A restaurant is a place where various delicacies are cooked and offered to patrons. In addition to meals, restaurants also provide snacks and alcoholic and non-alcoholic drinks.
According to the data that is currently available, the market size of the full-service restaurant sector in Canada will be $41.7 billion in 2023. Statistics on the Canadian restaurant business show that it employs 1.2 million people or 6.4 percent of all jobs in the nation. In Canada, there are about 97,000 taverns and eateries.
Steps on How to Start a Restaurant Business in Canada
Table of Contents
Conduct Market Research
It is key to remember that conducting thorough market research before opening a restaurant in Canada is essential for maximizing revenue. Please note that creating market-based research questions that are consistent with your overall business aim should be the first stage in the market research process for your Canadian restaurant business.
In this regard, you should look for information that will provide you with trustworthy data, information that will help you find out what your potential market will be seeking from a Canadian restaurant business and information that will enable you to run your Canadian restaurant business with less stress and, grow the business to profitability.
a. Who is the Target Market for Restaurant Business in Canada?
- Everyone who resides in and around the location where you have your restaurant.
- Visitors and tourists.
b. Is Restaurant a Profitable Business?
Yes, the restaurant business in Canada is very profitable. Statistics shows that sales in the food service and drinking places subsector increased three percent to $7.4 billion in May 2022.
c. Are There Existing Niches in the Industry?
There are existing niches in the restaurant industry, and here are some of them;
- Fine Dining Restaurants
- Casual Dining Restaurants
- Fast Casual Restaurants
- Premium Casual Restaurants
- Family Style Restaurants
- Fast Food Restaurants
- Ethnic Restaurants.
d. Who are the Major Competitors?
- Beba, Montreal
- Supply and Demand, Ottawa
- Edna, Halifax
- Cinched, St John’s
- The Cottage, Regina
- Deer + Almond, Winnipeg
- Native Tongues, Calgary
- The Acorn, Vancouver
- Jinbar, Calgary
- Mimi, Toronto
- The Green Door Restaurant and Bakery, Ottawa
- Bar Kismet, Halifax
- John’s Lunch, Dartmouth
- Phnom Penh, Vancouver
- Île Flottante, Montreal
- La Buche, Quebec City
- Eight, Calgary
- Tojo’s, Vancouver
- Alo, Toronto
- The Inn at Fortune Bay, Fortune Bay.
e. Are There County or State Regulations or Zoning Laws for Restaurant Business in Canada?
Yes, there are county and provincial regulations and zoning laws for restaurants in Canada. Zoning allows local governments to regulate which areas under their jurisdiction may have real estate or land used for particular purposes. Examples of zoning classifications include residential, commercial, agricultural, industrial, or hotel/hospitality, among other more specific designations.
f. Is There a Franchise for Restaurant Business in Canada?
Yes, there are franchise opportunities for restaurants, and here are some of them;
- Ben & Florentine
- Smitty’s Family Restaurants
- Booster Juice
- Coffee Time
- Boston Pizza
- Pizza Pizza
- Sub
- Second Cup
- Montana’s
- Tim Hortons.
g. What Do You Need to Start a Restaurant Business in Canada?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- A Good Restaurant facility
- Goods and Services Tax/ Harmonized Sales Tax (GST/HST)
- A Corporate Bank Account
- Suppliers of food ingredients and drinks
- Employees
- Startup Capital
Choose a Memorable Business Name
When looking to start a business, before you can begin to file the necessary documents with the constituted authorities or start your website, it is necessary that you come up with a name that you will be recognized with. It is essential that the name you come up with can easily be pronounced, is unique and easily memorable.
Some of the catchy business name ideas suitable for a restaurant business in Canada are;
Creative Restaurant Business Name ideas
- Grace Food Court© Restaurants, Inc.
- Manitoba Kitchen® Restaurants, Ltd.
- Respectable Foods© Restaurants, Inc.
- Ottawa Corner® Restaurants, Inc.
- Calgary Culture™ Restaurants, Inc.
- Milton Jones™ Restaurants, Ltd.
- Dillard House© Restaurants, Ltd.
- Foodie Court® Restaurants, Inc.
- Catherine Kitchen© Restaurants, Inc.
- Temple Food© Restaurants, Inc.
- Food Balloon® Restaurants, Ltd.
- Monarchy Chickens™ Restaurants, Ltd.
- Mississauga Pots© Restaurants, Inc.
- Kitchener Kitchen® Restaurants, Inc.
- Regina Foodie™ Restaurants, Inc.
- Halifax Fingers™ Restaurants, Inc.
- The Food Corner© Restaurants, Inc.
- Foodie Nations® Restaurants, Ltd.
- Greenish Foods© Restaurants, Inc.
- King George© Restaurants, Inc.
Register Your Business
a. What Type of Business Structure is Best for a Restaurant?
You have four alternatives for business structures when creating a restaurant in Canada, but the corporation is the one that most people in this industry take into account. A corporation has limited liability—the owners are not liable for the debts or liabilities of the business. Obtaining funding from investors or financial organizations is simpler.
All Canadian businesses must register their names in their respective provinces or territories, with the exception of sole proprietorships that use only the owner’s legal name without any additions (except in Newfoundland and Labrador, where neither partnerships nor sole proprietorships are required to register their names).
b. Steps to Form a Corporation in Canada
- Whether it’s a federal or provincial/territorial incorporation, register your business.
- Contact the Canada Revenue Agency to open a corporate income tax account and obtain a federal business number (CRA).
- In all other Canadian jurisdictions where you want to conduct business, register as an extra-provincial or extra-territorial corporation.
c. What Type of License is Needed to Open a Restaurant Business in Canada?
- General Business License
- Health and Safety Permit
- Food Handler’s License
- Liquor license
- Health and trade license
- Lift clearance license
- Zonal Permits
- Signage Permit
- Operational State Facility Inspections
- A live entertainment license if you want to provide entertainment such as live musicians or offer dancing or karaoke.
- A music license if you want to play live, recorded, or streaming music in your restaurant
- A dumpster placement permit that specifies where you can put your trash dumpster outside your restaurant
- A valet parking permit if you plan to offer valet parking for customers
- Sidewalk permits if you plan to offer outside seating.
d. What Type of Certification is Needed to Open a Restaurant Business in Canada?
These are some of the certifications you can work towards achieving if you want to run your own restaurant;
- Clean Health Certificate
- Food handler Certification
- Catering Training Certificate
e. What Documents are Needed to Open a Restaurant Business in Canada?
These are some of the basic legal documents that you are expected to have in place if you want to legally run a restaurant in Canada;
- Goods and Services TaxHarmonized Sales Tax (GST/HST)
- Council Permit
- Business and liability insurance
- State Permit and Building Approval
- Certificate of Incorporation
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Online Terms of Use
- Online Privacy Policy Document
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
In most cases, you may not need to register for intellectual property protection or a trademark if you are thinking about starting a restaurant business in Canada. This is true because the nature of the business allows you to successfully manage it without having any reason to sue anyone for using your intellectual property.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Restaurant Business in Canada?
While the exact launch expenses for a restaurant are unknown, available research indicates that they can range from $450,000 to more than $1 million for a small to larger business.
b. What are the Costs Involved in Starting a Restaurant
- Business Registration Fees – $750.
- Legal expenses for obtaining licenses and permits – $3,300.
- Marketing, Branding, and Promotions – $2,000.
- Business Consultant Fee – $2,500.
- Insurance – $8,400.
- Rent/Lease – $200,000.
- Other start-up expenses include stationery ($500), and phone and utility deposits ($1,800).
- Operational Cost (salaries of employees, payments of bills et al) – $70,000
- Start-up Inventory – $35,000
- Store Equipment (cash register, security, ventilation, signage) – $1,750
- Furnishing and Equipping the Restaurant – $150,000
- Website: $600
- Opening party: $3,000
- Miscellaneous: $2,000
c. What Factors Determine the Cost of Opening a Restaurant Business in Canada?
- The size and type of the restaurant
- The choice of location
- The required licenses and permits
- The type of facility
- The type of food and related products retailed in the restaurant
- The cost of branding, promotion, and marketing of the restaurant business in Canada
- The cost of furnishing and equipping the restaurant
- The cost of the insurance policy covers
- The cost of registering the business
- Source of your food ingredients, supplies, and ongoing expenses
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
- The cost of the grand opening of the restaurant business
d. Do You Need to Build a Facility?
In Canada, building a new facility for your restaurant business is not mandatory, but if you have the necessary financing, you should consider doing so. In actuality, developing or remodeling a facility will provide you the chance to design a space that properly reflects your overall business vision.
e. What are the Ongoing Expenses of a Restaurant Business in Canada?
- Supplies (inventory expenses)
- Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
- Rent
- Salaries of employees
f. What is the Average Salary of your Staff?
- Chief Executive Officer (Owner) – $65,000 Per Year
- Human Resources and Amin Manager – $43,000 Per Year
- Restaurant Manager – $40,000 Per Year
- Accountants / Cashiers – $33,000 Per Year
- Chefs (Cooks) – $30,000 Per Year
- Waiters / Waitress – $26,000 Per Year
- Cleaners – $25,000 Per Year
- Security Guard -$24,000 Per Year
g. How Do You Get Funding to Start a Restaurant Business in Canada
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
- Source for soft loans from your family members and friends.
Write a Business Plan
a. Executive Summary
Kitchener Kitchen® Restaurant, Inc. is a standard restaurant business in Canada that will be located in Kitchener, Ontario. We have been able to lease a facility along a major road that is big enough to fit into the kind of classy restaurant we intend launching and the facility is located on a corner–piece property.
b. Products and Service
- Local food sales
- Intercontinental food sales
- Snacks
- Assorted wines
- Beverage sales
c. Mission Statement
Our mission is to establish a restaurant business in Canada that will provide residents of Kitchener, Ontario, and other Canadian cities with a variety of well-prepared local and international specialties, as well as other foods and drinks, at reasonable prices. We also plan to open chains of upscale restaurants in other cities.
Vision Statement
Our vision is to become the leading restaurant brand in Kitchener, Ontario, and to establish our restaurant in other cities in Canada.
d. Goals and Objectives
The goals and objectives of a restaurant business in Canada are to provide an outlet where people can visit to buy food and drinks.
e. Organizational Structure
- Chief Executive Officer (Owner)
- Human Resources and Admin Manager
- Restaurant Manager
- Accountants/Cashiers
- Chefs (Cooks)
- Waiters/Waitress
- Cleaners
- Security Guard
Marketing Plan
a. SWOT Analysis
Strength:
- Ideal location for a restaurant business in Canada
- Highly experienced and qualified employees and management
- Access to finance from business partners
- Availability of different types of delicacies
- Moderately priced menu
- Availability of table service and counter service
- Full bar, usually separate from the dining room
- Reliable and efficient inventory management system.
Weakness:
- Financial constraints may restrict the publicity and branding of the business
- A new business that will be competing with well-established restaurants and other restaurants in the city.
- Inability to retain our highly experienced and qualified employees longer than we want during the teething stage of the business.
Opportunities:
- A rise in the number of people who would want to eat out within our market space
- Online market, new services, new technology, and of course the opening of new markets.
Threat:
- The arrival of a new restaurant within our market space
- Economic uncertainty
- Liability problems
- The government could change its regulatory status and decide to enforce strict regulations that can strangulate new businesses like ours.
b. How Do Restaurants Make Money?
Restaurants make money by selling the following products;
- American food sales
- Intercontinental food sales
- Small chops and snacks
- Assorted wines
- Beverage sales
- Franchise
c. Payment Options
- Payment via bank transfer
- Payment with cash
- Payment via credit cards/Point of Sale Machines (POS Machines)
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
- Payment via bank draft
d. Sales & Advertising Strategies
- Introduce your restaurant by sending introductory letters alongside your brochure to construction companies, religious organizations, clubs, corporate organizations, households, and other key stakeholders throughout the city where your restaurant is located.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, and LinkedIn to get your message across
- Create a basic website for your business so as to give your business an online presence
- Directly market your restaurant.
- Join local restaurant business in Canada associations for industry trends and tips
- Provide discount days for your customers
- Advertise our business in community-based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word-of-mouth marketing (referrals)
Financial Projection
a. How Much Should You Charge for your Product/Service?
The price of a meal in a restaurant usually depends on the size and type of meal and other add-ons, but on average, a plate of meal in a restaurant starts from $15.
b. How Much Profit Do Restaurant Owners Make a Year?
It depends, but the available report shows that on average, restaurant owners make anywhere from $45,000 a year to $150,00 and above. They also estimate that the national average is around $81,695 a year.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the restaurant
- The types of food, snacks, and other drinks retailed in the shop
- The location of the restaurant
- The management style of the restaurant
- The business approach of the restaurant
- The advertising and marketing strategies adopted by the restaurant
- The number of years the restaurant is in business
d. What is the Profit Margin of a Restaurant?
A basic guideline in the restaurant business is to keep food cost percentages between 28 and 32%. But rather than being a general rule that applies to all restaurants, this is more of a recommendation. Between quick service concepts and fine dining, as well as between different cities, there are differences in the average meal cost percentage.
e. What is the Sales Forecast?
Below is the sales forecast for a restaurant. It is based on the location of the business and other factors as it relates to such startups in Canada;
- First Fiscal Year: $350,000
- Second Fiscal Year: $420,000
- Third Fiscal Year: $550,000
Set Up your Shop/Office
a. How Do You Choose a Perfect Location for Restaurant?
- The demography of the location especially as it relates to families
- The demand for family-style dining in the location
- The purchasing power of the residents of the location
- Accessibility of the location and the road network
- The number of restaurants in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What Province and City are Best to Open a Restaurant in Canada?
- Manitoba, Winnipeg
- Mississauga, Ontario
- Vancouver, British Columbia
- Brampton, Ontario
- Hamilton, Ontario Toronto, Ontario
- Calgary, Alberta
- Quebec City, Quebec
- Charlottetown, Prince Edward Island
- Saskatoon, Saskatchewan
- Nova Scotia, Halifax.
c. What Equipment is Needed to Operate a Restaurant?
Before you can open a restaurant, you should budget and buy chairs and dining tables, POS and receipt issuing machines, storage hardware (bins, racks, shelves, food case), counter area equipment (countertop, sink, ice machine, etc.),
(Flat Screen TVs, sound system, DVD players, cooking gas, deep freezers, fridge, blenders, store equipment (cash register, security, ventilation, signage), serving utensils (plates, ashtrays, glasses, flatware) and fancy lightening amongst others.
Hire Employees
When it comes to hiring employees for a standard restaurant, you should make plans to hire a competent chief executive officer, human resource and admin manager, restaurant manager, chef (cook), waiters and waitresses, cleaners, and security guard.
Launch the Business Proper
No restaurant opens its doors for business without first planning an opening party to formally launch the establishment. If you are on a tight budget, you may want to do a soft opening instead of a grand opening event. Alternatively, you might want to do both.
Bottom line: By properly launching your restaurant, you will formally let residents of your community know that your restaurant is open for business.
a. What Makes a Restaurant Business in Canada Successful?
- Choose a good location and restaurant facility to launch the business
- Make sure you offer a wide variety of foods and drinks (give your customers options)
- Throw an open house party before officially opening the restaurant
- Be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your restaurant business
- Leverage all available online and offline platforms to promote your restaurant business in Canada
b. What Happens During a Typical Day at a Restaurant?
- The restaurant is open for the day’s work
- The kitchen staff prepares the food and snacks
- The serving areas, serving wares, chairs, and tables are properly arranged
- Customers are attended to
- Stocks are taken and reports are written and submitted to superior officers
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Restaurant Business in Canada?
- Excellent culinary skills
- Excellent customer services skills
- Interpersonal skill
- Accounting and bookkeeping skills
- Business management skills
- Bargaining skill
- Work experience in a restaurant environment or niche restaurant
- Experience in managing people
- Experience in business administration
- Experience in preparing a wide variety of delicacies.