Menchies scoops up market share; Tiffenday’s growth plan; more.

Tiffinday has come a long way, but now finds itself at a crossroads. The lunch delivery service launched by Seema Pabari in 2010 has reached the pinnacle of its output, but only reaps modest profit. Only so much money can be made with just lunch, so Ms. Pabari is now looking into expanding her operations by opening a dine-in restaurant somewhere on Toronto’s west side.

The Tiffinday concept is borrowed from India where wives cook lunches for their husbands and have couriers deliver the meals to their workplace in reusable metal containers called tiffins. Thousands of lunches are delivered each day in this manner.

In Toronto, Ms. Pabari delivers them in her Honda Fit, or on an ebike weather permitting. To cook the meals, she’s fortunate to have the use of the kitchen at Udupi Palace, an Indian restaurant in Toronto’s east end, where staff helps with meal preparation.

Tiffinday has been doing well these days, but with no help she has had to refuse orders. Her next step, she believes, is to open a restaurant and expand the menu to include dinner options. But Ms. Pabari and her business partner Hubert D’Mello, owner of Udupi Palace, are having trouble finding an appropriate place within their budget of $3,500 a month, property tax included. They want to find a 1,200-square-foot location with seating for 35 people.

“We’re working within a certain budget and places don’t always come up within that range,” Ms. Pabari says. “We need to make sure there’s a ventilation hood installed because we don’t want to incur that expense. That limits our choices as well. Another thing is that the upfront cost of setting up a restaurant is actually quite high. We’re looking for a place that is virtually ready, maybe turnkey.”

Last year, they were offered space through the YMCA. They took it only to find it wasn’t suitable to their needs. There were apartments above, so installing a range hood in the kitchen would not have been allowed by the city because smells would drift up into the apartments.

Mr. D’Mello, who has 13 years of experience in the restaurant industry, says it can cost up to $150,000 and take up to four months to open a new restaurant. Installing the range hood can cost $35,000 alone. Being self-financed, Ms. Pabari and Mr. D’Mello want to avoid those expenses.

The rents they’re looking for are a tough find, says Mary M o w b r a y, senior vicepresident of the Toronto retail group of Colliers International. They have a hard search ahead of them, she says.

“The really high rent locations in Toronto are the premium areas on Bloor Street, Yonge and Dundas, and Queen Street West. There’s a relationship between the traffic and the rent, and that’s why the rent is so much higher in an area that’s really busy,” Ms. Mowbray says.

“[Ms. Pabari is] going to have to go to a secondary tier to get those kinds of rents. She’s going to have to go to something where there’s not a lot of other retail. Not a lot

We’re looking for a place that is virtually ready, maybe turnkey

of nationals. The downside though is that those aren’t the best places to open a retail business.”

Another factor is the high failure rate of new restaurants — with 25% closing in their first year. Lease terms for commercial properties are most commonly set on five or 10-year terms, and the first thing property owners want to know is if the tenant has a working business in place. Tiffinday already has a loyal following with its lunch deliveries, but venturing into the restaurant business in Toronto, a city overflowing with restaurants, means it will face some stiff competition.

“Since the recession, traffic to full-service restaurants has not increased,” says Geoff Wilson, president of fsStrategy, a restaurant industry consulting firm. “More restaurants open, traffic stays the same; we’re fighting over the same pie, so supply is exceeding demand. Getting enough noise out there so people come and try her place, as opposed to someone else’s, is really going to be the challenge.”

For Tiffinday, success in its next venture depends on a number of things, Mr. Wilson says. A good location that provides enough of a lunch crowd, as well as a dinner crowd to make up for the increased expenses of operating a dine-in establishment, is essential. And there is a number of operating and managerial costs associated with running a restaurant that are not present under Tiffinday’s current lunch delivery model. “[Ms. Pabari will have to find] unique ways to get the word out and get people to know about the new restaurant, and keep that spirit of differentiation that she’s already got. Clearly that’s going to be her advantage. It’s a very unique concept.”