megan explained. “We’d maintain our Canadian manufacturing for our domestic market while partnering with a U.S. co-packer to produce items sold in the U.S. This way, we could avoid tariffs while continuing to support our Canadian workforce.”
Despite the uncertainty, the co-founders remain optimistic. “Entrepreneurship is all about problem-solving,” Megan concluded. “This is just another challenge we need to tackle with urgency, but not panic. The natural food community is strong, and we’re confident we’ll find a way forward.”
As the two-month GST/HST holiday comes to an end, only 5% of small businesses saw stronger sales compared to the same period last year, reported the Canadian Federation of Independent Business (CFIB) on Tuesday.
Among those, only 4% of businesses in retail and 15% hospitality saw an increase in their sales, it said.
Dan Kelly
“By all accounts the government’s GST holiday was a flop for small businesses,” said Dan Kelly, the CFIB’s President. “For many retailers it was an administrative nightmare to get point-of-sale machines compliant just before Christmas, let alone sort out which LEGO sets the holiday applied to, or how many items in a gift basket had to be tax-free for it to qualify.
“The past few months have been incredibly challenging and filled with uncertainty for many small firms. As they transition their systems back to the original amount of GST, we urge the CRA to be lenient and waive taxes owed, penalties, and interest for good faith errors made during the rushed implementation period. The government should also provide affected businesses with a $1,000 credit in their GST/HST accounts to offset programming and administrative costs they incurred back in December.”
The CFIB is Canada’s largest association of small and medium-sized businesses with 100,000 members across every industry and region.
The CFIB said most (66%) small firms impacted by the tax break said their sales stayed about the same but also faced a number of challenges including reprogramming point-of-sale systems and the associated costs, additional administrative workload, training staff and managing customer inquiries.
“On top of the administrative headache and confusing sets of rules, both the Canada Revenue Agency (CRA) and Finance Canada were providing conflicting information as to whether participation in the GST/HST holiday was mandatory. In fact, just last month, the GST holiday was nominated for CFIB’s Paperweight Award – one of the worst examples of red tape across the country – as part of its 16th annual Red Tape Awareness Week,” said the national organization.
