Estimating Potential of hot pot restaurant in Victoria Downtown

Step 1: Find Market Potential

There are a few ways to get an answer:

- You could be lucky enough to find the figure for fine dining expenditures in Victoria or
even Canada.
- You could go to https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110022201 to
get the average Canadian household spending on restaurants and then multiplied it by
the number of households in Victoria Metro. Then you would have had to adjust
downward to better represent the figure for fine dining restaurants. But remember, this
stat doesn’t include tourists!
- I based my calculations below on the average expenditure per seat in fine dining
restaurants (I was comfortable using this because my qualitative analysis revealed that
the market was mature in Victoria Metro). I found it here… (https://www-statista-
com.libsecure.camosun.bc.ca:2443/statistics/455281/restaurant-sales-per-seat-canada/

a) Average Revenue per seat $12,000 (https://www-statista-

com.libsecure.camosun.bc.ca:2443/statistics/455281/restaurant-sales-per-seat-
canada/)

b) Number of seats in Victoria (you can find this in a number of ways, but a quick and dirty
way is to look at on-line directories to get the number of restaurants and visit some to
estimate the number of seats)

30 (I used yelp to find this) fine dining restaurants averaging 30 seats = 900 seats
(estimated)

c) Total expenditures in Greater Victoria = $11,000,000 approx (This seems like a big
figure)

Step 2: Estimate your market share

- Typical for restaurants is either number of seats OR floor space.

a) You plan to have 25 seats so your share of seats is:

25/(900 + 25) = 0.027 or 2.7%

THIS IS A GOOD STARTING POINT FOR FIGURING OUT YOUR MARKET SHARE

b) Estimate sales for your restaurant

 You will be a start up and no one will know you. However, your competitive advantage is
your executive chef is well know across Canada. You predict you can get 3.5% market share

$11,000,000 x 0.035 = $385,000

Step 3: Forecast your NI

You will need to search out your cost information. Industry reports found online can be helpful
as can personal experience (or knowing someone has experience). I got my info here.
https://www.touchbistro.com/blog/21-restaurant-metrics-and-how-to-calculate-them/
www.realtor.ca
https://www.forbes.com/advisor/business-insurance/restaurant-insurance/

Sales 385,000
Less:
COGS (at 35%) 135,000
Gross Profit 250,000
Less:
Labour Cost (25% of sales)
- Kitchen 120,000
- Wait Staff 100,000 (4 staff @ 30 hrs per week @ $16.75 per hour for 50
weeks)
220,000
Lease 48,000 (1200 sq ft at $3.33)
Insurance 2,000 ($165/m for 12 months)
Advertising 10,000
Other 20,000
300,000

EBITDA (50,000)

Is it a good decision to do this???