How to Start a Restaurant or Catering Business in Ontario

Table of Contents

Introduction
Getting Started
Regulations
Taxation
Financing
Managing Your Operation
Associations
Next Steps

 Introduction

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:

• Fast-food
• Gourmet, ethnic
• Casual/Fine dining
• Cafés
• Cafeterias
• Pubs
• Bistros and brasseries

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.

Read online:
Franchising

Getting Started

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:

• Find out what licences and regulations apply to your type of business
• Choose a business structure and register or incorporate
• Determine if you will need to collect and remit HST

Our business start-up guide will give you more information on these steps and other basic requirements for starting a business in Ontario.

Read online:
Business Start-Up Guide

Regulations

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.

Use online:
Permits and Licences Wizard

Contact the Business Info Line:
1-888-745-8888

Restaurants and catering services are highly regulated in Ontario. Some common regulations that may apply to your business include:

Food Safety and Labelling

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.

Read online:
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).

Contact CFIA:
1-800-442-2342
Regulated products and sectors

Contact OMAFRA:
1-877-424-1300
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.

Contact AMO:
1-877-426-6527
Association of Municipalities of Ontario

Smoke-Free 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.

Contact your local Public Health Unit:
Public Health Unit Locations
Smoke-Free Ontario – How the Act Affects You

Selling and Serving Alcohol

If you plan on selling or serving alcoholic beverages, you will need one or all of the following:

Environmental Requirements and Waste Disposal

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:
1-800-461-6290
Environmental Approvals for Business

Music Licence

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.

Legal Questions

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:
1-800-268-8326
Law Society of Upper Canada's Lawyer Referral Service

Taxation

Depending on your location and the type of products or services being offered, federal, provincial and/or municipal business taxes may apply.

Read online:
Taxation Guide

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.

Contact CRA:
1-800-959-5525
Canada Revenue Agency – Business

Additional Tax Requirements that may apply to Restaurants and Caterers in Ontario include:

Financing

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.

Search online:
Canada Business: Government Grants and Financing
ONe-Source Ontario Business Financing Guide

Contact the Business Info Line:
1-888-745-8888

The Ontario Business Program Guide (OBPG)

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:

• An at-a-glance directory designed for quick and easy scanning
• Programs and services for Ontario businesses
• Basic information on programs as well as links you can follow for more detailed information

Search Online:
Ontario Business Program Guide

Managing Your Operation

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.

Maintaining High Health Standards

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:

• Food temperature control
• Protection of food from contamination
• Employee hygiene and hand washing
• Maintenance and sanitation of surfaces and equipment that come into contact with food
• Maintenance and sanitation of surfaces and equipment that do not come into contact with food
• Maintenance and sanitation of washrooms
• Storage and removal of waste
• Pest control.

For further information, call your local Public Health Unit.

Designing your Restaurant

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:

• Seating/waiting areas, serving room, cashier area, rest rooms, bar (optional)
• One or more areas from which you can view the entire restaurant
• Lighting, signs and obstacle-free traffic flow
• A variety of seating arrangements to accommodate different numbers of customers, including those who come alone, in pairs, in groups of three, and  in groups of four or more
• Adequate room for staff movement and clients
• A kitchen that allows efficient and effective food preparation and interaction between staff
• Dry and cold storage, dishwashing area
• An area for employees’ personal items
• Convenient delivery zone
• Proper ventilation and lighting

Hours of Operation

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:

• Choose which meals you will offer (breakfast, lunch, dinner)
• Choose the number of operating days for your business
• Estimate the time per meal period
• Determine when your clients will expect your business to be open

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.

Planning Your Menu

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:

• Determine how many menu items you will offer. You may want to consider whether you will offer items that will cater to people with different dietary needs (e.g. a vegetarian dish, a gluten-free or wheat-free dish, modified dishes for people with food allergies)
• Consider whether you will allow people to substitute menu items (e.g. a salad instead of fries), and whether there will be a fee to substitute.
• Estimate your sales and aim to balance the prices of your menu items. Higher cost items can have smaller mark-ups, and lower cost items can have higher mark-ups to balance your menu prices.

Setting the Right Price

Setting the right price is important in ensuring the success of your business. Here are a few questions you may want to consider:

• What is the current price for your range of services in the industry?
• What is your competition charging?
• What is the total cost of running your business?
• What is the minimum acceptable profit you need to generate from your business?

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.

Read online:
Pricing

Insurance

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.

Basic insurance:

• Fire insurance (extended coverage on buildings and contents)
• Liability insurance
• Burglary protection (theft coverage)
• Dishonesty insurance (covers thefts by employees)

Read online:
Insurance for Your Small Business

Marketing and Advertising

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.

Read online:  
Developing a Marketing Plan 
Marketing and Sales

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:
1-800-348-5358
Misleading Advertising and Labelling

Professional Services

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:

• Lawyers
• Real estate agents
• Insurance brokers
• Bookkeepers
• Accountants

Choosing a Location

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.

Read online:
Choosing and Setting Up a Location
Home-Based Business

Furnishings and Equipment

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:

• Buying used equipment - Consider buying used equipment as a cost-saving measure. Sources of used equipment could be businesses that are closing or second-hand equipment stores. Keep in mind the cost of maintenance and repair in the overall costs when buying used equipment.
• Leasing equipment - Another alternative is to lease equipment to help keep start-up costs down. If you choose to lease equipment remember to include interest in your overall cost.

Associations

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:

• Promoting and exchanging marketing and promotional ideas among members
• Establishing and encouraging high standards of quality and professionalism

An example of an association for restaurants or catering businesses is:

Next Steps

For other information that relates to starting your business, you can read the following guides:

• Business Planning
• Market Research and Statistics
• Starting Your Business
• Grants and Financing
• Taxation Guide
• Employment Regulations Guide: Hiring

Additional resources that may be of interest to you include:

• Restaurant Central.ca
• Canadian Industry Statistics - Food Services and Drinking Places
• Increase sales
• Franchising

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.

Need more information?

Click: Canada Business
Call: The Business Info Line, a collaboration between ServiceOntario and Industry Canada, at 1-888-745-8888
Visit: Find a Community Partner Location near you

Disclaimers

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.