If you’re thinking about opening a restaurant, you’re likely aware of just how difficult it can be. Famously, most new restaurants don’t even last a year.
Having your own restaurant may be a personal dream, but it’s also a functioning business – one that needs to be profitable. Restaurant owners are experiencing increased financial pressure due to the many new challenges facing the industry.
Are restaurants profitable in today’s day and age? Yes, but only with the right business plan. Here’s what you need to know.
Is it a Good Idea to Open a Restaurant?
Operating a restaurant is still possible in today’s economic landscape. However, there are new realities and challenges facing entrepreneurs. Therefore, if you’re looking to start or buy a restaurant business, you’ll want to have a solid plan in place before you start investing.
Starting from the very top, there are two things you’ll need if you want to run a successful restaurant: experience and capital.
Why Experience Matters
There are few industries more cutthroat than the restaurant space. It’s competitive, volatile, and constantly changing. With that in mind, having years – or even decades of industry experience is essential to managing a profitable business venture. If you’ve never owned a restaurant (or even worked in one before), launching your own will be an uphill battle.
That said, you could always look for outside help, such as an investor or partner who is seasoned in the local industry. They can help you build an informed business plan that protects your investment and sets you up for success.
Do You Have the Financial Means?
Beyond experience, starting a restaurant requires capital – a lot of it. This is especially true in Toronto, one of the most expensive cities in Canada. Commercial real estate costs are high, regardless of whether you’re leasing or buying. Beyond rent, restaurant owners must also deal with high utility bills, food costs, and wages for staff.
With all that in mind, running a profitable business requires upfront investment. If you try to pinch pennies or take shortcuts in creating an enjoyable and high-quality dining experience, you could struggle to attract customers, hurting profitability long term.
Searching for more advice to help your business thrive? You may be interested in these related articles.
- Pricing and Inflation in the Restaurant Industry
- How Will the Tariffs Impact Restaurants in Canada?
- Feeling the Heat of Labour Shortages?
What Are Some of the Challenges Facing Restaurants?
Keeping with the theme of finances, one of the primary challenges facing restaurants today is rising costs. Inflation, supply chain challenges, and other economic factors are making things more expensive – and not just for consumers. Operating expenses for restaurants are on the rise. If you’re looking to run a profitable business, you’ll want to have a strong financial plan in place to ensure you’re bringing in more than you’re spending.
Another relevant concern for restaurants today is competition. If consumers are being more selective in when and where they dine out, your restaurant will need to stand out from the rest. If you fail to offer a unique and memorable experience, customers may choose to visit a more established competitor.
Buying an Existing (and Profitable) Restaurant
If you’re looking to own a restaurant, one opportune path you could take is buying an existing restaurant business – preferably one that already has a strong business model in place. It’s a common misconception that restaurants only go up for sale when they’re failing. In reality, restaurant owners may choose to sell for any number of reasons such as retirement, moving to a new city, or other personal reasons.
Building a business from the ground up isn’t easy. However, a successful restaurant already has several key systems in place – which can give you a leg up in operating a smooth and profitable business.
Buying a successful restaurant doesn’t mean you won’t have to put in hard work. However, it can help you bypass many of the costly (and time-consuming) variables and red tape that come with building one from scratch.
Looking for a crash course on Canada’s restaurant industry? We’ve carved up some helpful resources on our blog.
- Everything You Don’t Understand About Restaurant Real Estate
- How is A.I. Changing Restaurant Real Estate?
- How Restaurant Real Estate is Evolving
Bring Your Goals to Life
Ready to buy a restaurant? There’s no substitute for personalized support from an industry expert – such as a professional restaurant real estate agent. That’s where we come in.
As professional specialists, we know the unique ins and outs of restaurant real estate. Not only can we help you find the perfect spot to bring your dreams to fruition, but we’ll also serve as your long-term advisor on all things restaurant-related.
Ready to bring your restaurant dreams to life? Carve Real Estate can help! You can reach us by email at ryan@carverealestate.com or by phone at 416-618-0054.
