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Chipotles Can Be Found in Canada, but Not in This Region

Regulations, Old and New, Can Present Obstacles to Foreign Chains Operating in Quebec
A Chipotle location in the United States. (Getty Images)
A Chipotle location in the United States. (Getty Images)
CoStar News
February 27, 2023 | 3:14 AM

Nick Suzuki's reward for winning an NHL all-star game skills competition this month was a year's worth of free meals at Chipotle. Not a bad trophy for a guy who likes his steak and chicken bowls. There was just one problem.

"We don't have a Chipotle in Montreal," the Canadiens hockey star tweeted.

The gaffe quickly made the rounds on social media. "Nick Suzuki is spilling the beans, but they won't be beans from Chipotle," declared a blog called HockeyFeed.

In fact, there are no Chipotles in the entire province of Quebec. Several American fast-food chains have never set foot in Quebec because of a combination of economics, legalities and cultural tendencies, including language laws that are about to get more stringent, said Éric Blais, president of Toronto-based Headspace Marketing, which consults with retailers about the Quebec market.

"It’s a huge task for someone who wants to expand in the market," Blais said. "They're certainly not making it easy."

The situation reflects the kind of considerations companies must make when they weigh whether to expand globally, particularly in regions eager to protect their unique culture.

Greater Montreal is home to 4 million people, about half the population of Quebec, making it Canada’s second-most populated province and representing 22% of the country’s population. Plenty of large American fast-food chains have entered the market: They include Subway, with 575 restaurants in the province, and McDonald’s, which has 301 locations. A&W has 182 restaurants in Quebec, Starbucks has 100, KFC has 72, Pizza Hut has 57, Burger King has 33, Wendy’s has 13 and Papa John's has three.

But others joined Chipotle in expanding to Canada but avoiding Quebec, including Popeyes, which has 317 locations in Canada outside of Quebec, Chic-Fil-A has six locations in Canada but none in Quebec and Carl’s Jr. has outlets only in Western Canada.

Strict Language Laws

Chipotle, based in Newport Beach, California, has 25 locations in Canada — all in Ontario and British Columbia. The quick-service chain plans to open 10 new restaurants this year in Canada but none in Quebec. Chipotle won't discuss the reasons behind that strategy.

Some American fast-food chains can be wary to settle in Quebec because of the province's strict and ever-expanding language laws, which aim to promote French by discouraging the usage of English, Blais said. One of those laws, Bill 96, passed last year and is set to start to take effect this year.

The new and stricter laws mean more inspectors will head out to look for violations rather than await complaints as businesses face increased fines of up to $30,000 per day for failing to comply. Any French wording on signs must be about twice as large as any other language, according to lawyers with McMillan LLP, as franchise agreements and written employer workplace communications must be first presented in French and franchises with at least 25 employees are required to form a francization committee.

The Second Cup coffee shop on St. Catherine Street in downtown Montreal has added French wording to its signs. Such added wording will become mandatory on signs in Quebec in 2025. (CoStar)

The legal push is meant to promote the French language majority in Quebec, where 77.5% of residents speak French at home, according to the federal census of 2021, a drop from 82.3% five years earlier. The decline led some to call out for tougher language laws, which first came into existence in province in the 1970s.

Quebec is not the only government that requires adjustments to corporate logos. In the United States, fast-food restaurants routinely adjust their familiar signs and corporate logos to comply with state laws and local ordinances, said Bill Gardner, founder of Wichita, Kansas-based branding company Gardner Design. The state of Colorado, for example, insists on a natural palette, which has forced Pizza Hut to adjust its signature bright red canopies to a more natural shade and has led McDonald's to employ signs using only metallic or bronze lettering within the state.

"When it comes down to how sacrosanct a logo is, companies ask themselves, 'Am I going to have an opportunity to make money?' If the answer is yes, most organizations are going to fully comply in order to stay in business," said Gardner.

But Quebec’s Civil Code legal system differs from the Common Law customs in effect elsewhere in Canada and in the United States, with some legal professionals considering the Quebec laws giving an advantage to local franchisees over the corporate head office.

For example, the Supreme Court of Canada ordered Dunkin' Donuts to pay a group of 30 franchisees in Quebec $16.4 million in 2016 after the head office banned them from customizing their menus to adapt to local tastes. The company has since disappeared entirely from Canada.

One of Quebec’s best-known culinary controversies occurred when Italian restaurant Buono Notte found itself in the uncomfortable language debate spotlight in 2013 as provincial language police ordered the eatery to remove the word pasta from its menu, as the officials deemed it insufficiently French. That led to a firestorm of discussion into the depths of the language laws in the province.

Quebec also has a well-organized and active union movement, which once successfully unionized workers at a thriving McDonald's on downtown Montreal's Peel Street, leading it to close soon after in 2001. Quebec has a history of high minimum wages and its upcoming hike to $15.25 will make it the fourth-highest provincial rate in Canada.

Rewarding Market

In spite of the obstacles, Quebec can be a rewarding place to do business, Blais said. "There are players who do very well because Quebecers are quite loyal. Once they adopt you, they stick with you. Once you have a group of fans, you have those fans for life. There are all sorts of solid reasons to operate and expand into Quebec."

Some paint the French language environment as a potential advantage for some companies. Xavier Chambon of the Montreal-based Quebec Franchise Council told CoStar News that the French language culture of Quebec can provide a dry run for American chains preparing to expand to France without having to leave the continent. “It can create a bridge to the European market. They start with Quebec and then get to Europe,” he said.

Conversely, some companies in France see Quebec as a way to enter the North American market. Columbus Café, a large coffee shop chain from France, described Montreal as its “gateway to North America” when it opened a trio of outlets in the city two years ago. The company vowed to open 80 franchises in the province by 2025 and now has nine in Quebec and recently unveiled its intention to open 100 more in the rest of Canada.

Companies settling into the province for the first time are typically fairly sizable and sufficiently sophisticated to deal with the unique local situation, said Kate Camenzuli, Toronto-based vice president of retail at CBRE, who has helped businesses set up in Quebec.

“It’s important to make sure you have the right team, lawyers, language experts, there’s a whole ecosystem there to make sure that you navigate the nuances," Camenzuli told CoStar News. "Yes, there’s a new bill there and there's harsh penalties for not following it but with the right team," it can be managed if companies are careful.

And taking those steps can pay off.

“The province loves their food. It’s a big place for the food business. Coming to Quebec is a unique experience and those businesses can be extremely successful,” Camenzuli said.

Updated March 1 to correct number of Papa John's in Quebec.