Best Managed Companies

How Cactus Club turned one funky restaurant into a growing national chain

Richard Jaffray spotted the shift toward casual dining far before most competitors. Now his distinctive West-coast chain is poised to enter the U.S.

Canada’s Best Managed Companies
Cactus Club Cafe location in Vancouver

Cactus Club’s Coal Harbour location in Vancouver. It exemplifes the high-profile locations the chain favours. (Grady Mitchell)

Most restaurant owners would flinch at a review that described their establishment’s food as “the edible analogue to accidentally seeing your grandfather nude.” But Cactus Club is a chain restaurant, the sort rarely visited by Chris Nuttall-Smith, the Globe and Mail’s influential former food critic. So the acknowledgement—even if it described the service as “uniformly clueless”—proved useful for the company. “When we got the attention of someone who normally wouldn’t write about a part of the industry like ours, we knew in some respects that we had made it,” says Richard Jaffray, Cactus Club’s charismatic founder and president.

It was particularly fortuitous that the review followed the opening of Cactus Club’s first Toronto location last fall. “It definitely increased our sales volume on the first weekend following it,” says Christy Murphy, a Cactus Club communications executive. “And our operators out there did tell us that a lot of it was, ‘I just had to come in and try it.’”

In the West, the Vancouver-based chain doesn’t need to worry about notoriety. For nearly 30 years, the brand has been synonymous with “creative fine dining,” a restaurant model that blends upscale cuisine with approachable prices. Cactus Club largely created the category and has seen it aped by other chains across the country. But Jaffray’s industry-leading innovation has always been mixed with extreme diligence when it comes to expanding his empire. And at the moment, with 29 locations across Canada—and the Toronto outpost now established—the company’s founder is musing about bringing the United States into his club.

Jaffray didn’t start out with the intention of reshaping the hospitality industry. He just wanted to own a restaurant. He dropped out of university in 1984 to pursue that goal, opening Café Cucamongas two years later. Expo 86 was just getting underway in Vancouver, and the city was flooded with visitors. Jaffray’s café—a pre-Starbucks-era coffee house that served gourmet ice cream, frozen yogurt and cappuccinos—was packed with patrons looking to escape the heat of an unusually sunny and warm summer. But Jaffray and Scott Morison, his business partner at the time, realized Café Cucamongas wasn’t a success story they could repeat elsewhere—and repeatable success was what they were really after. “I didn’t know at the time it was going to be called Cactus Club,” Jaffray says. “But I knew it was going to be a bigger and more mainstream restaurant.” The first location in what would become the Cactus Club empire opened in North Vancouver in March of 1988 (Morison was bought out in 2005).

Jaffray describes the initial vision for the business as a “fun, funky coffee shop” to compete against family-dining stalwarts like White Spot and Denny’s. Cactus Club’s casual aesthetic and consistently competent food won it a steady stream of customers. The company started to expand at the rate of approximately one new location per year and, by the early 1990s, was ready to push into Alberta. Jaffray had grown up in that province, but his homecoming was, in retrospect, a mistake. “I’d bought four restaurants that were either out of business or going out of business, because I thought they were a really good deal. The rent was good, and I could buy them for very cheap. But there really are no good deals, and if you’re getting one, there’s a reason why.”

Many of the locations were duds; the company ended up losing money and closing outlets. “What was good real estate in Vancouver was very different from what good real estate was in Edmonton and Calgary,” Jaffray says. Cactus Club’s near-death experience in Alberta taught Jaffray lessons that would come to define his approach to doing business. “I’ve spent a lot more time and energy doing my homework on locations than I did in the earlier days,” he says. “And, as a result, we’ve been able to get some of these very high-profile locations.”

The spot with the highest profile might be the 500-seat, 15,000-square-foot three-storey location at First Canadian Place in downtown Toronto. But that wasn’t Jaffray’s riskiest pick. That designation belongs to a location on Burrard Street in Vancouver’s financial district that Jaffray opened back in 2008, when the area was a culinary wasteland and the global economy was about to collapse. “I sort of looked around and thought, There are so many people down here. Is the reason nobody’s going after that market because the market’s not there? Or is it because nobody’s offering something the market wants?

Jaffray determined the neighbourhood just wasn’t being properly served. That same year, he hired Rob Feenie. The chef had turned Lumière into Western Canada’s most decorated restaurant, opened up an eponymous food joint next door to it and even defeated Masaharu Morimoto on a 2005 episode of Iron Chef. But after a falling out with his business partners, Feenie took his talents to Cactus Club. Industry watchers were shocked by his decision to join the company as its “food concept architect,” but Murphy says the move reflected the direction diners were headed in. “People didn’t want to go out and spend $1,000 at Lumière anymore,” Murphy says, “but they still wanted the food.”

Feenie’s hiring marked a sea change for the company—and the industry. White-tablecloth restaurants are increasingly rare in the markets where Cactus Club operates. Eateries have embraced the “upscale casual” concept Cactus Club helped invent.

Jaffray’s knack for spotting trends—and, more important, knowing when to jump on them—finds an easy metaphor in his passion for surfing. “You always have to keep your eye on the horizon and see what’s going on. And when that big wave is going to come in, you want to see it first and get yourself in the right spot to take advantage of that opportunity,” he says.

He and his team have their eyes fixed squarely on the Ontario market right now, but the next big wave will likely come from south of the border. “It is just a matter of when,” Jaffray says. The early failure in Alberta taught him that markets can vary greatly, even when they’re adjacent. “It is a different country, and it is a different consumer with different expectations,” he says. “We need to make sure we’re good enough to be an international brand.”

That means making investments, like the new head office the company moved into last April. But it will also mean Jaffray is stepping back from day-to-day operations to focus more on the macro. “He couldn’t be more hands-on, and I mean that in a very good way,” Murphy says. “I think we’re at a point now where it’s almost impossible to have his hand in as many things as he does, but it’s very hard for him not to.”

The goal, she says, is to give Jaffray fewer direct reports and more time to focus on product development and the real estate transactions that are crucial to success. One thing that won’t change, though, is Jaffray’s willingness to wait for the right wave—no matter how long it takes. “He never guesses,” Murphy says. “He never rushes any decision—ever. And I truly believe that’s one of his secrets to success.”