McDonald’s Wal-Mart signs fast food deal

With its instant market clout, leased space in Wal-Mart Canada stores could be a gold mine.And the 122-store chain is only too happy to oblige those companies which match its strategic and local market imperatives.McDonald's Restaurants of Canada is one of...

With its instant market clout, leased space in Wal-Mart Canada stores could be a gold mine.

And the 122-store chain is only too happy to oblige those companies which match its strategic and local market imperatives.

McDonald’s Restaurants of Canada is one of a number of companies lining up to get its foot in the door of as many Wal-Mart outlets as possible.

Jack Baskerville, vice-president, real estate, at McDonald’s, says his company has signed a non-exclusive agreement with the retailer, although no location specifics have been decided.

Baskerville says the McDonald’s restaurants in the Canadian Wal-Marts will differ in a few ways from established outlets.

He says the sandwich menu will be limited to hamburgers, cheeseburgers and Big Macs; the breakfast menu will be limited because Wal-Mart Canada stores will not open until 9 a.m.; and there will be self-serve drinks as well.

Humphrey Kadaner, director of franchising and new concepts at Pizza Hut in Mississauga, Ont., says it is his view Pizza Hut and Taco Bell, as well as McDonald’s, will be in Canadian Wal-Mart stores by the end of the year.

Pizza Hut and Taco Bell are both owned by PepsiCo. in the u.s.

Kadaner says although Taco Bell is leading the way in exploratory talks with Wal-Mart Canada, it is the understanding of Pizza Hut in this country the retailer’s food service strategy will mirror that in the u.s.

Baskerville says there are 110 McDonald’s restaurants in Wal-Marts in the u.s., and 19 Taco Bell/Pizza Hut combos.

He says some u.s. Wal-Marts also offer pastries through PepsiCo’s Cinnabun outlets.

Janis Smith, a Taco Bell spokeswoman at corporate headquarters in Irvine, Calif., says it is company policy not to announce business deals until they are finalized, so she cannot comment on the Wal-Mart Canada situation.

Kadaner says although Woolco, which recently sold 122 stores to Wal-Mart Canada, had its own food service, it was not branded.

He says, in the u.s., research has shown food sales go up fourfold to tenfold in stores that have branded food service such as Pizza Hut because customers are more confident about its quality.

Jane Arend, a spokeswoman for Bentonville, Ark.-based Wal-Mart, says it is too soon to say what will go where in the retailer’s Canadian stores.

Arend says Wal-Mart in the u.s. leases out parts of its operations, depending on store location and market conditions.

She says lessees in the u.s. Wal-Mart stores include vision care centres and hairdressing salons, as well as fast food chains.

She says the hair-cutting business in Wal-Mart in the u.s. is leased in its entirety to Fantastic Sam’s.

Ken Armstrong, a director of Toronto-based Topcuts salons, says his firm would ‘love’ to lease space in Canadian Wal-Marts, but points out Woolco had a deal with Magicuts, also Toronto-based, and apparently that agreement is still in force.

Chris Cawston, president of Magicuts, says the hairdressing chain and the retailer are still talking.