How Much Does it Cost to Open a Cafe in Canada? [Cafe Startup Costs]

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Katherine BoyarskyAuthor

How Much Does it Cost to Open a Cafe in Canada?

There’s no restaurant atmosphere quite as cozy as a cafe. Whether you pop in for a coffee before work, are looking to meet friends in a casual setting, or hunker down in the corner to lose yourself in a good book, cafes are welcoming and inviting establishments for all.

Despite challenges faced during the COVID-19 pandemic, the cafe industry has continued to flourish over recent years, with over 6,829 cafes in Canada as of 2022.

With steady growth in the industry, it’s a great time for aspiring cafe owners to begin forming their cafe business plans and ordering their milk frothers. Sound like you? We’re breaking down how much it costs to open a cafe, and sharing business planning tips for new cafe owners.

Whether you're a foodie who's always dreamed of owning your own cafe or an industry pro ready to take the leap with a new concept, Toast is here to help.

Average Restaurant Startup Costs

Depending on the exact location of your cafe (down to the province, city, and neighbourhood), as well as how much renovation needs to be done and utility fees, the startup costs to open a restaurant quickly add up. The average cost to open a restaurant tends to range from $175,000 to over $700,000.

Average Cost of Opening a Cafe

The cost of opening your cafe will depend heavily on the lease you secure for your location. And location is everything.

To determine a reasonable price to pay for your lease, calculate your projected revenue. Total occupancy costs for a profitable business should be 6-10% of gross sales. Take your projected revenue and multiply it by 6% and 10% to determine the lease price range you can afford.

The lowest end of the range of costs to open a restaurant is $175,000, and cafes can be much more cost-effective to open than typical restaurants. With less inventory, less equipment, less staff, and less real estate, the cost to open a cafe can be significantly lower than the cost to open a general restaurant. 

The range for opening a cafe in Canada can vary. Expect to spend between $25,000 and $300,000 in total. Coffee stands, kiosks and food trucks can cost between $25,000 and $75,000, with some stands reportedly opening their business for as low as $5,000.

However, for a seated cafe, expect to spend up to $300,000, or possibly even more, depending on size and location. 

Cafe Opening Cost by Square Foot

As real estate trends continue to fluctuate, cafe opening costs will follow suit. During your real estate search, make sure that you are regularly consulting the most up to date real estate costs.

There’s one main decision to make when it comes to determining opening costs by square foot: will you be purchasing an existing property or constructing a new one from scratch? 

Renting costs an average of $29.42 per square foot for a commercial property. Purchasing an already-established commercial property typically costs $252 per square foot. If you’re looking to build your own cafe, you can expect to pay $200 to $300 per square foot for construction (not including fit-out).

Cafe Startup Costs to Expect

Here’s a breakdown of estimated startup costs for opening a cafe, from food to staffing and utilities. These are average estimates, so depending on the size of your shop and where you're located, your total opening cost prediction might vary.

To ensure that you’re continuously operating within your budget and allocating costs appropriately, map your business plan before proceeding with opening your cafe. 

A Breakdown of Cafe Startup Expenses

Follow this checklist to help plan and manage your budget.

1. Utilities

Cafe utility costs depend on size and location. When taking over an established cafe’s existing lease or renting a new space, look into the previous tenant’s utility history before signing to ensure you are not taking on any residual property debt, and to get an idea of how much to budget.

According to a Direct Energy, restaurants in Canada spend 3-5% of their total operating costs on energy. 

This usage can be broken down by area: 

  • Food prep uses around 35%.
  • Heating and cooling use up to 28%.
  • Sanitation and water usage is responsible for around 18%.
  • Lighting takes up to 13%.
  • Keeping your produce chilled uses up to 6%.

2. Location

As the modern workforce continues to adapt to flexible work, more and more employees are looking for the perfect cafe to use as a workspace on days when they aren’t required to be in the office. 

The success of your cafe may come down to how well you have chosen a location. You'll want to find a location with high foot traffic (or drive-through traffic for the suburbs). That usually means proximity to densely populated neighbourhoods, proximity to public transit or highways, or near office buildings and office parks. 

Of course, costs will vary significantly here, so work with a trusted local commercial real estate agent to ensure you're getting a good deal on a great location. 

3. Interior Design

The interior design and layout of your cafe will influence the branding and atmosphere. What types of people are you hoping to attract as customers? Define your cafe’s mission and vision, then let that drive the interior design style and seating offerings.

Depending on how many redesign projects you’ll need to do to transform your space into the cafe of your dreams, restaurant interior design renovation costs range from $120 - $700 per square foot.

4. Cafe Equipment

It takes a lot of equipment to get your cafe up and running, but remember the good news — most of the equipment you need to purchase to open a cafe will serve as a long-term investment. 

Some of the cafe equipment you need and their estimated price ranges from williamsfoodequipment.com) are:

  • Coffee machine: $650 to $13,000

  • Drip coffee and brewers: $200 to $4000 each

  • Blenders: $200 to $5250 each

  • Reach-in freezer: $2800 to $12,000

  • Undercounter freezer: $1800 to $10,500

  • Reach-in refrigerator: $950 to $25,000

  • Undercounter refrigerator $1500 to $6000

  • Ice machine: $2000 to $8500

  • Dishwasher: $3000 to $19,000

In many cases, the median price between the range can get you great quality for good value, but do lots of comparison shopping and find out what your peers use before you make huge purchases. Consider, too, the maintenance required of each piece of equipment, and if a bigger investment up front could save you repair costs down the line. 

5. Pre-Opening Expenses

Before proceeding any further, take stock of what you still need to accomplish before opening day. All of those tasks — onboarding and training staff members, creating your marketing strategy, obtaining the necessary license and permits, paying utilities that are needed before opening — are considered pre-opening expenses.

Pre-opening expenses average around $30,000 for inventory and kitchenware and $15,000 for operating capital (including staff). 

6. Marketing, Branding, and PR

The marketing strategy you create for your cafe will primarily depend on your cafe’s current relationship with the community. For example, building a brand spanking new cafe will require a more dedicated marketing effort to draw a crowd than if you were taking over the lease of a cafe with existing name recognition.

As a general rule, your cafe marketing budget should be between 3% and 6% of your sales and may include:

  • Developing a clear brand identity

  • Creating branded merchandise

  • Running social media marketing campaigns

  • Paid digital ads

  • Creating a website

  • Email marketing

7. Restaurant Startup Capital and Loans

The restaurant startup capital needed to open a cafe includes:

  • Opening costs

  • At least six months of operating costs

  • Emergency funds

8. Exterior Design

Cafe exterior design serves a dual purpose: to draw customers in from off the street, and to provide them with outside seating options that are just as comfortable as your indoor seating options.

If your cafe location comes with outdoor space, allocate up to $55,000 for your exterior design needs, including:

  • Patio furniture

  • Signage and decor

  • Weather-proof lighting

  • Landscaping

9. Organisational and Development Costs

Opening a cafe will require you to navigate a collection of development costs, such as obtaining all of the necessary restaurant licenses and permits. Depending on the exact services your cafe provides, you may need $1,000 - $3,000 for yearly licensing and insurance.

Working with a professional here can help you avoid any bureaucratic bumps in the road. Speaking of which: 

10. Professional Services

Managing all of those licenses and permits can quickly get out of hand. Luckily, there are experts available to help you navigate the pre-opening and opening of your cafe such as accountants, lawyers, marketing professionals, and more.

Professional service costs range drastically depending on your specific needs and connections (friends and family still count as professional services). On average, cafes spend up to $70,000 on professional services. 

11. Technology and Point of Sale

With each passing day the restaurant industry takes another big step toward the future, thanks to the continuous evolution of restaurant technology. Implementing the latest tech in your cafe allows you to provide your customers with the best and most modern service possible, starting with your POS system. Choose a POS system that can help you offer online ordering (guests love to order ahead these days!), plus an easy to learn simple interface to unite the front and back of house, and systems that integrate with other restaurant tools. 

Toast’s Cafe and Bakery POS System allows cafe owners to provide their customers with a seamless transaction experience.

12. Food Cost

Assuming that you are operating with a fully stocked inventory and supply chain disruptions haven’t thrown too big of a wrench in your plans, a profitable food cost ratio is 28% to 35% of revenue.

The good news is that cafes tend to have much smaller menus, so inventory costs can be lower than traditional restaurants. But don't forget to factor in the cost of the best coffee beans you can get your hands on!

13. Staffing and Management

A few months before your grand opening, assemble a team of superstars that’ll make your cafe shine. Once it does, payroll will be added to your startup costs alongside the cost of recruiting, hiring, and training employees. While you’re busy shaping up your internal team, you may want to consider outsourcing other roles like marketing, design, or bookkeeping to third-party agencies and service providers.

Overall, expect to spend 30% of total revenue on restaurant labour costs.

You Say Coffee Shop, I Say Cafe

Still got coffee dreams percolating? Create a comprehensive cafe business plan, explore the right cafe equipment and then stick to your startup budget, and you’ll be serving up your first cup in no time.

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DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. Toast does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Toast does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.

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