Exploring the Impact of Earls' Acquisition of Cactus Club
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The Consolidation of Dining Options
Recently, I received a message from a friend announcing that Earls has acquired complete ownership of Cactus Club. Initially, I brushed it off, considering that Earls, Cactus Club, and Joey’s are all under the same umbrella—the Fuller family. Given that Earls already held a 65% stake (having been the first investors in the original Cactus Club in North Vancouver back in 1988), the news felt inconsequential. However, as discussions began to circulate on social media, I found myself reflecting on the implications of this change: the Fuller family now controls three significant restaurant chains.
This situation raises concerns.
In capitalism, mergers and acquisitions are common occurrences. We witness this frequently, such as the problematic AT&T and Time Warner merger or Microsoft's recent acquisition of Activision. Even Jeff Bezos’ purchase of Whole Foods in 2017 is part of this narrative.
While such acquisitions are often seen as vital for maintaining competitive dynamics, there are times when government intervention becomes necessary to prevent excessive concentration of power. A historical example is the breakup of Standard Oil over a century ago, which was deemed detrimental to growth and innovation due to John D. Rockefeller's overwhelming wealth.
Competition is essential. It fosters excellence. Without it, capitalism falters. A current example is Spotify's ongoing challenges amid the Joe Rogan controversy, where they must navigate a landscape with alternatives like Apple Music. If Spotify continues to alienate artists and customers, they risk losing business to competitors. Their position as the only service available could lead to complacency, but with rivals present, they must remain responsive to consumer desires.
Returning to the situation with Earls and Cactus Club, the question looms: what does this mean for the broader restaurant landscape? With the Fullers owning these three major chains, we must consider the consequences for the dining community.
A Lack of Variety
These establishments operate similarly, raising concerns about innovation. Aside from some notable hires, like Jason Yamasaki at Joey's and Kevin Brownlee at Cactus Club, there seems to be little unique flavor among them.
Consumers crave diversity, creativity, and originality. Do we genuinely want one family to dominate our dining options with indistinguishable eateries devoid of character? Are we so complacent that we settle for their familiarity?
Should we be concerned if they acquire other groups like The Donnelley Group or Top Table? What market share is acceptable for them to control?
Understanding Monopolies
As defined by The Balance, a monopoly occurs when a company holds "monopoly power" over a product or service, making it nearly impossible for competitors to enter the market. Characteristics of monopolies can include the need for significant economies of scale, capital requirements, and a lack of substitutes.
In a conversation with food journalist Corey Mintz for my podcast, we explored how large chains negatively impact local communities. Many operate at a loss, possess unfair advantages over smaller establishments, and wield significant political influence, all while prioritizing relentless growth. The sheer size of these chains can overshadow local restaurateurs, leaving them little room to thrive.
For instance, on Burrard Street in Vancouver, there are multiple Earls, two Joey’s, and a Cactus Club, with another Cactus Club just a block away, amounting to about 1200 seats controlled by one ownership group. This concentration cannot bode well for the dining scene.
Monopolies often emerge through vertical or horizontal integration. In the case of Earls, the Fuller family exemplifies horizontal integration. They dominate the market because they can sustain high rents and are always accessible. Yet, when was the last time tourists intentionally sought out these chains? In my ten years working in hospitality, it’s something I rarely witnessed.
As Corey Mintz notes, chains often become our go-to options due to their convenience, especially for large groups or diverse dietary needs. This trend can lead to a lack of unique dining experiences and reinforce a monotonous culinary landscape.
Desiring Unique Experiences
What we truly seek are unique establishments like The Diamond, St. Lawrence, Savio Volpe, Bao Bei, and The Keefer Bar—creative venues that enhance Vancouver’s reputation rather than diminish it.
While I recognize the role these chains play in our economy, providing jobs and services, the concentration of power leads to unfavorable outcomes. The Fullers controlling multiple major restaurant chains is not a positive development for our dining culture. But these are merely my thoughts, and while they may not alter the status quo, they are worth considering.