Symbol of the Government of Canada
Government of Ontario
Skip to content | Skip to institutional links

Common menu bar links

 

Institutional links

How to Start a Restaurant or Catering Business in Ontario

Last Verified: 2010-06-29

TABLE OF CONTENTS

  1. Basics to Getting Started
  2. Industry Overview
  3. Regulations
  4. Financing
  5. Taxation
  6. Managing Your Operation
  7. Catering 
  8. Associations 
  9. Other Resources    

 1. Basics to Getting Started

Starting a business can be a rewarding undertaking, but it comes with its challenges. Before starting a business in Ontario, it is wise to do your research. There are several issues to consider such as regulations, financing, and taxation, managing your business, advertising and much more.

For further information:
see the documents:

For regulatory or legal questions, it may be useful to contact a lawyer that deals with business regulations through the Law Society of Upper Canada's Lawyer Referral Service.

For further information:
call 1-800-268-8326
visit the website: Law Society of Upper Canada's Lawyer Referral Service

2. Industry Overview

Maintaining High Health Standards

As a restaurant operator, your main preoccupation should be to maintain high health standards.  Maintaining traffic in your restaurant depends on it, as your restaurant will probably be inspected and appraised.  Important steps to take into consideration when dealing with health issues include:

  • 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; and 
  • pest control.

For further information, call your local Public Health Unit.

Designing your Restaurant and Calculating Seating Capacity

Depending on your experience, finances, location and customers, you will have to decide on the type of restaurant you want to operate (traditional, ethnic, specialty, coffee shop, fast food, cafeteria, self-serve, etc.), and aim for a practical, useful layout that will set the mood.  It would be good to have all of 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: 50% of customers come in pairs; 30% come alone or in groups of three; and 20% in groups of four or more;
  • adequate room - the suggested square footage requirements per chair are: 10-20 sq. ft. in traditional restaurants, 10-12 in cafeterias, 7-17 in coffee shops;
  • a kitchen that allows efficient and effective food preparation and interaction between staff;
  • safety in movement, dry and cold storage, dish washing, an area for staffs personal items;
  • convenient delivery zone, ease of cleaning and maintenance, and proper ventilation and lighting.

To determine the maximum potential of your restaurant and break-even point:

  1. determine desired profit - convert to percentage of sales to get sales required;
  2. determine number of operating days - divide number of days into sales to get average daily sales;
  3. estimate volume percentages for meal periods (breakfast, lunch, dinner);
  4. multiply figures in step 3 by average sales per day to get dollar volume per period;
  5. determine average check per meal period;
  6. divide dollar volumes in step 4 by average check for the number of patrons per period;
  7. estimate a) average seat occupation per meal period; and b) time per meal period;
  8. divide time per period by average occupation to get seat turnover per period;
  9. divide possible seat turnover into number of patrons to get number of seats required per period;
  10. take the largest seating requirement in step 9 and add a 20% safety margin for the seating capacity.

Source: Western Regional Office, Manitoba Industry, Trade and Mines

3. Regulations

Business Regulations Info-Guide

This document will assist you in navigating federal, provincial and municipal regulations that apply to a number of industries and businesses.

For further information:
see the document: Business Regulations Info-Guide

Environmental Assessment and Approvals

For many of the small or medium-sized business in Ontario, complying with environmental regulations is just a part of their day-to-day business.  However, not all businesses are sure whether or not they are subject to specific environmental requirements.  Some of the most common regulations include air permits, hazardous wastes, and water quality.  For more information on whether your restaurant should be complying with these regulations please contact the Ministry of the Environment Environmental Assessment and Approvals Branch.

For further information:
please call 1-800-461-6290 or 416-314-8001
visit the websites: 
The Ministry of the Environment and Your Business
Environmental Approvals for Business

Canadian Food Inspection Agency (CFIA)

The Canadian Food Inspection Agency provides a lot of information on food safety, including food safety tips.

For further information:
please call 1-800-442-2342 or 613-225-2342
visit the website: Canadian Food Inspection Agency

Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA)

The Ministry of Agriculture, Food and Rural Affairs website contains a lot of information on food safety, including information on the Food Safety and Quality Act.

For further information:
please call 1-888-466-2372 or 519-826-3100
visit the website: Food Safety

Ontario Ministry of Health and Long-Term Care (MOHLTC)

The Ministry of Health and Long-Term Care website contains information on health issues, including locations of Public Health Units and publications on food and water safety.

For further information:
please call 1-800-268-1154 or 416-314-5518
visit the website: Food Safety - Publications

The Smoke-Free Ontario Act

As of May 31, 2006, the Ontario government prohibited smoking in all enclosed workplaces and enclosed public places. The legislation also strengthened measures to ensure only those 19 years of age and older can buy cigarettes and phased out the display of tobacco products beginning May 31, 2008.

For further information:
please call 416-327-7737
visit the websites:
Smoke-Free Ontario: Legislation
Smoke-Free Ontario Act

Alcohol and Gaming Commission of Ontario (AGCO)

The Alcohol and Gaming Commission of Ontario is a regulatory agency that reports to the Ministry of Consumer Services.  Its mandate is to regulate the sale, service and consumption of alcoholic beverages.  It manages alcohol licences in Ontario.

For further information:
please call 1-800-522-2876 or 416-326-8700
visit the website: Alcohol and Gaming Commission of Ontario

AGCO - Bring Your Own Wine (BYOW) and Take Home the Rest (THTR)

Bring Your Own Wine

The Bring Your Own Wine initiative improves customer service by allowing patrons to bring commercially made and unopened wine to participating licensed establishments. Licensed establishments such as family and fine dining restaurants, cafes, hotel and motel restaurants and similar types of restaurants are eligible for BYOW.  Licensed banquet rooms located in a hotel or motel are also eligible.

Participation in the BYOW initiative is voluntary for eligible licensed establishments, and establishments are free to set their own policies for how they offer the service.  Some establishments may choose to offer BYOW only on slow nights of the week or only on special occasions.

Licensed establishments offering this service may also charge a corkage or service fee, require minimum food orders and/or limit the number of bottles a patron can bring.

How to Apply for a Bring Your Own Wine (BYOW) Endorsement:

Interested licensees must apply to the Alcohol and Gaming Commission of Ontario (AGCO) for an endorsement to their existing liquor license.  Participating licensed establishments are not charged an endorsement fee.

A liquor sales license is issued for the sale and service of beverage alcohol in licensed areas where light meals are available.  When a liquor sales license is combined with an endorsement, the licensee may sell and serve beverage alcohol under specific circumstances.

An endorsement is an addition that is only valid when combined with an active liquor sales license.  In order to apply for a BYOW endorsement, licensees should visit the AGCO website to print an application form.  Once completed, the application should be mailed to the Alcohol and Gaming Commission, Licensing and Registration at 20 Dundas Street West, 7th Floor, Toronto, Ontario, M5G 2N6.

Take Home the Rest (THTR)

Take Home the Rest can improve consumer service by allowing patrons to remove partially consumed and resealed bottles of wine that they brought to, or purchased from, a licensed establishment.

Take Home the Rest encourages responsible drinking.  Patrons no longer have to choose between finishing a bottle of wine - which may lead to over-consumption - or leaving it behind.  Participation in the Take Home the Rest initiative is voluntary for all licensed establishments.

For further information on these programs:
call 1-800-522-2876 or 416-326-8700
visit the website: Questions and Answers - Bring your own wine/Take the Rest Home

Municipal Regulations

Keep in mind that specific municipal requirements may also apply, depending on the city where the business will be located.  Local municipalities may be responsible for the administration of certain business licenses and they are also responsible for the administration of certain provincial laws, like the Health Protection and Promotion Act, which governs community health standards.

For further information:
visit the website: Association of Municipalities in Ontario

Related legislation:

4. Financing

Financing for Starting a Business Info-Guide

This document is designed to help you navigate through the federal and provincial government programs available to individuals starting a business in Ontario.

For further information:
see the document:  Financing for Starting a Business Info-Guide

5. Taxation

Dealing with Business Taxes

All businesses must be aware of the various taxes that may apply to their product or service. Depending on the type and location of products or services being offered, federal, provincial and/or municipal business taxes may apply. For information specific to your organization you should consult an accountant or financial professional.

For further information:
See the Taxation Info-Guide

Other Resources:
Ontario Ministry of Revenue: 1-866-668-8297
Small Business Tax Help (MOR)

Canada Revenue Agency: 1-800-959-5525
Canada Revenue Agency (CRA)

Prepared Food and Beverages

The following will help you understand how to charge the Harmonized Sales Tax (HST) on prepared food and beverages.

For further information:
see the websites:
Prepare for Ontario's HST: Point-of-Sale Rebate for Qualifying Prepared Food and Beverages $4.00 and Under
Harmonized Sales Tax for Ontario - Point-of-Sale Rebate on Prepared Food and Beverages

Coupons and Gift Certificates

The information in this guide explains how HST applies when various types of coupons and gift certificates are redeemed towards the purchase of goods.

For further information:
see the website: How to treat coupons and gift certificates

6. Managing Your Operation

Insurance

Insurance needs for businesses vary greatly.  It is best to choose an insurance agent or broker familiar with your size of business and, in particular, an agent familiar with your type of operation.  If you don't have an insurance agent, it could be a wise decision to ask other business owners in your area to recommend one.

Your local restaurant association may also have information about insurance packages specifically tailored for restaurants.  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); and
  • dishonesty insurance (covers thefts by employees).

Marketing/Advertising

Word-of-mouth advertising and good public relations are often the best ways of promoting your business.  Depending on your market and its size, also consider advertising with flyers, business cards, brochures, newspapers (especially for holiday promotions), radio, TV, the phone book and the Internet.  Also, bear in mind that a satisfied customer is good advertising.  Referrals are also a valuable way of making customers aware of your products or services.

A website is also a good marketing tool. It should have details to describe the location (your address, telephone and fax numbers, and directions on how to get to your establishment), hours of operation, services offered, credentials and anything else you think may be of interest to potential customers.  However, once you launch a website, you should update it on a regular basis.  For more information on reaching your customers online see the following documents:

Participating in community events is another way of advertising your business.  You may also want to hold events that will promote your business.  No matter how you choose to market your business, it is wise to track how your clients became aware of your establishment - this may help determine your future advertising strategies.

The Competition Act governs misleading advertising and deceptive marketing practices for all businesses in Canada.  The Act, which is administered by Industry Canada, defines which marketing practices are illegal and the process of complaint investigation.

For more information:
please call: 1-800-348-5358 or 819-997-4282
visit the website: Competition Bureau

Market Research

It is essential that you know who your customers are, what they need or want, and how to reach them. You should have solid understanding of these if you are going to run a successful business.

For further information:
see the document: Market Research and Statistics

Employing people

Employment Regulations Info-Guide

This Info-Guide is designed to help you navigate through the federal and provincial government regulations on employment.

For further information:
see the document: Employment Regulations Info-Guide

Choosing Your Location

Choosing the right location for your business is important.  Considerations include the needs of your business, where your customers and competitors are, and such things as taxes, zoning restrictions, noise and the environment.  For most businesses, an appropriate location is critical.

Furnishing and Equipment

Before you open your restaurant, you will probably want to buy tables, chairs, lighting and decorative items. You might also need a kitchen, a bar and dinner wares.  The menu, size of restaurant and kind of service will determine the type of equipment you will require.  For assistance in this area, you might want to try to get the advice of a sales representative or consult trade publications and manufacturers' websites.  When choosing equipment it is important to consider not only affordability, but also the after-sales service and repairs.

Financing your Equipment

Restaurants sometimes buy used equipment as a cost-saving measure. Sources of used equipment could be a restaurant that is closing or dealers in second-hand equipment. The drawback to this approach is that, often, there are no guarantees with the purchase.

Planning your Menu

Plan your menu carefully.  Try to know what items your customers prefer and how they like them prepared.  Try to provide variety while maintaining stable cost averages.  Menu prices are a combination of food costs and what is needed to meet expenses and realize a profit.  Generally, the price of an item is approximately three times the food costs, depending on restaurant type, operating expenses and competitors' prices.  To establish pricing:

  • estimate your sales - counter-balance higher cost items tagged with lower mark-up, with higher mark-ups on lower cost items;
  • maintain a desired overall food cost percentage, usually 33-40% of gross sales, and a normal margin of profit; and
  • balance items ranging in popularity - monitor high demand items which can determine your success.

7. Catering

A catering business follows many of the same regulations as a restaurant.  You should decide whether you want to run your catering business from your home as different regulations may apply.

For copies of these regulations, you can call your local health department and speak with a food inspector.

For further information:
visit the websites:
Public Health Unit Locations
Health Protection and Promotion Act

Liquor License for a Catering Business

License Endorsements

Liquor Licence Act allows for the addition of a variety of special conditions to a sales license.  This special condition is referred to as a license "Endorsement".

Catering Endorsement

The holder of a catering endorsement may sell and serve liquor at a catered event in an unlicensed area of a licensed establishment and at a catered event away from the licensed premises in an unlicensed area where a LCBO - Special Occasion Permits would otherwise be required.

For further information:
visit the website: Catering Endorsement

8. Associations

9. Other Resources

Related Publications

Saving Energy Dollars in Hotels, Motels and Restaurants

Statistics

Statistics Canada is the official source for social and economic statistics and products.  You may want to take a look at:

Related Reading

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.

Date Modified: 2009-11-27

Top of Page
Important Notices