How Much Does It Cost to Open a Restaurant in Vancouver? [Restaurant Startup Costs]

Let's examine all the expenses associated with starting a restaurant in Vancouver.

Transforming your restaurant concept from a vision to reality is a challenging task, yet it can be exceptionally gratifying. Similar to other significant life choices, the next question after "How do I start a restaurant?" is "What is the financial cost required?"

Numerous initial expenses to consider and a range of varying factors make this a complex question to address. However, in this article, we’ll take a closer look at all the initial costs you should anticipate and allocate funds for.

How Much Does It Cost to Open a Restaurant in Vancouver [Average Cost 2023]

Based on your leasing expenses, selections of furnishings, and how you're refurbishing your venue, the complete initial investment for a restaurant can vary from $175,000 to more than $750,000.

Restaurant Opening Cost by Square Foot

For just the premises, as noted by collaboratemeetings.com, the expected expenditure is around $200-$500 for each square foot. However, this can significantly fluctuate based on your location in Vancouver and whether you opt for leasing or purchasing. For a restaurant occupying a space of hundreds or thousands of square feet, this expense can really build up.

If you’re looking to rent, Loopnet reports that restaurants can expect to pay between $3,500 and $15,000 monthly on rent in Vancouver.

If you plan to buy a restaurant that is ceasing operations with space of 1,500 square feet, including all furnishings, fixtures, and equipment, you might find yourself at the lower spectrum of our $175,000 to $750,000 estimate. On the other hand, constructing a restaurant from scratch is likely to be significantly more costly, with construction expenses increasing the total – aside from the costs of equipment, furniture, and decoration.

Keep in mind, these figures are general estimates for starting a restaurant – various factors play a role, and these estimates can vary widely from one establishment to another. Your Vancouver restaurant’s business plan also holds considerable significance in this context, so ensure it's watertight.

What Restaurant Startup Costs You Can Expect

Opening a restaurant involves numerous factors,  so there isn't a universal solution to the anticipated expenses. However, gaining a comprehensive insight into where your funds will be allocated can give you a clearer picture of the ultimate costs.

A lack of adequate planning is essentially planning to fail. In the initial stages, you and your team should dedicate time to strategising your approach — this includes understanding the financial implications behind every facet of your restaurant.

Restaurants typically operate on slim profit margins, and operations can be complex, so starting with an inefficient restaurant layout can lead to substantial financial losses through increased labour costs and diminished patronage. An uninviting dining space may deter customers from staying longer and ordering another round. Plus, inferior construction and choosing the wrong equipment may double your expenses in the future.

Below are some of the primary costs and expenditures you should expect in the process of starting a restaurant.

Restaurant Startup Costs Breakdown

Use this restaurant startup costs checklist to get you going as you begin budgeting for your new project.

1. Utilities

While your Vancouver restaurant may not be fully functional during its construction phase, it’s essential to have utilities like gas, water, and electricity up and running. The costs for these utilities can accumulate rapidly: Direct Energy states that Canadian restaurants allocate 3-5% of their overall operational costs to energy.

Energy consumption in restaurants can be broken down by area: 

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

Price Range: Anticipate allocating 3-5% of your total operational expenses to utilities, and keep in mind you should expect to be in the upper range for larger establishments.

2. Location

Choosing the right site for your restaurant is one of the most important decisions you'll make. If you want to open a fast and casual stall, consider a food truck in Gastown, or if you want to capitalise on foodie tourist foot traffic, think Yaletown or Kitsilano. Generally, a prime location with significant pedestrian activity is advisable over depending solely on advertising to attract customers. 

Based on your dining concept, you may have the opportunity to explore various alternatives:

• Constructing a new building from scratch and dedicating funds to new development.
• Launching within a pre-existing structure and acquiring an operational eatery.
• Transforming a current commercial area into a restaurant setting.

Each choice comes with its advantages and disadvantages and will significantly impact your initial expenses — there are no definitive correct or incorrect choices here — however, through thorough investigation, you can determine the most suitable option for your situation.

3. Interior Finishes and Equipment

This is the point where numerous smaller expenses begin to add up. It's no surprise that your establishment will require kitchen equipment and various cooking appliances. Additionally, you’ll need furnishings and decorations that embody your brand. And don't overlook back-end necessities such as signage, lighting, plus sound and telecommunication systems.

It's almost too easy to overspend your budget in this area, so meticulous budget management is crucial to keep your startup costs in check. The primary contributors to the cost variance here are the kitchen equipment and furniture, which largely depend on the scale of your kitchen and dining area, respectively.

Price Range: As per Ownr, the anticipated average expenditure is around $50,000 for furnishings and $43,000 for kitchen apparatus.

4. Pre-Opening Expenses

Everything should be set and ready to roll from the moment you swing open the doors for the grand opening of your restaurant.

Investing in a robust training program is crucial to ensure your staff are prepared and efficient. Additionally, you should have a substantial inventory in your kitchen and freezer ready to sustain you throughout the initial opening phase. This inventory should include food, dishes, beverages, glasses, water pitchers, and any other items necessary to deliver an outstanding experience for your guests.

Price Average: $18,750 on kitchenware and $12,500 on opening inventory. 

5. Marketing

This part varies significantly depending on the type of restaurant you are establishing. If you are starting a franchise, your marketing might already be covered. On the other hand, if you’re launching a new concept in a competitive market, you may need extensive advertising and promotion to stand out.

For those initiating a high-end restaurant in a bustling downtown Vancouver, collaborating with a public relations agency for exposure might be beneficial, or you could be contacted by media for a feature on your establishment.

Beginning with social media is a smart move — and as your customer base expands, you can delve into email marketing. Similar to other aspects of opening a restaurant, the expenses associated with marketing and public relations will vary based on your business model, the level of competition, and other unique factors known only to you as the owner.

Price Range: 3 - 6% of total sales.

6. Capital and Contingency

Even if your restaurant turns out to be successful, it will require a period to stabilise and operate smoothly. It's crucial to anticipate a gradual increase in sales and understand that it will take time for casual visitors to become regulars. Reserve a significant amount of capital and emergency funds to support your restaurant through at least the first six months, which may experience fluctuating or reduced sales.

Price Range: Allocate 10-20% of your overall initial costs for emergency purposes.

7. Exterior Finishes

The restaurant's exterior should be just as appealing as its interior. If you have the ability to influence the outside of your building, consider investing in exterior design, lighting, and landscaping. And if your establishment includes an outdoor eating area, you should fully utilise this space during warmer weather periods.

Regardless of your control over the building's exterior, it's essential to have signage outside your restaurant to inform potential customers that you are open for business.

Price Range: Expect to spend between $150 and $55,000, with potential extra expenses for planning permits.

8. Organisational and Development Costs

This aspect is often the least enjoyable part of launching a restaurant, yet it’s crucial. You must ensure that all restaurant licenses and permits are applied for and paid, place insurance deposits, and also make utility deposits for services such as gas, electricity, and water.

This process can be as time-consuming as it is financially demanding, so begin familiarising yourself with the necessary licenses and permits required to open your restaurant.

Price Average: Approximately $1,000 - $3,000 for yearly licensing and insurance, depending on your location.

9. Professional Services

Newcomers to the Vancouver restaurant scene should avoid going at it alone. Employing a restaurant consultant, as well as seeking guidance from specialists such as architects, attorneys, and interior designers, is a smart investment for ensuring a successful launch.

Price Range: You can expect to spend anywhere from $0 to $70,000, with the actual amount varying based on the extent to which you engage professional services.

10. Technology

Your technology infrastructure is crucial for the seamless operation of your restaurant. Every restaurant requires a point-of-sale (POS) system, and based on your specific concept, additional functionalities and technologies might be necessary to make life easier for your team and delight guests.

Full-service dining venues may benefit from a handheld POS system to speed up table turnover, while fast-service eateries might need a kitchen display system and performance metrics to unlock valuable business insights. You can learn more about each here.

Price Range: Get a quote.

11. Food Cost

Since this aspect forms the core of your restaurant's offering, it's crucial to guarantee that you have all the necessary components for a triumphant launch into the bustling Vancouver food scene. Lacking sufficient food supplies to serve up your menu — particularly in the early days — could leave a negative first impression on your customers. Maintaining a full inventory ensures that your kitchen staff has all the required items for uninterrupted service. Like all other facets, the typical monthly cost for food will fluctuate based on your restaurant's culinary style and menu selections.

Price Average: $12,500 is the typical food cost for restaurants opening in Vancouver. 

Bonus Cost: Franchise Fees

Obviously, this expense is irrelevant if your restaurant is not a franchise, but if it is, prepare for a significant financial commitment upfront. Below is a compilation of typical franchise fees for well-known restaurant brands in Canada*:

• McDonald’s: Willing to invest $700,000 of non-borrowed funds

• Tim Horton’s: $25,000 - 50,000 franchise fee

• Mary Brown’s Chicken: $30,000 franchise fee

• Pizza Pizza: $150,000 franchise fee

• Subway: $15,000 franchise fee

*Data collected in November of 2023 and subject to change. 

Assembling Your Restaurant Startup Dream Team

It's a well-known fact that a major reason for restaurant failures is insufficient funding. Lack of capital makes an inherently tough industry even harder. To steer clear of these common traps, engaging with experts throughout the entire process is crucial. Below is a roster of specialists and tradespeople you ought to involve while preparing to launch your Vancouver restaurant:

• Real estate agents
• Attorneys
• Accountants
• General construction contractors
• Marketing firms
• Architects

Securing the assistance of such professionals will help ensure that your business operations are sound and properly established. Whenever feasible, opt for professionals who possess specific experience in the restaurant sector.

Open a Restaurant without Closing Your Bank Account

Prior to committing to your Vancouver restaurant, assess your available capital and decide on the distribution of funds. For instance, you may prefer allocating a larger portion of your budget to refurbishments as opposed to marketing.

Budget wisely and aim for accuracy in your financial planning. Although your actual expenditures may significantly exceed or fall below your initial estimates, starting a restaurant in Vancouver with a rational and thoroughly thought-out budget will enhance your prospects for success!

Related Resources

• How to Write a Restaurant Business Plan
• How Much Does It Cost to Open a Restaurant? 
• What is the Average Restaurant Profit Margin in Canada? 
• 15 Licences and Permits Needed to Open a Restaurant
• What is the Average Restaurant Revenue for a New Restaurant?
• How Much Does It Cost to Open a Restaurant in Toronto?