How Much Does It Cost to Open a Pizza Shop in Canada? [Pizza Shop Startup Costs]
How Much Does it Cost to Open a Pizza Shop?
Pizza is a crowd pleaser — it's no wonder pizza is the go-to option for everything from lazy days on the couch to birthday parties to sporting events. If you're thinking about starting your own pizzeria, it's important to dig into how much money you'll need available to do so.
To assess the cost to open a pizza shop, you’ll have to consider many different factors — some that any restaurant would deal with, and a few others that are specific to pizzerias.
Will you open an independent shop, or become a franchisee? Are you building from scratch, or taking over an existing pizza shop? No matter what route you take, you’ll need to build out a business plan and a budget so that you can start thinking about assembling the right restaurant startup costs you need to hit the ground running.
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How Much Does It Cost to Open a Pizza Shop?
Like any other restaurant, the cost of setting up a pizza shop can vary widely — starting from around $175,000 to a whopping $700,000 and up. As with many restaurant concepts, building the pizza shop of your dreams comes down to your budget and your business plan.
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5 Pizzeria Startup Costs to Know
Your location costs to open a pizza shop will vary based on the city, province or territory, and type of location you’re looking at, but the cost for a location can be roughly $250 per square foot. There’s a lot of variation in this range — and that’s because the type of restaurant you decide to invest in matters. Consider the size, concept, materials, accessibility features, proximity to a major city, and interior furnishings as well.
Here are three other factors in considering the cost to open a pizza shop, each with its own benefits and drawbacks:
Are you building and investing in new construction for your pizza shop? This option gives you the most flexibility in designing exactly what you want but is the most costly.
Will you purchase a pizza shop that already exists? This may lower the cost of your location expense, and you likely will need to purchase less equipment to get running. However, this option provides the least flexibility in terms of customisation.
Will you purchase an existing commercial space, then convert it into a pizza shop? Depending on your budget, this could be the sweet spot where you get the advantages of a commercial space, with the option to build out with some customisation.
If you decide to lease a space, be prepared to pay up to three month’s rent in advance for a security deposit.
No matter where you decide to set up your pizza shop, the location should be easily accessible and visible, with either high foot traffic or ample parking if possible.
Marketing is a major component in the cost to open a pizza shop — and it varies depending on whether you decide to hire an agency or go the DIY route. There are many ways to market your pizza shop, using more traditional methods like broadcasting, newspapers, magazines, and radio to newer outlets like social media. While social media is by far the most popular (and least expensive option), costs can add up once you add in targeted advertisements.
Public relations agencies may offer you more channels to advertise on and manage your social media accounts, but they are the most expensive. However, keep in mind that marketing your pizza shop is a continual process, and you’ll need to budget accordingly.
The cost of marketing has the most variability, depending on your goals. As a general rule, your marketing budget should be between 3% and 6% of your sales when starting out. Then, you can ramp up to 10-12% of your sales if you go for bigger brand awareness plays or choose to work with an agency.
In order to operate your pizza shop legally, you’ll need to obtain licenses, health, and compliance permits, insurance, and pay any applicable fees — usually around $1,000 - $3,000 per year, but it can vary based on your location, so do your research. Ideally, you’ll also want to hire a lawyer to review all contracts and ensure that your shop is legally compliant and not incurring unnecessary liabilities — this will add significant costs upfront but can be very helpful in the long run by preventing any issues.
In addition to licenses, permits, and legal fees, factor in the cost of getting utilities. On average, restaurants in Canada spend 3-5% of their total operating costs on energy.
You’ll also want to factor in staff payments in the cost of setting up a pizza shop. Of course, you'll want to be aware of your expected labour costs and what kind of staff you'll need, from prep cooks and dishwashers to line cooks and servers (if you're a sit-down pizzeria). But also do consider that many team members will have to join you well before your grand opening. For example, to hire a manager, budget around $70,000 a year for their salary, including the amount that you'll be paying them even before you open your doors.
Equipment and Inventory Costs
Similar to scouting a location, you’ll need to factor in the cost of setting up a pizza shop’s equipment and ingredients. The most cost-effective solution is to use existing equipment from a pizza shop that already exists. However, depending on whether you’re starting from the ground up, budget anywhere from $43,000 and up for kitchen equipment. You can also buy used restaurant equipment from Facebook Marketplace at great discounts!
Here’s a list of some essential pizza shop equipment you’ll need:
- Pizza oven (if you’re specialising in artisanal pizzas, you may want to budget more for an authentic wood-fired oven, but many conventional pizza shops use brick, electric, or gas ovens)
- Dough mixers and rollers
- Commercial dishwasher and fridge
- Pizza delivery system for deliveries (if you’re adding delivery services)
- Assorted pizza trays
- Utensils and accessories
Keep in mind that your actual food costs — flour, cheese, yeast, vegetables, and meats — are often cheaper than other types of restaurants. If you’re considering adding vegan or gluten-free options, budget more for your food costs.
Also, many pizza shops also offer supplemental menu items like salads, pasta, and desserts, so you’ll likely want to add those items to your menu. While the cost of food varies significantly depending on size and menu offerings, budget about $12,500 for your initial food costs.
Finally, you'll have to choose a POS (point-of-sale) system, which allows you to keep tabs on inventory and orders and collect payments. Look into a POS that has special functionalities for pizzerias, like the ability to account for toppings and increased delivery volume.
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