The Checklist to Opening a Restaurant in Canada
If you are reading this, there is a good chance that you are considering opening a restaurant. Food, with its endless combinations, can be a method of expression that strides over the barriers of communication and brings people together. The alluring scent of fresh bread or the inviting fragrance of aromatic teas is the final product of an enormous amount of effort. Together, let’s explore the 10 steps you need to succeed when opening a restaurant.
1. Designing Your Brand
The first step to success is to choose a restaurant concept or restaurant brand. This is the best part of building your business, because you can let your imagination and taste buds run wild. When choosing, consider the type of concept you intend to open. Will this concept be Asian Fusion? Will it be a Vegan Health Bar? The choice is yours.
The second part of this process is to ensure that, after you have determined your unique style of food, you have an idea of how to properly execute the concept. Will this be a full-service dine-in establishment? Will you choose a lean delivery-only ghost kitchen concept? It is paramount that you know how your concept works early. Your decisions will guide the design of your brand moving forward. For example, what kind of chairs and tables would you purchase for a quick-service ramen brand? To solve for all of this, make a list of all of your ideas from logo to menu to aesthetic. By making a list, you will always have your eyes on success.
2. Creating Your Menu
The tasty next step is to create a menu. This is the heart and soul of your business. A delicious food offering can itself act as the best form of advertising. You do need to be very careful not to get too carried away, however. Every choice that you make can determine what equipment you will need, the type of people you will attract, the skills you will need from your staff, and more. Remember that if you are leasing near a locale that has a lot of health-oriented activities, opening a big burger shack may not be the best course of action. There are many difficult choices that have to be made when opening a restaurant, but the result will be a beautiful combination of flavour, design, and implementation – trust the process.
3. Making A Business Plan
To help with the difficulty of opening a restaurant, it is vitally important to implement step three, which is writing a business plan. The business plan is a scary document that any new entrepreneur must overcome. This document aims to outline every part of the business to do your due diligence before opening a restaurant. Unfortunately, to achieve long-term success, a business plan is required, but fortunately, breaking the plan into small and achievable steps makes the document a virtual non-issue. With the help of such free platforms as LivePlan, building and optimizing a business plan has never been easier.
As part of your business plan, consider selling food from your restaurant through a third-party food delivery services such as UberEats, SkipTheDishes, and DoorDash. Selling virtually can help reach a larger audience and drive sales. In addition to these well-known delivery services, NextGen Kitchens provides a white-label mobile app that allows your restaurant brand to create a fully customizable online food ordering app fully branded to your restaurant. This app provides its own unique benefits as you can connect with your customers on a more personal level and also instead of commission-based sales that other third-delivery apps possess such as UberEats and SkipTheDishes, you only have to pay a fixed membership fee. This mobile app would allow you to be more profitable and help scale up your business.
4. Getting Funding
With your third step finished, it is now time to turn your dreams into a reality. To do this though, you will need a cash infusion. There are many ways to get the money which you need to start your restaurant. The most common is to go to a bank and ask for a loan. This is where the business plan plays its role. A strong business plan is a great foundation for a loan application. Banks are never in the business of losing money, so it is important that your business plan be optimistic enough to woo them but be accurate so as to stand up to scrutiny.
In your business plan, you have already taken the effort to establish a budget that includes your start-up and running costs. With this in hand, you can confidently show anyone who wants to know, how you plan to be successful. Remember to include all the licensing, permitting, and renovation costs as well. For all Canadian Provinces, Bizpal is a great source to understand which permits you may need.
Using your own funds is another option. For many, funding themselves to open a brick and mortar locations is not particularly feasible. This is why you should consider a ghost kitchen. Ghost kitchens offer a much more forgiving alternative to brick-and-mortar locations, and come in at a fraction of the cost. The capital requirement will be very different when using this option. Remember to consider that when making you business plan and writing a budget!
5. Choosing Your Restaurant’s Location
With start-up capital in hand, it is important to choose the right location. There are many options for locations, and some have more benefits than others. Foot traffic and physical visibility are extremely important when it comes to a brick and mortar restaurant, but they may come at prohibitive costs. In some areas in Canada, rents can shoot up to more than $160,000 per year. To contrast, a ghost kitchen, relies solely on delivery and takeout, but can cost up to three times less.
A very serious stumbling block to overcome is to ensure that the area in which you have decided to open your restaurant fits all bylaws and permits. There are horror stories of entrepreneurs signing a lease to build a facility, only to have the restaurant permits be rejected by the city because the zoned area does not allow for restaurants. The city can also frequently rezone areas of the city. Restaurants in the area may have been previously zoned and grandfathered into the new rules. You, as someone seeking to open up an establishment, may see the perfect facility, already pre-built. The presence of the ready-made facility does not mean you are free from zoning restrictions. Make sure to check this before making an offer to the landlord and consult a realtor.
If the area is zoned as needed, however, it is extremely fortuitous to find an available commercial kitchen. The time required to request building permits and renovate a new facility to the proper standards can be quite lengthy. Pre-existing infrastructure can save time and even more money if any equipment has been left behind by the previous tenant.
6. Getting Your Permits
Once the location is set, ensure that all permits and licenses are right for the facility. In many instances, it may be of benefit to hire a lawyer or expert to audit your business and ensure that the dream you are building follows all applicable laws. After all, opening a restaurant is not easy. All of the important permits and licenses can be found on Bizpal, but a few key ones to remember are a business license, a FOODSAFE certificate, and any signage permit you may need.
There are some other factors that are permit-adjacent that you need to consider. It is vital to the success of your business that you budget for these things properly. The first consideration is the lease. The lease can be a large cost burden to take and usually requires a minimum commitment of three or five years.
Another consideration is insurance. There’s no perfect solution for insurance costs, as every city has its own requirements, and the final number is affected by the location, square footage, and the number of employees. Some common types of insurance are general risk insurance, general liability, liquor liability, workers compensation, employment insurance, life & health insurance, fire insurance, loss of business insurance, and food contamination insurance. Make sure to request quotes from multiple providers, as these costs can add up quickly.
No restaurant is complete without employees. The cumulative tasks of taking orders, cooking, and serving are far too much for a single person to accomplish. Staffing costs are an important consideration. For a full service establishment spending between 30 percent and 35 percent of revenue on staffing is standard. That number falls to between 25 percent and 30 percent of revenue for a quick service restaurant. Management salaries should be 10 percent of sales or less for any restaurant. Makes sure to take them in consideration when determining your food’s pricing and profit margins.
There may be other considerations and obligations to consider as well. An example of this would be to pay for waste removal and pest control. You, as the owner of the business, must pay for this service unless stated differently in the lease. Banking fees, music licensing, and surveillance should also be considered. Ensure that you are also aware of all compliance requirements permit renewal costs and their frequency to budget them in. Some examples include fire inspections and hood certifications.
7. Designing Your Layout
If you are opting in for a brick and mortar restaurant, make sure to plan your layout efficiently. The crucial seventh step doesn’t only cover how and where the customers will sit, but also how the staff in your kitchen will move around safely. Safety is paramount for the continued operation of your restaurant. After all, you wouldn’t work in an unsafe environment, so why should your staff? The layout of the kitchen can also affect the employees by creating bottlenecks which can artificially limit efficiency. The key to your success is to run smoothly. Make sure that the kitchen layout features all of the equipment needed to produce the food that makes you the best restaurant in a way that helps your kitchen function at its best.
A good guide when designing a restaurant is that for each seat in the dining area, you will need roughly five square feet in the kitchen. If your restaurant has the capacity to seat 60 people, this means that your kitchen should be 300 square feet. While it is always tempting to fit more seats, do not sacrifice the size of your kitchen, or you may run into troubles. To help with the design of your restaurant, it may be prudent for you to look at some of the most common kitchen configurations. These configurations have a proven track record for efficiency and effectiveness.
Speaking of aesthetic, ambiance is important to the personality of your establishment and can really add value to any eat-in restaurant. Naturally, it should match the food being served. Quick-service burritos should not be paired with a French-style high-street aesthetic. In your business plan, you should have already laid out the plans for the restaurant, but theory always differs slightly from reality, so make sure you stay on target.
8. Obtaining Furniture and Equipment
Once the layout is complete, order the furniture and equipment you need. There are many different options available to get what you need. Some of these include, buying equipment outright, leasing, and lease-to-own plans. Ensure that the options you choose fit best for your particular situation.
The owner of a pizzeria may choose to purchase and install the pizza oven because it is so crucial to the establishment, but may choose to lease coolers. Leasing is typically cheaper than buying, and can help free up capital, especially in the short-term, to help meet financial obligations. Getting cheaper options is not necessarily better. Some equipment comes with special features that can help improve longevity, performance, or efficiency. Make sure you do due diligence when considering which equipment to order. The costs should also be factored in on your business plan.
9. Hire the Right Staff
No matter how diligently you have considered opening a restaurant, staffing is important. To start, a management team with a focus on cost control is extremely important. Many restaurants only make a profit margin of between three and five percent. In this industry every dime counts. With such high upfront costs, it is important to manage money carefully, so that every obligation can be paid and the restaurant can become profitable sooner.
Next, it is important to have extremely competent kitchen staff. These people make your culinary masterpiece come to life. Training them properly so that the food can taste as you intend it to is paramount to the success of your establishment. There needs to be a system of checks and balances in place so that your food beats out the competition. Management can be used to ensure that everything runs smoothly and that costs are kept down. Prepare to spend lots of time overseeing operations yourself, especially at the beginning.
Front of house staff are the synergy to taste that makes your restaurant shine. The staff you hire must be kind and courteous, as well as prompt and accurate. A bad experience does more damage to the reputation of your establishment than several good ones. Staff can be a benefit, but a very expensive one at that. If your concept is a ghost kitchen, you may not need to worry so much about hiring front-of-house staff. Your business model will have no need of servers and this can save you money.
10. (Softly) Opening a Restaurant
Lastly, to ensure everything goes smoothly, host a soft opening. Any problems that could occur will show themselves. The best way to do this is by implementing a smaller trial menu to reduce kitchen stress, and have family and friends show up to reduce judgment. A trustworthy soft-opening audience can help to provide valuable feedback as well. Soft openings allow for a training period for your staff to solve any unexpected issues. Plus they are a great opportunity to start promoting your concept along with the marketing initiatives that you should include in your business plan.
Ready to Open Your Restaurant?
Overall, it is important to follow this process closely when opening a restaurant. Your brand should represent how you want your consumers to feel when purchasing from you. Ensure that the menu that you have planned has synergy with your brand and values. Conceptualize your food establishment early on with a thorough business business plan. This step is vital to receive funding, if you choose to go that route. The location matters too. Delivery options can help increase the size of your market dramatically, and allow you to operate in a location with less overhead. Ghost kitchens are a great alternative if cost control is your priority, because the lower overhead pairs with a wide delivery reach. When you are close to your soft opening, make sure to train your newly hired staff and begin marketing early on.
Congratulations! You are on your way to starting your very own food empire!