Happy Belly Food Group could grow its restaurant network to 183 locations by the end of 2027 as the Canadian company increasingly relies on franchising to expand its portfolio of quick-service and fast-casual restaurant brands, according to new analysis from Stifel.
The forecast follows a period of rapid expansion for Toronto-based Happy Belly, which reported record second-quarter results this week. The company generated $28.4 million in system-wide sales during Q2 2026, up approximately 76% from a year earlier, while revenue increased 56% to $8.5 million.
Happy Belly ended the quarter with 95 restaurants, including 77 franchised and 18 corporate locations, compared with 62 restaurants a year earlier. Adjusted EBITDA increased 41% to approximately $720,000.
Martin Landry, Managing Director at Stifel, said the results came in slightly ahead of the firm’s expectations. Stifel maintained its Buy rating and $2.30 target price following the results.
The quarterly performance was covered separately by Retail Insider. Stifel’s latest analysis provides a longer-term view of the company’s expansion and the growing role franchising is expected to play as Happy Belly enters additional markets.
Stifel Forecasts 183 Restaurants by End of 2027
Stifel forecasts Happy Belly will finish 2026 with 124 operating restaurants before increasing the network to 183 locations by the end of 2027. Franchised restaurants represented about 81% of the network during the second quarter, with Stifel forecasting that proportion will reach approximately 85% by the end of 2026 and 87% in 2027.
The expansion could produce a significant increase in sales across the restaurant system. Stifel estimates system-wide sales will reach approximately $118.5 million in 2026 and $227.1 million in 2027.
Those projections follow considerable growth over the past two years. Happy Belly had 43 restaurants at the end of 2024 and 77 at the end of 2025. Reaching Stifel’s 124-location estimate this year would put the network at nearly three times its size at the end of 2024.
The company’s development pipeline is considerably larger than its operating footprint. Stifel points to a backlog of more than 650 restaurants, while Happy Belly has recently reported 686 contractually committed franchise locations across its portfolio in various stages of development, construction and operation.
Those commitments extend over multiple years and should not be interpreted as hundreds of imminent openings. They include development agreements across several brands and geographic markets, with the timing of individual restaurants dependent on real estate, construction and franchisee execution.
Franchising Changes the Financial Picture
Happy Belly’s increasing reliance on franchising is also changing how its growth appears in its financial results.
Stifel reduced its 2026 revenue forecast to approximately $30.9 million from $32.5 million and lowered its 2027 forecast to $51.6 million from $59.6 million. The firm attributed much of the revision to expectations for a higher proportion of franchised restaurants.
Sales generated at franchised restaurants contribute to Happy Belly’s system-wide sales but are not recorded entirely as company revenue. Happy Belly instead receives royalties and other franchise-related revenue, making system-wide sales and restaurant count increasingly relevant measures as franchising represents a larger share of the network.
Despite reducing its 2027 revenue estimate by approximately $8 million, Stifel made a comparatively modest adjustment to its adjusted EBITDA forecast, lowering it from approximately $12.4 million to $11.9 million. The firm now forecasts an adjusted EBITDA margin of 23.1% in 2027, compared with a projected 6.3% in 2026.
Landry’s analysis points to franchise economics as an important part of the growth strategy. Stifel says investment payback periods and returns on invested capital for franchisees have helped attract additional operators, supporting expansion while limiting the amount of capital Happy Belly needs to invest directly in new restaurants.
Development Agreements Build the Pipeline
A series of multi-unit franchise agreements shows how Happy Belly is attempting to translate that model into operating restaurants.
Heal Wellness signed the largest multi-unit development agreement in Happy Belly’s history in June, covering 45 restaurants across Ontario, Saskatchewan and Manitoba over three years. At the time, Happy Belly said Heal had 42 operating restaurants and more than 166 locations in development, while the overall company portfolio had reached 686 contractually committed franchise locations.
Other concepts are growing through similar arrangements. Yolks Breakfast has a 15-unit development agreement for Alberta, while iQ Food Co. has a five-unit development arrangement in Calgary, with its first Calgary restaurant planned for The CORE in the city’s downtown.
The agreements allow Happy Belly to establish development pipelines covering multiple restaurants and markets while franchisees provide much of the capital required to build and operate individual locations.
Heal Wellness and Rosie’s Burgers Drive Expansion
Heal Wellness has become one of the clearest examples of Happy Belly’s expansion strategy. When the company opened its 100th restaurant in Maple, Ontario, in June, the location was also Heal’s 41st restaurant.
The concept continues to expand beyond its established Ontario footprint. Its 45-location development agreement includes Saskatchewan and Manitoba, while a separate agreement is supporting further expansion in Quebec.
Rosie’s Burgers is another rapidly growing part of the portfolio. Stifel describes Rosie’s as one of Happy Belly’s strongest concepts and notes that its restaurant count doubled over the previous 12 months.
The burger concept has expanded into Calgary, Edmonton, Montreal and the Greater Toronto Area, including a recently opened restaurant at First Canadian Place in Toronto’s Financial District. Happy Belly may also exercise an option during the fourth quarter to acquire the remaining interest in Rosie’s, according to Stifel.
Happy Belly is also working toward completion of its acquisition of Ghost Taco, a fast-casual Mexican concept. Stifel views the pending acquisition as another potential avenue for growth and believes Happy Belly’s cash position and relatively low capital requirements could leave room for additional acquisitions.
U.S. Expansion Adds Another Growth Market
Happy Belly is preparing to move beyond Canada, with its first U.S. restaurant expected to open in September. Heal Wellness is entering Lubbock, Texas, near Texas Tech University, and Stifel expects additional U.S. restaurants to follow in subsequent quarters.
The move comes as Happy Belly continues its Canadian rollout, adding another layer of complexity to the expansion. Landry identifies growing pains as one of the principal risks facing the company, particularly as management supports a larger franchise network while entering new geographic markets.
Competition is another consideration. Happy Belly’s brands operate primarily in highly competitive quick-service and fast-casual categories, where larger restaurant companies can have considerably greater marketing, purchasing and financial resources.
Growth Accompanied by Portfolio Pruning
Happy Belly is also removing weaker restaurants from its system as it expands. Stifel said five underperforming locations were recently closed, noting that the restaurants had been a drag on earnings and that their removal could contribute to improved profitability in subsequent quarters.
The closures put greater emphasis on the quality of expansion rather than restaurant count alone. As more committed units move through the development pipeline, site selection, franchisee performance and individual restaurant economics will become increasingly important.
Food inflation presents another operating challenge. Stifel said management has been negotiating with vendors for improved terms and volume discounts and recently reached an exclusive delivery arrangement with Uber Eats that resulted in improved rates.
A larger restaurant network could provide Happy Belly with greater negotiating leverage in areas including food purchasing and delivery, while requiring additional infrastructure to support a larger and more geographically dispersed franchise system.
Converting the Pipeline Into Restaurants
Happy Belly has grown from 43 restaurants at the end of 2024 to more than 100 operating locations in 2026, while its contractual development pipeline has expanded considerably faster.
The next phase will be defined by how successfully those commitments are converted into productive restaurants while Happy Belly maintains franchisee economics and operating standards across a wider geographic footprint. Stifel’s forecast of 183 restaurants by the end of 2027 would still represent only a portion of the company’s broader development pipeline, while more than doubling its year-end 2025 footprint.
The increasing franchise mix allows Happy Belly to pursue expansion with less direct capital invested in individual restaurants, while putting greater importance on franchisee selection, real estate, training and consistent execution.
With development agreements in place across Canada and the company’s first U.S. restaurant approaching, the next several quarters will begin to show how much of Happy Belly’s large development pipeline can translate into a substantially larger operating network.
