Opening a new restaurant, café, or bar in Canada is a dream shared by many aspiring entrepreneurs. However, in today’s business landscape, with the rising costs of food and beverages, as well as increased minimum wages, it has become crucial to leverage expert assistance for success. One vital component that new businesses often overlook is conducting a feasibility study, which can lead to difficulties in hiring, generating sales, and achieving profitability. To minimize risks and determine the potential success rate of your restaurant, it is imperative to undertake a comprehensive feasibility study.

A feasibility study is an analytical process aimed at assessing the practicality and viability of a proposed project, venture, or course of action. Its primary purpose is to ascertain whether the project is achievable within the available resources, constraints, and objectives. Decision-makers rely on the results of a feasibility study to make informed choices by evaluating various factors such as technical feasibility, economic viability, legal compliance, operational feasibility, and scheduling constraints.

This study should be the first of three plans, which include a feasibility study, concept development, and a business plan, working cohesively as a unit before securing a lease or investing further funds. To assist you in conducting a successful feasibility study and realizing your dream, here are four essential categories to consider:

Step one: Preliminary Analysis

Begin by outlining your proposed restaurant in terms of service style, target market, required location size, and the style of food and beverages you plan to offer. Be as specific as possible during this stage.

Next, determine if your restaurant will fill a gap in an underserved niche in your market. Focus on demographic factors such as age groups, income levels, and multicultural populations. List all relevant details.

Evaluate if your new restaurant can effectively compete with similar food and beverage concepts within your target market. Assess the market saturation and identify the advantages that your concept brings to differentiate itself. Consider aspects such as food and beverage quality, capacity, location requirements, value propositions, pricing structure, and overall atmosphere.

If your market has no direct competitors, question the reasons behind this absence and analyze the potential demand for your concept.

Identify the immediate challenges or threats your startup may face. Assess the labor market to ensure the availability of qualified chefs, managers, and bartenders. Consider potential challenges in supply chain management or food and beverage delivery logistics. Also, evaluate if your proximity to a farming community can be leveraged.

If your early vision shows promise, proceed to the next step.

Step two: Market Survey

Conducting a thorough market analysis is crucial for success. Accumulate and analyze population trends, lifestyles, demographic features, community profiles, cultural factors, traffic patterns, local capital improvement projects, and income levels within your target city.

Analyze the existing food and beverage offerings in your community, mapping them out based on location and concept style. Consider high-end grocery chains that offer quick meal solutions.

Perform a SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats) of your key competitors. Evaluate their pricing, menu options, location, seating capacity, promotions, service levels, customer reviews, and community involvement.

Engage with your target customers through physical or online surveys. Ask them a series of pertinent questions related to your envisioned concept. Document and analyze their responses to determine if the target market is not only sizable but also offers room for growth.

Step Three: Prepare Financial Forecasts

This step is of paramount importance as it allows you to determine your proposed restaurant’s monthly expenses and revenue. Through meticulous research, analysis, industry percentages, and government reports, you can establish averages and projections specific to your concept and service style.

Additionally, this step helps identify projected start-up costs, staffing requirements, wages and salaries, food and beverage costs, average monthly lease payments, marketing and advertising expenses, and more.

To estimate potential revenue, project your operating hours, seating or take-out capacity, and revenue goals per customer based on the market size. Utilize this data to conduct an hourly-based revenue per seat analysis, providing realistic insights into the number of customers that can be served per hour, day, week, and month.

Considering the abundance of data required for this step, it may be advisable to enlist the services of a professional familiar with the industry and local market. Understanding projected break-even points and assessing the demand in your market space is crucial for ensuring profitability.

Step Four: Review the Risk

Revisit and scrutinize your entire study thus far. Ensure that it is well-organized, incorporating graphs, charts, and substantial factual data. Assess whether the data aligns with realistic expectations. Analyze risks, timeframes, and overall projections.

Listen to your intuition and make calculated decisions based on the data collected. The more comprehensive your research, the easier it becomes to make informed choices. Are you prepared to make the commitment? If not, it may be wise to reconsider your plans.

If you are ready to move forward, the next step is to implement the insights gained from your feasibility study into your action plans.

By conducting a comprehensive feasibility study, you set the foundation for a successful restaurant, café, or bar in Canada. This diligent research and analysis enable you to make informed decisions, mitigate risks, and increase the likelihood of profitability. Remember, seeking expert assistance can significantly contribute to the accuracy and effectiveness of your study. With the right preparation and planning, you can turn your dream into a thriving reality in the vibrant Canadian hospitality industry.  Let our experts help you set up for long term success by emailing for a free consult Morgan@hospitalityconsulting.co