How Much Does it Cost to Open a Donut Shop in Canada? [Donut Shop Startup Costs]
How Much Does it Cost to Open a Donut Shop?
Donuts (or doughnuts!) aren’t just a short-lived craze. They’re an attractive and flexible business model. Donuts can be served in bakeries, as part of a food truck or mobile donut business, or in a counter-service donut shop. Another option for aspiring donut moguls? Opening a franchise!
The cost of opening a restaurant, especially a donut franchise, might be a bit more than that of a traditional shop. But the brand recognition is priceless.
There are endless possibilities when it comes to donut shops… they can be cozy and classic or high-end and gourmet. Check out Glory Hole Doughnuts in Toronto on Instagram. The process behind making their sweet treats is drool-worthy to watch!
There are more donut shops per person in Canada than any other country. So, are you ready to set up your own shop and get involved? Here are all of the startup costs for opening a donut shop, along with expected revenue, monthly expenses, and the tools and resources you need in order to put together a successful restaurant business plan.
Average Restaurant Startup Costs
The average cost to start a new restaurant in Canada tends to range from $175,000 to over $700,000 and can vary depending on location, type of restaurant, size, renovation or building needs, and whether you rent, buy, or build.
Average Cost to Open a Donut Shop
This depends on whether you’re opening a new restaurant, renting, building new construction, or launching a franchise. To open a franchise like a Robin’s Donuts, you’ll need between $260,000 and $500,000, but opening your own small donut shop or food truck might run closer to $25,000 - $300,000 (similar to the cost of opening a cafe).
When you consider that donut shops can bring in $250,000 - $1m in revenue per year, the opening costs will prove well worth it after only a few years in business.
Donut Shop Startup Costs by Square Foot
When estimating the costs of your new shop by square foot, decide if you’re going to buy or rent an existing space, or undergo a new construction or renovation.
Donut shops need anywhere from 1,200 square feet to almost 3,000 square feet to ensure adequate space for baking, prep, and a counter or seating area. To purchase space for your new restaurant, budget $252 per square foot, and $200 to $300 per square foot for construction (not including fit-out).
Standard Donut Shop Startup Costs
After real estate, you’ll need to consider initial startup investments like equipment and branding, along with ongoing operating costs such as staff and food supplies.
Use a restaurant business plan to stay on budget and plan ahead for potential unexpected costs.
Restaurant Business Plan Template
Donut Shop Startup Expenses Checklist
Use these average costs as a starting point to map out your restaurant opening budget.
Utilities for restaurants include water, electricity, WiFi, gas, and any other services that aren’t covered by your rent. If you’re renting a new property or purchasing an existing building, you may be able to find out how much the previous owners paid on an average month, or you can benchmark based on square footage and location. According to Direct Energy, restaurants in Canada spend 3-5% of their total operating costs on energy.
You can choose to sell from a brick and mortar store, a food truck, or a pop-up location that offers multiple businesses’ products.
Research competitors in the area and find out where the existing shops are, then seek out an opportunity nearby or in a heavily populated area.
Successful donut shops only need around 1,000 square feet of space, so you may benefit from choosing a smaller building in a more prime location.
3. Interior Design
The biggest influence on interior design costs will be whether or not you choose to offer seating, or if you’ll operate a counter-service only shop. Restaurant interior design costs are typically between $120 - $700 per square foot. So it’ll help your budget to purchase resale furniture, or offer limited seating. A little paint and creativity can go a long way. You’ll also want a bakery display case to show off your treats, which can cost between $185- $7,764 depending on the size.
4. Donut Making Equipment
Will you bake your donuts or fry them? Fill them with fresh cream and jam, or frost them? Different donut-making methods require different equipment, and you can choose to purchase brand new equipment or rent.
- Donut fryers: $4000+
- Dough sheeter: $3995 - $5,500
- Bakery convection ovens: $5,000 to $15,000
- Donut cutter: $14 each
- Coffee makers: $625 to $995
All in, equipment costs to open a donut shop start around $25,000 and go up based on the number of locations and the types of donuts you make.
5. Pre-Opening Expenses
During the time leading up to opening day, budget for costs to train new staff, develop a marketing plan, and secure any permits needed. These restaurant pre-opening expenses can cost around $45,000, considering size, previous experience, staff experience, and whether or not you’re opening a franchise.
6. Marketing, Branding, and PR
Marketing and branding is usually covered by franchise fees, but for independent shop owners, it’s all on you. You can choose to run your own social media accounts, or hire a restaurant-industry marketing agency to handle your marketing and communications.
Restaurant marketing and branding can include:
- Email marketing
- Public relations
- Social media marketing
- Digital advertising
- Giveaways and contests
- Local advertising and SEO
The largest portion of a restaurant's marketing budget typically goes towards social media ads, which can be targeted toward certain demographics and tend to be cost-effective when in the hands of an experienced strategist.
Restaurant Marketing Plan
7. Restaurant or Franchise Startup Capital and Loans
Restaurant startup capital and financing should cover opening costs, six to twelve months of ongoing operations costs, and emergency funds in case of unexpected situations.
When applying for restaurant financing or loans, have a detailed business plan prepared and map out as many expenses as you can ahead of time.
8. Exterior Design
Allocate up to $55,000 to design the exterior of your donut shop, and consider opening a counter-service window.
Exterior design costs for restaurants can include outdoor seating areas, heaters, parking, landscaping, or signage.
9. Restaurant Permits and Organisational Costs
Restaurants require food safety and handling permits along with the standard licenses that businesses need to operate. Depending on the exact services your donut shop provides, you may need $1,000 - $3,000 for yearly licensing and insurance.
If you need help navigating which permits and licenses you need, consult with a lawyer or restaurant business consultant.
10. Professional Services
Professional services you can choose to outsource include legal services, marketing services, real estate scouting, competitive analysis, bookkeeping and accounting, and establishing a new business. Restaurant professional service costs can add up to $70,000+ if a full suite of professionals are enlisted.
11. Technology and Point of Sale
Today’s customers expect a digital dining experience and a seamless one at that. The tools you invest in from the start can help your donut shop business develop a loyal customer base.
POS platforms like Toast are fully integrated restaurant technology solutions that make order handling easier, and provide you with insights, data and multi-location management tools. The more automated your tech and POS system, the less manual work for you and your team.
The Toast Cafe and Bakery POS System ranges in price based on services and solutions chosen, and can grow as your business scales.
Restaurant POS Comparison Tool
12. Food Cost
The cost to make one donut is, on average, only $0.16. Talk about an opportunity to make some serious dough! Restaurants should prepare to spend about 30% of their revenue on food items and supplies.
13. Staffing and Management
Krispy Kreme has offered the same menu since the 1930s, and their methods can be taught to any new worker, but couture donuts require a more advanced pastry training program.
Consider hiring a pastry chef or manager with experience in confections. Budget for 30% of revenue to go towards restaurant labour costs and staffing.
Donut tell me you aren’t ready to get started…
The world needs more donuts. Always. And it’s ready for your spin! Take these actionable steps and use cost estimates to finally put together a plan that’ll bring you closer to opening a new shop.
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