Y&A Framework: Restaurant

The first step to become a successful Restaurateur.


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Purchase vs Development?
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Business Plan
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License & Permit


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Business Incorporation
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Bookkeeping: QuickBooks
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Accounting Calculator
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Corporate Taxes


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    What’s new?

    Worldwide, the market for food delivery stands at €83 billion, or 1 percent of the total food market and 4 percent of food sold through restaurants and fast-food chains. It has already matured in most countries, with an overall annual growth rate estimated at just 3.5 percent for the next five years.

    The competition among restaurants is fierce, and you’ll need to give your all to be successful. Your success on your restaurant venture takes more than your love for cooking and food, there are many factors that you need to look at, from registering your business, getting the right education and employees, bookkeeping and taxes to all kinds of challenges. This article will help you prepare from the inevitable problems.

    Do you need to go cheftopia to find the right partner for your business?

    It’ll take some research and some investigative skills to get the real scoop if a potential chef is a culinary wizard or a culinary wannabe.Look for a chef that has Red Seal Endorsement! The term Red Seal refers to the Interprovincial Standards Red Seal Program. It was designed to create a national standard to help ensure that journeypersons are achieving the same level of training and certification from province to province.A Red Seal chef has met a standard for creativity, quality, and professionalism; An RSE is a symbol of excellence and many years of studying and practicing culinary arts.

    How much does it cost to open a restaurant in Canada?

    Average restaurant start-up costs vary from a few thousand to a few million. According to a survey, the average cost to open a restaurant is $275,000 or $3,046 per seat. If owning the building is figured into the amount, the average cost is $425,000 or $3,734 per seat. You must have at least $750,000 in liquid assets to open a McDonald's or Taco Bell restaurant. Your net worth must be at least $1.5 million if you want to open a KFC.

    Independent Average Life Span
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    Many restaurants, particularly independent establishments, fail during their first year because they are undercapitalized.Restaurants should have enough money in the bank to cover their immediate costs plus an additional food and beverage reorder, two payroll cycles and six months of rent. Prepare for the unexpected operating expenses.

    Researchers at Cornell University have identified that thecompetitive environment can have a huge impact on a restaurant’s success or failure, particularly if the owner is unable to differentiate his establishment from the competition.Restaurateurs that are able to identify trends and change rapidly to meet consumers’ needs tend to succeed.

    Restaurants often operate on thin profit margins because intensive labor and food costs generally run from 60–70 percent of gross sales. Start-ups should be careful not to overspend when purchasing equipment. Look at second-hand options, shop online and buy only what you need now. Another restaurant’s failure may be fortunate for you, find equipment at greatly reduced prices. – Shorter

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    Federal or Provincial: Take the quiz and identify what best fits your business.

    You can register your business federally or provincially, one advantage of registering federally Is business name protection. You will be able to do business all across Canada under the same business name

    Incorporating your business is recommended. Corporation is a separate legal entity, which provides you limited liability; it creates a wall that secures your personal assets.

    Want to Start a Business without living in Canada?

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      If you’re a Canadian Citizen

      Yes, starting a non-resident business in Canada is possible. All you need is a Canadian address (not a Post Office box, but a real Canadian address). If you personally have or establish a Canadian address and are a Canadian citizen or a landed immigrant, you can register your business as a sole proprietorship (or as any of the other permitted forms of business in Canada).

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      If you’re Not a Canadian Citizen

      If you're not a Canadian citizen or landed immigrant, One of your options is to form a partnership with a Canadian living in Canada; then you can use his/her address for starting your business in Canada. Another approach is to start an incorporated business. You would still need a Canadian address to enjoy the tax benefits of having a Canadian Controlled Private Corporation.

    The federal statute requires that 25 per cent of the directors be resident in Canada. In case there are fewer than four directors, then the CBCA (Canada Business Corporations Act) requires that one director be resident in Canada. Each province has different residency requirements and an investor wishing to incorporate in Canada should consider this issue.

    Existing foreign corporations can register to operate in Canada by either

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      Opening a branch office - To do this the foreign corporation must make an application for registration as an Extra-Provincial or Foreign Corporation in each province where the business intends to operate.

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      Incorporating a Subsidiary - a subsidiary is a Canadian corporation whose shares are held by the foreign parent company. A subsidiary can be incorporated federally or provincially. Compared with a branch office, incorporating a subsidiary gives the parent company limited liability from the actions of the subsidiary.


    How do you handle your books?

    Running a restaurant may begin with a talent for cooking and a passion for hospitality, it can only gain and maintain a profit through proper bookkeeping. The day to day demands of running a restaurant can cause an owner to neglect the bookkeeping process. Once you are behind on the bookkeeping it is difficult to get caught up. The profit margins in the restaurant industry are too tight to let your bookkeeping slip.

    1. Use a POS system to track your sales daily.
    2. Reconcile all your accounts monthly.
    3. Outsource your payroll and tax filing.
    4. Use Accounting software to manage your inventory and cash flow accurately.

    All this can be handled by QuickBooks! Y&A recommends it because of its many powerful features. This popular accounting software can be used from handling your personal expenditures to creating a professional business account records.

    Y&A’s Advise: Accounting Software will make your life easier.

    As a restaurateur it is important to know how much you are earning per each dish you are serving, here is a powerful report that will help you strategize and plan. QuickBooks Sales by item summary report shows you the total quantity of each item sold, Sales Price – COGS = Gross Margin

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    Daily and weekly reports can show when labor or food expenses are getting too high, spot unexplained losses of food staples, recognize when employee meals are costing too much and identify your business profitability. Your restaurants business health is your priority to maintain.

    Accounting is the language of business

    Small and large restaurants face the same financial challenges as other businesses. Restaurants face the unique problems of food spoilage, wasted food from employees who eat on the job, food that spoils and changing dining trends, loyal customers trying new restaurants and people who look for healthier food choices. Good financial management spots these trends and inevitable issues.

    Foot Traffic Analysis

    Aside from understanding your Table turnover rate, The Foot Traffic analysis allows you to identify the busiest hour of your restaurant, it gives you figures to improve your service and sales like closing ratio and average sales. Number and statistics tells the truth. Your restaurant will never be out of trend by focusing your plans and strategies on the data.

    The goal of the Foot Traffic Analysis is to identify the following

    1. Opportunities for improvementEx: Low Closing Ratio - Work on your menu, improve your waitress sales skills Low average sales – up selling / multiple selling
    2. It helps you strategize your Man Power. More traffic = More staff needed
    3. Stock Preparation, It'll give you the figures of which dish has highest demand per hour.
    4. Constant changes on food demand or traffic can be easily spotted; you will never be out of trend.

    Give your partners at Yogi & Associates a call to help file your Tax Return

    1. Every business needs to file their corporate taxes, whether they were actively engaged in business or not.
    2. Sometimes, there’s an advantage to being the little guy—Canadian owned and controlled small businesses may be eligible for the small business deduction, bringing the tax rate down to 10.5%. The business limit on receiving the small business deduction is $500,000, meaning that corporate income up to the amount of $500,000 is eligible for the small business deduction.

    How to calculate income from an active business?

    You have to deduct the following amounts from your net income for income tax purposes:

    1. Taxable capital gains minus allowable capital losses
    2. Property income minus property losses..
    3. Property income from an interest in a trust.
    4. Foreign business income.
    5. Income from a specified investment business
    6. Income from a personal services business


    Failure to file your T2 taxes on time will result in penalties. These penalties amount to 5% of the amount owing on your taxes, plus an extra 1% for each full month that your tax filing is late. The late penalty for filing may jump to 10% if the CRA sends a demand to file, when there has also been a failure to file in any of the three previous tax years.


    1. Restaurants Designed for Delivery, or "Ghost" Restaurants

      As diners demand convenience, 80% of diners place online orders from a restaurant's website; many restaurateurs are experimenting with delivery-only restaurants, or "ghost" restaurants. They're outsourcing delivery with companies like UberEATS and saving money on rent as they don't have to devote square footage to customer seating areas.

    2. Food Waste Reduction

      Food waste reduction at restaurants is becoming a hot concept this year. Some restaurants are selling their uneaten entrees to the public for up to 80% off the menu price by using the FoodforAll app. They're also committing to using an entire plant, such as broccoli, in entrees and side dishes.

      As food waste is most prevalent in the restaurant industry due to overproduction, expiration, spoilage, and trimming, many restaurateurs have stepped up to reduce their impact.

    3. Gut-friendly Menu Items

      Many restaurants are embracing healthy food trends as consumers seek healthier lifestyles. In a recent Nielsen survey 63% of Canadians said they were actively trying to eat healthier while another 49% were consciously eating products with reduced fats, gluten, salt or sugar. As allergen-free foods become more mainstream, restaurants are also starting to incorporate gut-friendly foods involving fermentation to improve digestion.

      The goal of the Foot Traffic Analysis is to identify the following

      1. Ghost restaurants also known as a delivery-only restaurant or online-only restaurant has been increasing rapidly, these new types of foodservice establishments are increasing in popularity as more and more restaurateurs decide to depart from traditional q brick-and-mortar establishments and focus on delivery instead.
      2. Federal incorporation of your business means that you will be able to do business all across Canada under the same business name while Provincial incorporation entitles you to operate your business in that jurisdiction and have no name protection outside that province or territory.
      3. Accounting is not just for tax compliance and business loans, it is the language of your business. It helps you strategize and plan, your best friend that will never tell a lie. Use QuickBooks and have sessions with one of your experts, we will help you grow your business while you do what you love.