Food price inflation and wage increases are making it harder to run a restaurant today in comparison to 10 years ago.
Many restauranteurs struggle to survive, with economic pressures weighing down on their profit margins. For those who can stand the heat, set out a long-term plan prior to buying a restaurant, and evolve your ideas to keep up with the food service industry.
A buyer’s profile
It takes more than a passion for cooking and food to become a successful restaurant owner. You need to have great business acumen and be able to manage all aspects, such as accounting and HR issues, to keep the restaurant running smoothly.
Be realistic about your goals: owning a thriving restaurant takes time, long hours and a lot of determination. You’ll have to commit most of your time to the business, especially in the first few years; it’s vital this suits your family and partner’s ideals.
A great restaurateur is social, patient and motivated; train your staff and create a dynamic, positive environment. You should also be creative, passionate and constantly evolving and improving your business; welcome criticism and reviews.
You need to have confidence and passion to create a successful brand. Restaurant chains and franchises rule the high street, offering low-prices and a familiar menu. This can make it hard for independents to compete. It is, however, possible to stand out as long as you are personable and unique.
Finance and statistics
There are various financing options available; Futurpreneur Canada is a non-proﬁt organisation that also provides mentoring for 18-to-39-year-old entrepreneurs. The Canada Small Business Financing Program also helps small business or start-ups.
Each province will have various grant opportunities, you can research federal business programs and available grants using the Government of Canada search tool. Some business opportunities may also offer seller financing as an incentive.
There are more than 330 restaurant opportunities on BusinessesForSale; with the lowest entry into the sector at CA$25,000 and the highest hitting CA$5,000,000. If you are buying a leasehold property, find out if there are any conditions attached.
Hiring a broker and/or solicitor to mediate and manage the transaction is strongly advisable. They will be able to offer advice when putting in an offer and negotiate with the vendor; hire professionals that have experience in the restaurant sector.
What to look for in a business
Location, reputation and profit margins are three very important aspects to consider when finding the right restaurant business. What are the footfall figures during different times of the week or throughout the year? Is the restaurant in a tourist-trap?
You need to determine how many changes you plan to implement once you’ve taken over the business. Will you be offering the same cuisine? Or will you carry out a complete overhaul and put your own stamp on the business?
Do you intend to keep the same branding and company name? Or will you be reinventing the business, menu and marketing? Find out what type of reputation the restaurant has with residents, suppliers, other local business owners, and online.
Be sure that if you are completely changing the business, you will not lose the regular customers in the process. On the other hand, though, if the business does not have a stellar reputation, make sure that the local community is aware that there has been a change in ownership.
You should make sure the size of the building and number of covers the restaurant caters for is in line with your business plan. When you’re looking to buy a restaurant, write a list of features that may be useful when growing the business in the future.
Licences and permissions
Visit the BizPaL permit and licence search to determine which federal, provincial, territorial and municipal business permits and licences will apply to your restaurant. During due diligence, check the current licences and permits are all up to date.
Alcohol sales will make up a large portion of your restaurant’s weekly sales and operations. Obtaining and maintaining a provincial liquor licence will be vital, so familiarise yourself with the regulatory conditions of possessing a liquor licensing.
Is it right for you?
There is a lot of competition in the food industry, and average restaurant standards are high, partly thanks to today’s generation of reviewers. The sector is full of passionate, evolving, high-quality foodies; scraping by just won’t cut the mustard.
You need to have a supportive network around you; you will have to spend a lot of your energy, time and money into making the restaurant a success. You will be on your feet most of the day, working late evenings, over weekends and public holidays.
Can you manage stress and remain calm under pressure? You will be leading a team and managing the expectations of your chefs, wait staff and managerial team. Hire a professional to tackle any tasks you can’t, such as marketing or bookkeeping.
In the early days it’s likely you won’t be making any profit and working like a dog but be patient and manage your profit expectations. If you can push through this, though, and you have a clear plan and vision, you could have the recipe for success in this sector.