Toronto or St. Louis: Which Is More Restaurant-Friendly? Read to learn more.
(StLouisRestaurantReview) It’s tough to run a restaurant. The hours are long, the margins are tight, and the competition? It grows every day. This is why where you open your restaurant plays such a huge part. There are some cities that are just easier to run any business in because they have lower taxes, it’s simple to get a license, and the operating costs are relatively affordable. Others, on the other hand, will drown you in fees, and you’ll have a hard time finding your way around all the regulations.
In this article, we’ll compare Toronto and St. Louis because both have a thriving food scene, but that’s about all they have in common. When it comes to running a restaurant, these two couldn’t be more different, and it’s a perfect example of how running a food business differs according to location.
Tax Policies and How They Impact Restaurants
Taxes will take a huge chunk out of your profits, so we’re here to compare businesses in Toronto (Ontario, Canada) and St. Louis (Missouri, USA) to see the differences across different aspects that will determine the success (or otherwise) of your business.
If you’re looking for food businesses for sale in Toronto or perhaps in St. Louis, or if you’re just trying to decide on whether you want to start your restaurant in a big city or a smaller one, taxes should be the first thing you’ll get familiar with.
In Toronto, for example, restaurant owners have multiple layers of taxation to deal with. The HST is set at 13%, which means that every meal you sell has a high tax burden for your customers. Plus, commercial property taxes in Toronto are some of the highest in all of Canada, so if you want a prime location, it will cost you quite a bit. Then you need to add business taxes and municipal fees.
St. Louis, however, has a different tax structure. There’s no single sales tax rate, and instead, the combined Missouri state and local tax can reach up to 9.679% – lower than Toronto’s HST. Keep in mind, though, St. Louis imposes a 1.5% gross receipts tax on restaurants, so you’ll have to pay a percentage of total revenue even if you don’t turn a profit.
Licensing, Inspections, and Compliance
In Toronto, your restaurant will need an Eating and Drinking Establishment License, and for that, you’ll need to pay fees and renewals. Once the restaurant is open, Toronto Public Health will inspect it on a regular basis to make sure the food is safe. The city has a grading system, and restaurants get PASS, CONDITIONAL PASS, and CLOSED signs that you need to display publicly. If you fail an inspection, you’ll get fined, forcibly closed, and in some cases, even shut down.
In St. Louis, licensing is also pretty strict, and you’ll need to go through the city’s health department to get approved before you open. Expect frequent inspections once you do, and if violations are found, you’re in for a penalty or you might even need to shut down altogether.
All in all, both cities are strict, but Toronto is more stringent, especially when you consider its visible grading policy. Costs related to compliance are also higher in Toronto.
Liquor Licensing and Overall Costs of Operation
Selling alcohol brings in a good deal of money, but you’ll need a license for that, which is neither cheap nor easy to get, especially in Toronto.
In Toronto, you’ll need to go through the Alcohol and Gaming Commission of Ontario to get a Liquor Sales License and that will set you back more than 1,000 USD (1450 CAD) in fees, plus renewal. The regulations are strict and dictate when you can serve alcohol, and all staff that handles it has to go through training.
In St. Louis, the process goes through the Excise Division and as far as the costs go, they vary according to the type and location of the establishment. Usually, fees are lower here than in Toronto, but you’ll still need to follow strict alcohol laws. That includes restrictions on sales hours and expensive fines if you violate them.
Day-to-day costs are also different. In Toronto, the minimum wage is higher (16.55 USD/hour; 23.85 CAD/hour), and the commercial rent is really expensive, especially if you’re looking to rent somewhere downtown. Utility costs and supply chain expenses (which are even worse because of import tariffs) add to the overall expense of running a restaurant. If you’re in St. Louis, your restaurant will have cheaper local supply chains, so food and beverages won’t cost you as much.
Conclusion
What’s best then, a big or a small city? The comparison between St. Louis and Toronto wasn’t random, it was to clearly show how costs and the experience in general differs according to location.
A big city means you’ll have a larger customer base, but it also usually means higher costs of operation and potentially less profit. A smaller area, on the other hand, will make it cheaper to run a business, but you still have taxes to pay, restrictions and laws to comply with, and not as many potential customers.
It’s a risk either way, but owning a business always is.
