There are many different kinds of restaurants and catering services. Whether you’re interested in starting a café, a bar, family style restaurant or event catering business, you will be part of the food services industry.
Popular types of restaurants and catering businesses include:
The type of food, its price, the preparation methods and services you provide will determine what kind of restaurant or catering business you have.
This guide focuses on operating an independent restaurant or catering business. For information on buying a franchise, visit the Canadian Franchise Association website or call them at 1-800-665-4232.
When you start a business there are several things to consider before you can sell your product or service. Most businesses in Ontario need to complete a minimum of three basic steps:
Our business start-up guide will give you more information on these steps and other basic requirements for starting a business in Ontario.
Business Start-Up Guide
Your business may need licences and permits from the federal, provincial and municipal levels of government.
In addition to the information you will find in this guide, you can use BizPaL—an online search tool—to find licences and regulations that may affect your business. You can also contact the Business Info Line to speak to someone about starting your business.
Permits and Licences Wizard
Contact the Business Info Line:
Restaurants and catering services are highly regulated in Ontario. Some common regulations that may apply to your business include:
Your local health unit is the main contact for information on food safety. Local health authorities are responsible for carrying out food service inspections.
You should contact your local health authority and arrange an inspection of the premises/equipment/and processes to make sure your business is complying with provincial and federal legislation.
The following link provides a list of contact information for local health authorities that perform inspections on restaurants and food businesses in Ontario.
Local Public Health Contacts
In addition to contacting your local health unit, if you are involved in the production, service or processing of food products, you will need to comply with safety standards and labelling regulations from the Canadian Food Inspection Agency (CFIA) and the Ontario Ministry of Agriculture and Rural Affairs (OMAFRA).
Regulated products and sectors
Regulations for the food industry
Many municipalities have licences specific to food handling or food preparation. If your municipality is not listed in BizPaL, or you are not sure what municipality your business falls under, you can contact the Association of Municipalities of Ontario (AMO) for information on what municipal regulations, licences or permits will be needed to operate your business.
Association of Municipalities of Ontario
The Ontario government prohibits smoking in all enclosed workplaces and enclosed public places. Find out what your responsibilities are, what is required for inspections and how to get “No Smoking” signs.
If you plan on selling or serving alcoholic beverages, you will need one or all of the following:
You will need a liquor licence for your business if you sell or serve alcoholic beverages in an area where light meals are available.
Contact the Alcohol and Gaming Commission of Ontario (AGCO)
Applying for a Licence
The BYOW endorsement allows customers of your licensed establishment to bring unopened wine from home. If you are interested in getting a BYOW endorsement for your business, contact the AGCO.
Your business can get a catering endorsement from the AGCO if you wish to sell and serve liquor at catered events in an unlicensed area.
You will need a permit to serve alcohol at special events such as weddings or charity fundraisers. Special Occasions Permits cannot be issued for a private residence.
LCBO - Special Occasion Permits
Your restaurant may need to obtain a certificate of approval to ensure that it meets environmental standards. Some of the most common regulations apply to air quality, hazardous wastes, and water quality.
Contact the Ministry of the Environment:
Environmental Approvals for Business
When your business uses recorded music, you are responsible for obtaining the right licence(s) for that use. The Copyright Board of Canada works with individual copyright collective societies who provide music licensing. Contact the following two organizations for more information.
SOCAN is a not-for-profit organization that represents the performance rights of music creators and music publishers. They can help you learn about your obligations and obtaining the required license(s).
Society of Composers, Authors and Music Publishers of Canada
Re:Sound is the Canadian not-for-profit organization that represents the performance rights of artists and record companies, and provides the legally required license(s) for businesses. You can get help determining what licence(s) will be required, what the licensing process will be and how much it will cost.
If you have legal questions, contact a lawyer who deals with business regulations. The Law Society of Upper Canada's Lawyer Referral Service may be able to assist you in finding a lawyer, based on your needs.
Contact the Law Society of Upper Canada:
Law Society of Upper Canada's Lawyer Referral Service
Depending on your location and the type of products or services being offered, federal, provincial and/or municipal business taxes may apply.
If you sell goods and services in Ontario, you may need a business number to collect and remit the Harmonized Sales Tax (HST). Most businesses that make less than $30,000 in any 12 month period are not required to charge HST; however, you can register voluntarily and claim input tax credits. Speak with the Canada Revenue Agency (CRA) for more information.
Canada Revenue Agency – Business
Additional Tax Requirements that may apply to Restaurants and Caterers in Ontario include:
The following will help you understand how to charge the Harmonized Sales Tax (HST) on prepared food and beverages.
Harmonized Sales Tax for Ontario - Point-of-Sale Rebate on Prepared Food and Beverages
If you offer coupons and gift certificates, find out how to apply the HST when you sell them, and when you redeem them.
How to Treat Coupons and Gift Certificates
In addition to charging HST, you need to know how much tax was collected on beer and wine products you sell to customers. Ontario manufacturers charge a special beer and wine tax to suppliers, which is included in the price you pay for your inventory. If requested, you need to be able to tell your customers how much beer and wine tax was paid.
Contact the Ministry of Revenue:
Beer and Wine Tax
Canada Business can help you find government financing options for your business. There are programs that apply to businesses across Canada, and others that apply only to businesses in Ontario. Use the Canada Business financing search tool or browse by type of financing.
You can also access Canada Business information through the ONe-Source online financing wizard. The wizard guides you through 3 easy steps to create a personalized list of results for Ontario business financing programs.
Contact the Business Info Line:
You can find Ontario-specific assistance for your business including advice, financing options, tax incentive programs and more using the Ontario government’s free online directory of support programs for business.
The OBPG provides:
Ontario Business Program Guide
The success of any business is built by setting goals and successfully managing the ups and downs of daily operations. Here are some key factors to consider when starting a restaurant or catering business.
Your restaurant or catering business will be inspected and appraised, so you should strive to maintain high health standards. When you are dealing with health issues, there are several standards that you may need to be aware of including:
For further information, call your local Public Health Unit.
Your choice of restaurant type will help you determine the layout and design for your business. A café has different requirements from a family-style diner. Keep your restaurant type in mind when deciding on layout and design. Depending on your experience, finances, location and customers, aim for a practical, useful layout that will set the mood. It would be good to include the following:
Your hours of operation will be based on your type of business, your desired profit and the needs or habits of your clients. Consider the following points to help you determine your hours of operation:
Having a clear understanding of your business type and your clients will help you establish appropriate hours of operation. If you own a bar or an event catering business, you will likely have different hours of operation from a breakfast diner or café.
Setting the right price is important for ensuring the success of your business. Plan your menu carefully and try to get an idea of what items and method of preparation your customers prefer. Your menu prices should be based on your food costs, your expenses and your profit margin. Generally, your price for an item will be approximately three times more than your food cost, depending on the restaurant type, operating expenses and competitors' prices. To establish pricing:
Setting the right price is important in ensuring the success of your business. Here are a few questions you may want to consider:
When determining your fees, make sure you include the cost of your labour, the overhead and the expenses that will be incurred.
In the end, the right price for the service is the price that the consumer is willing to pay. Correct pricing decisions are often key to successful business management.
Having the correct business insurance can provide peace of mind. Contact an insurance agent to discuss your business insurance options, or to develop a plan that is right for your business.
You may also wish to contact your local chamber of commerce or industry association, as some organizations offer members lower rates on their business insurance.
The following list is included to remind you not to overlook the complex areas of business insurance. It is best, however, to discuss your specific requirements with your insurance agent.
Insurance for Your Small Business
Marketing can help you determine the value of your product or service and communicate that information to customers. Depending on your market and its size, you can consider using flyers, business cards, brochures, newspapers, radio, TV, the phone book or the Internet. Keep in mind, a satisfied customer or a positive referral is often the best form of advertising.
When preparing your marketing and/or advertising material, there are regulations to follow. When you promote a product or service, your customers need to have enough information to make informed choices. You can get more information on advertising requirements from the Competition Bureau.
Contact the Competition Bureau:
Misleading Advertising and Labelling
The use of business support services can be essential to the success of a small business. Professionals can provide knowledge and expertise to ensure your business is operating efficiently.
As an entrepreneur, there are several types of professional business services you can consult:
For most businesses, choosing an appropriate location is critical. Your ideal location will depend on your business needs, zoning restrictions and where your customers and competitors are. Taxes, noise and the local business environment are also important factors to consider when reviewing your options.
If you are considering setting up your business in your home, make sure you know what regulations and restrictions will apply to your home-based business before you start.
Your business will need equipment and furniture, and it is important to decide what you need and how much you want to spend. Some common ways to save money on furnishings and equipment are:
There are many associations that may be of interest to you. It is not necessary to join an association, but some of the advantages include:
An example of an association for restaurants or catering businesses is:
CRFA helps the restaurant and foodservices industry grow and prosper through advocacy, research, member savings and industry events. Its membership includes restaurants, bars, cafeterias, coffee shops, and contract and social caterers.
Canadian Restaurant and Foodservices Association
For other information that relates to starting your business, you can read the following guides:
Additional resources that may be of interest to you include:
You can also find books, magazines and other relevant print material at business service organizations in your community. To locate a Canada Business Ontario (CBO) community partner, contact us through the Business Info Line at 1-888-745-8888.
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.
Some of the organizations listed above are not subject to the federal Official Languages Act or the French Language Services Act of Ontario. Their services may not be available in both official languages.