Yoshinori Kitanoya | BCBusiness

Yoshinori Kitanoya | BCBusiness
Chef Yoshinori Kitanoya is credited with introducing Vancouver to the true cacophonous spirit of izakaya.

Will the unique dining category spawned 
in the tony enclaves of Yaletown and Kitsilano become Canada’s national cuisine?

There’s no mistaking the look and sound of a hot restaurant. And on this fall evening the buzz around one corner patio is lively. Customers loiter outside, awaiting tables; inside, wait staff shout orders and line cooks shout back while conversations escalate in volume, either due to alcohol consumption or out of simple necessity. The food is good and the place vibrates with energy. It’s no wonder the Globe and Mail called this “Toronto’s hottest new restaurant.”

This particular scene, however, is not happening in Toronto. It’s Guu with Garlic, at the corner of Robson and Bidwell streets, one of the six Vancouver-area locations of the Japanese chain. Having introduced the izakaya concept to the Vancouver market in the early ’90s, Guu has now exported the concept to Toronto with instant success. And Guu is not alone in its eastward invasion. Several Earls restaurants have landed in metro Hogtown, including a downtown location that is already the chain’s most successful. Following the lead of those two are Vancouver casual dining staples Joey Tomato’s and Cactus Club. Meanwhile, the Caffè Artigiano chain that has spread through Vancouver since opening its first café at Pender and Thurlow streets is also taking its latte art show to Canada’s biggest city.

Like zebra mussels invading the Great Lakes, Vancouver restaurants are steadily colonizing Toronto. Most of the western invaders developed and honed their operations in competitive fields that did not necessarily exist back east. Just as the armies of Genghis Khan sharpened their skills and techniques fighting battles back home before conquering Europe, Vancouver chains have worked out the bugs in Vancouver before striking out beyond the mountains.

The arrival of Guu in Toronto was everything a restaurateur could hope for: earning rave reviews, landing steady office business, and perhaps best of all, owning a market niche that did not even exist in Toronto before the first Guu opened its doors on Church Street in December 2009. But the chain has had some experience introducing the izakaya concept into new markets. Common as they may be here these days, Vancouver was once izakaya-free. Before the wave could spread across Canada, some education – and adjustment – would be necessary.

Raku (not to be confused with chef Trevor Hooper’s now-closed Raku Kushiyaki on West 10th Avenue) opened at Thurlow and Smithe in 1993. It was launched by Tokyo izakaya master Takashi Uno, who ran three different izakaya chains in Japan and wanted to launch one in his adopted hometown.

Things did not go well initially. Vancouver did not understand the izakaya concept. Sometimes described as “Japanese tapas,” izakaya menus offer an ever-changing variety of small dishes, often based on traditional comfort food. Although they offer seafood items, including black cod and the popular seared tuna tataki, izakayas are not sushi joints. “People would come in and expect sushi or teriyaki,” recalls general manager Kaz Hashimoto, “and then they’d go away and never come back.”

Enter Yoshinori Kitanoya. A chef at one of Uno’s Japanese restaurants, Kitanoya transferred to Vancouver six months after Raku opened, on a mission to turn it around. The food, Kitanoya decided, was not the big problem. What Raku needed was the missing element so crucial to the feel of a Japanese izakaya: yelling.

For an izakaya, yelling is not an end in itself. It’s about team spirit. Staff members shout back and forth, wait staff to kitchen and vice versa, conveying and confirming orders but also functioning like a cheering squad at a ball game. Everyone gets pumped up. The content of the shouting is not all that important.

Soon patrons arriving at Raku were startled by loud shouts of “Irashaimase” (welcome), followed by a near-continuous cacophony of Japanese bellowing, capped off with hearty goodbye-and-thanks-for-coming choruses. And come back they did. Tickled by this bizarre new dining experience, Vancouver diners began to stick around long enough to discover that there was more to Japanese cuisine than sushi and teriyaki. Meanwhile, homesick Japanese ESL students began showing up in droves. Raku took off.

Izakayas began sprouting around Vancouver, many bearing the name Guu, including Guu with Garlic on Robson, Guu Otokomae in Gastown, Guu Garden on Nelson, and Guu Thurlow – the restaurant formerly known as Raku. The name change for Vancouver’s original izakaya reflected a big change at the top. Head chef Yoshinori Kitanoya was now the owner. It hadn’t been a hostile takeover – in fact, Takashi Uno had simply given the restaurant to his protege. “The Japanese master-student relationship,” says Guu general manager Hashimoto, “is like a father-son relationship. It was as if Mr. Uno was giving the restaurant to his son.”

By the early 2000s the revolution was well underway: it seemed almost every new Vancouver restaurant was an izakaya. By the time Guu arrived in Toronto, its operations had been honed to a sharp edge in North America’s most competitive market for casual Japanese dining.

Take away the octopus casseroles and deep-fried pumpkin balls, and a similar story could be told about Earls. The new Earls on King Street in Toronto’s financial district is now the chain leader in revenue and profitability, sometimes taking in $300,000 a week. The Earls menu of burgers, steaks, stir-fries and salads may not seem quite as new to Toronto as Guu’s mystery marvels (one Guu special sheet contained a dish described as “squid gristle”). But Earls is also exploiting a Toronto market niche that is, if not empty, at least under-served: the segment known in the industry as premium casual.


Earls restaurants
Image: Adam Blasberg
Sleek, modern and capitalizing on an under-served
market, Earls is almost unrecognizable from its
hamburger joint beginnings.

Earls makes its way east

The Earls chain was launched in Edmonton in 1982. Founder Leroy Earl “Bus” Fuller moved his family to Vancouver in the mid-’80s and the Earls chain arrived with them. As it established itself on the West Coast, Earls gradually evolved from its roots as Edmonton’s favourite funky burger joint. Using its chain-wide buying power, Earls provided fresh, premium ingredients and increasingly sophisticated décor and service, while maintaining price points that were competitive with other casual diners. The pricing allowed Earls to cater to a broad market segment even as it gently educated customers in the joys of quality ingredients. Diners gradually learned that, within reason, they could have it all: reasonable prices and meals suitable for special occasions. 

Now Joey Tomato’s, another successful Fuller family nameplate, has followed Earls into southern Ontario, with locations in Don Mills and Toronto’s Eaton Centre.

The Toronto market was ripe for the category now being dubbed “premium casual.” Toronto’s casual dining scene is populated by chains such as Wild Wings and Alice Fazooli’s, both owned by Peter Fowler’s Service Inspired Restaurants Corp. (SIR) group. A recent visit to Alice Fazooli’s in Mississauga revealed a fettuccine primavera dish that appeared to have been made with asparagus from a jar – not something you’d find at Earls. So the question is, why did Earls wait so long to move into the country’s biggest market?

In the mid-’80s Fowler bought a stake in the Fuller family business. The principals decline to confirm or deny an industry rumour of a non-compete agreement on their respective sides of the east-west divide, but when the SIR group opened a Jack Astor’s bar in Calgary in the late ’90s, it seemed to be a declaration of open season. It wasn’t long after that the Fullers began scouting suitable locations in the Greater Toronto area. “We started looking for real estate as far back as 2001,” says Earls director of Toronto operations Mike Hladik.

The first Ontario Earls would not open until 2008, in Mississauga’s Square One mall. A Burlington location followed in 2010. In February 2011 Earls finally invaded Toronto proper with its King and York restaurant. “It’s by far the busiest restaurant in the organization,” Hladik says. “Costs are high – we pay a very high rent in the middle of the financial district. But we didn’t expect this kind of volume. Even with the extra costs it’s our most successful restaurant in terms of profitability.”

Caffè Artigiano tries to crack the eastern market

Providing a premium product at a competitive price should crack open any market, under-served or not. But Caffè Artigiano has learned the hard way that due diligence is necessary. Before making his plans to tackle Hogtown, Willie Mounzer did his homework.

Caffe Artigiano
Image: Adam Blasberg
Caffè Artigiano expects its intimidating price point
to attract rather than deter the coffee mavens of

“We used to think Artigiano was bulletproof,” Mounzer says. The former Earls vice-president of operations bought the successful Artigiano chain from founders Vince, Mike and Sammy Piccolo in 2006. The Piccolos had already proved that with rigorous staff training and top-of-the-line beans, a high-volume café chain could still offer latte art and a level of quality that would be a revelation to Starbucks regulars. Mounzer then proceeded to accelerate the chain’s expansion and today there are 11 locations: two in Calgary, one in Victoria, and eight in Vancouver. (An Artigiano location in Seoul, Korea, is a franchise operation under separate management.) Buoyed by an unblemished record of success, Mounzer was convinced that Artigiano locations would be destination shops wherever they appeared. When Mounzer and his team found a scenic location in Kelowna’s West Bank side, they figured it would work. “There are only about 35 to 40,000 people on the West Bank side. We really thought that in a small community people would travel for good coffee. We thought, ‘There are 80,000 people on the Kelowna side; they’ll drive over.’ No. The base was just too small. And in a café like ours we need to run it with six or seven [staff], whereas a Starbucks can run with three or four. You need the population to make it work.”

The company ran into problems with its two Broadway locations as well. The London Drugs location at Cambie and Broadway has been closed. “In that neighbourhood they buy on price, not on quality,” Mounzer says. “An employee in the Broadway medical corridor is not going to spend as much. You can get a sandwich for $3.50 and ours are $6.95 to $7.95. You can get baked goods for $1.20 to $1.80 and ours are $2.50 to $2.70. The décor was intimidating to a lot of people on Broadway – they found it too fancy. People would say, ‘Looks too expensive,’ and wouldn’t even go in.”

These days Mounzer employs a demographic research firm to plot suitable markets for the chain. “Artigiano fits a certain niche, a certain part of the bell curve. It just can’t go everywhere.” 

But it’s definitely going to Toronto. If the target is people who don’t mind paying a little more for quality, Toronto has more of those kind of people than Kelowna has people. And Toronto was begging for it – Mounzer says he was constantly fielding requests from Hogtown visitors. “It was emails from developers, commercial real estate agents, and owners wanting an Artigiano in their building,” Mounzer says. “I went out there in 2008, before the recession hit, and determined Toronto would be a great spot for us. Because of the recession we had to wait a few years for our expansion financing to return.”

Current projections are for the first Caffè Artigiano to open in Toronto in early 2012. It’s unlikely to be the last. “We plan to build as many cafés as we can in the areas that meet our demographic profile,” Mounzer says. “We’re looking at three downtown locations in the financial core. There’s a number of outlying areas that we think would fit our demographic, comparable to a Kerrisdale or a Park Royal or Robson Street. We’re pretty confident we’ll be met with approval.”

Artigiano is in a different situation than Guu or even Earls – premium cafés are not unknown in the Big Smoke. Small premium café chains like Crema and Dark Horse compete with numerous independent specialty cafés. But as Canada’s biggest market and financial heart, the premium coffee sector in Toronto has barely been scratched.

Mounzer says capital costs for starting up in Toronto are similar. “The capital’s not an issue; it’s the people,” Mounzer says. “Having good people trained for a while in a café is extremely important before we move forward. There’s 10 or 12 steps where you can ruin an espresso bean or you can ruin drip coffee – if you don’t have the right people, that’s what’s going to happen.”

Mounzer believes expansion should happen naturally. “We don’t have any grandiose plans. But if we get it right in a city and there’s a manager and two assistants, those two assistants are going to want their own stores because they’re going to want to make what the café manager makes. That would be the impetus to open more stores.”


Cactus Club makes plans for Toronto

Like Mounzer, Richard Jaffray learned the perils of expansion the hard way. The founder of the Cactus Club chain of restaurants and president of Cactus Restaurants Ltd. is also planning to take his hit Vancouver brand into Toronto, although plans have not yet firmed up. “We’ll be in the downtown area – we’re looking at a couple of opportunities,” Jaffray says. “I expect we’ll be there in the next couple of years.”

With 20 Cactus Clubs in operation in two provinces and three more under construction, Jaffray is clearly ambitious. But he also understands the need for caution. His first out-of-province expansion ended badly. 

Jaffray and original partner Scott Morrison launched the Cactus Club concept in March 1988, with a restaurant on Pemberton Avenue in North Vancouver. (Earls has been a silent partner in the company since the beginning.) By 1996 they had five locations and made the bold decision to tackle Alberta. Two Cactus Clubs opened in Edmonton and two in Calgary. Of those original Alberta four, only the restaurant on Calgary’s McLeod Trail survives. “We got some bad real estate deals,” Jaffray says. “And it was too soon. We weren’t ready to be a national chain.” 

Today, Cactus Club has successfully returned to Edmonton, and Jaffray is eager to tap the Toronto market. “The population is three times size of B.C.,” he points out. As for Cactus Club’s earlier troubles, he can now afford a sanguine attitude. “In terms of a learning experience it was probably the best thing that ever happened to us,” he says, “although I’d rather it hadn’t.”

In the estimation of Caffè Artigiano’s Willie Mounzer, Toronto invaders such as Cactus Club, Earls and Caffè Artigiano are targeting a similar segment of the market – straddling the line between casual and the high end. “There’s fine dining on one end, casual dining in the middle. With coffee you have specialty cafés, akin to fine dining. Then there’s the middle, which Starbucks basically has. We feel we’re as good as the specialty cafés, but we still do a lot of things that appeal to the middle of the bell curve. We understand that the person drinking the latte is still the biggest piece of the pie.”

Earls currently has 62 locations, including cafés in Victoria, Colorado, Washington state, Winnipeg, and now Toronto. Hladik feels the chain is benefiting from a honeymoon period in Toronto. “We’ve had articles in Maclean’s, Toronto Life, the Globe and Mail, all good. A lot of feedback from bloggers too. There was some skepticism until they saw what we do – the reaction was something like, ‘It’s a chain but not a chain.’ People have discovered we’re a different sort of operation.”

Where was the difference born? Is there something about the Vancouver market that hones a competitive edge? “I think the theory has merit,” Hladik says. “Vancouver, Edmonton, Calgary – they have been competitive in the upper end of the casual market. You have Milestone’s, Joey Tomato’s, Maxi’s, Cactus Club – it raised everyone’s game. Out here [in Toronto] you don’t have the same level of competition. They’ll raise the bar eventually.”

Mounzer believes it’s a West Coast thing. “In the food service industry a lot of the great ideas came from San Francisco. They didn’t come from Chicago or New York; they came from Frisco, and they came up the West Coast. With coffee it was the same thing – Seattle and Vancouver were years ahead of everywhere else. Even Starbucks will tell you that Vancouver is one of the hottest markets for them in North America.”

Cactus Club’s Jaffray can even see a connection between Vancouver’s izakaya boom and the success now being enjoyed by the city’s casual chains. He points out that Cactus Club head chef Rob Feenie has added items such as tuna tataki to the menu – an appetizer introduced to the Vancouver market at Guu. “Vancouver has an adventurous climate for food,” Jaffray says. “There’s Asian influence on almost every menu. Items like butternut squash ravioli and tuna tataki – people didn’t think they would sell in a casual restaurant.”

Toronto is now getting a taste of that Japanese influence. According to Guu general manager Hashimoto, they’ve got some catching up to do. “Toronto is 20 years behind Vancouver in terms of Japanese food,” he says. 

That could change fast, as a number of other Vancouver Japanese restaurants consider expanding eastward. Hapa Izakaya is investigating the possibility of a Toronto expansion. Kingyo is already scouting for a Toronto location, while Daiji Matsubara, chef and owner of the Kintaro/Motomachi Shokudo ramen shops, is contemplating a Toronto move perhaps a couple of years down the road. 

As for Guu, further expansion in Toronto or elsewhere does not depend merely on economic factors. Guu’s two Toronto locations are franchise operations owned by ESL school entrepreneur James Kim. But chef Kitanoya is in charge of quality control. “Mr. Kitanoya feels that new locations of Guu are like stages for his chefs,” says Guu general manager Hashimoto. “He is in business for his chefs, not just himself.”

In fact, Kitanoya’s Guu business card contains the Japanese characters not just for “president,” but also for “father.” It’s nice when the kids can help bring a proud dad a little income.