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Cara Acquires the Steak and the Sizzle

Duncan Wallace

If you follow the food industry in Canada at all, you’re probably aware that back in January 2018 Cara Operations Ltd. had acquired The Keg Restaurants Ltd. at a small price of $200,000,000.

This is an important merger to follow for many reasons, most importantly, one of Canada’s largest food purchasers (Cara, second to McDonald’s) is adding THE countries’ premium chain to its large portfolio of restaurants. What interested me was I personally had been involved with Cara for a few months in 2014 when the company was looking to expand one of its brands in St. John’s. Myself and a small group had made it through their intensive franchise interview process, all the way down to the last two groups. Throughout the process there was one thing that struck me during my meetings with their directors and vice presidents: It’s the admiration they all had for The Keg, calling them the envy of chains in high end restaurant operations. They spoke highly of how The Keg dominated that sector, how amazing their brand power was, as well as how great their service standards were.

This is interesting to me because usually in major mergers and acquisitions, often, the larger corporation tends to lend its best practices and culture to the smaller one. But one thing you might have missed throughout this merger (if you hadn’t followed it closely) is that David Aisenstat (CEO of The Keg Restaurants Ltd. at the time of the acquisition) will remain in charge of The Keg’s operations and will now be assuming oversight in Cara’s other high-end brands; including the Bier Markt and Milestones chains. This is probably the most important part of the merger, because if you do just the slightest bit of research on David (name being awesome alone), he is very well respected in the industry and has been wildly successful in his career.

David was born and bred for the industry, almost quite literally. His father Hy Aisenstat started Hy’s Steakhouse in Calgary in 1955, as a side project when he noticed there was a need in the market for it, which eventually became his career. If you read up on the history of Hy’s Steakhouse (click here), it was mostly due to Hy’s infectious personality that the restaurant took off. As a restaurateur myself, I know there’s nothing customers love more than an energetic owner greeting them and asking them how their evening is. One can assume this is where David first learned that a customer’s experience is vital to a restaurant’s success. However, even though he had grown an empire in this industry, before jumping into the family business himself, David’s father cautioned him against it:

There’s no one working for me now that can take over, so if you want to come and give it a shot you’re welcome,” he recalls his father telling him. “He said, ‘If I were you I’m not sure that I would.’ (BCBusiness)

As most of you in this business know, it’s a lot of late nights (given the hours of operation), it means putting on a face every day, even when you’re not feeling the best, and it means working hard to retain quality employees in an industry where they can just send out a text and have a new job in minutes. But when it’s in your blood, it’s just in your blood. So, after moving through the ranks at Nabisco Brands, David returned to Hy’s Steakhouse to eventually take over as President in 1988. This was a great natural progression for him as it set him up to eventually be in the position to purchase The Keg, which he did in 1997. David had a long history with The Keg, his family having owned 20% of it in the past and were good friends with founder George Tidball.

David wasn’t happy with the direction The Keg had gone after it’s initial sale and wanted to “rewind The Keg to the entrepreneurial style and attitude George Tidball had started the company with, offering customers a place where ‘you could get a steak, have some fun in a casual atmosphere.’” (BCBusiness) One quote from David where you can get some great insight into what makes The Keg so successful is also from the article in BCBusiness in 2006:

You can build a stunning restaurant in a great location, but if you don’t have the right people, you have nothing. It’s the experience: how you are greeted when you walk in, how your meal is prepared, how you get served, what the guy at the bar is like, down to if you get a glass with lipstick. Every single staff member is so important. (The article quoted is a great honest look into his personality, you should have a read through it after this amazing one ;) )

Having these values ingrained in him, he was able to change the corporate culture at The Keg and was able to take the company to the next level, the highest one in fact. From 1997 to 2005 alone he was able to increase annual sales from $185 million to $325 million. That’s an incredible increase in an eight-year period, especially when you factor in the fact that the brand had started to lose its swagger before he had purchased the company. Today the 100+ locations ring in over $600 million in sales annually, with no end in sight, as the brand continues to develop that little market to the south of us, the United States.

So, going back to where all this started, what does this all mean for Cara? Well if you ask me it means not only has Cara purchased a beast in the industry, they’ve also acquired the catalyst behind the massive machine. With David Aisenstat now in charge of expanding their higher-end brands, I think it’s a pretty safe bet there’s a lot of amazing things to come in the next couple of years at Cara Operations Ltd. So, if you’re a potential franchisee or someone just looking to invest I would say this: There’s a lot of people that regret not getting in on The Keg early on, so here’s your second chance!

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