The cost to build a new restaurant ranges anywhere between $95,000 to over $2 million. The final cost generally depends on activities such as leasing, permits, and renovations. One-time purchases and repetitive expenses like rent and utilities should also be factored in.
Thus, small restaurants will obtain a rough cost of about $275,000 to start. This includes expenditures on furniture, kitchen equipment, and licenses. Knowing how much these costs occur allows one to budget accordingly.
Experts like the National Restaurant Association provide helpful estimates by comparing prices from suppliers and service providers. These figures can guide you in planning your restaurant budget. Total Estimated Cost of Building a Restaurant.
Total Estimated Cost of Opening a Restaurant
Here’s a breakdown of the cost to build a restaurant by different categories:
| Field | Estimated Cost Range |
| Lease or Purchase Costs | $10,000 – $500,000+ |
| Renovation and Interior Design | $10,000 – $100,000+ |
| Licenses and Permits | $1,000 – $10,000+ |
| Equipment and Furnishings | $15,000 – $100,000+ |
| Staffing | $5,000 – $50,000+ |
| Marketing and Advertising | $1,000 – $10,000+ |
| Utilities and Operating Expenses | $2,000 – $10,000+ per month |
| Average Restaurant Opening Cost | $450,000 |
What are the startup costs of opening a restaurant?
There are different kinds of startup costs depending on the restaurant’s concept, size, and location.
The following are some examples of necessary expenditures:
- Shop or Rental Costs: Amount due for rent, deposit towards the lease, or even down payment to have a place secured.
- Remodeling and Interior Decoration: Changing or renovating the space not including decor and furniture turns the place into an inviting dining area.
- Kitchen: kitchen appliances, dining furniture, bar tools, and a Point of Sale (POS) to further ensure the smooth running of operations.
- Staff: Preparation for salaries, taxes, and even benefits for the whole team including the chefs and servers.
- Marketing and Advertising: Creating awareness through a website, social media, and menu design is vital in drawing customers.
- Utilities and Operating Expenses: Covers any monthly recurring fees associated with electricity, water, insurance, and waste disposal.
Renovation and Interior Design
Almost a functional space intended for a stylish restaurant comes at an expense that may be very high. The costs depend on several factors such as the size of the restaurant, location, type, and extent of repairs required as well as design considerations per square foot.
The costs differ based on the conditions of space, the level of customization, and the scope of work. Getting multiple estimates from contractors, designers, and suppliers can help provide an accurate costing.
Working with professionals in the industry ensures that the dream becomes reality within the budget required to construct a successful restaurant with the required norms of the area.
- Construction and Remodeling: Building or remodeling a restaurant is usually highly priced. Constructing walls or plumbing and electrical work will cost anywhere from $10,000 to $50,000. This can add up with permits and finishing work, along with the above-mentioned items.
- Interior Design and Decor: Initial costs may vary according to the size and type of restaurant-from about $10,000 to even $50,000 or higher in dollars for dining tables, chairs, bar stools, booths, and other variables. It generally is going to cost between $5,000 and $20,000 to install interior lighting fixtures, depending on the design of the fixture and how it was crafted.
Licenses and Permits
Licenses and permits are necessary to applying and operating a restaurant. Depending on the location of the business, business models, and the effect of local laws, various licenses and permits might be required. It is important to note that the values of these documents vary widely. For this reason, it is advisable to consult with the local government authorities, health departments, and licensing authorities to get the correct understanding of the requirements and fees regarding your restaurant.
This is the place for all of them to get accurate information tailored to their domain.
- Business License: This varies as per the jurisdiction in which the business falls and the type of license: The fee is usually between $ 50 and $500 or more per annum. The fee will depend on size and location.
- Food Service Permit: It ensures that the business meets the known health and safety regulations and would suitably cost between $100 and $500 as this depends on the local health department and the size of the establishment.
- Liquor License: There is a huge variation in prices from about a few thousand bucks to tens of thousands, depending on the type of license (beer and wine vs. full liquor) and local regulations. In some cases, you might also have to buy an existing license from another establishment in your area, which is going to increase the cost even further
- Entertainment and Music Licensing: If your restaurant will be playing either live music or any copyrighted songs, you may need to have licenses from performing rights organizations like ASCAP or SESAC. Other factors that will affect the cost include seating capacity and the frequency at which the music is played.
Equipment and Furnishings
The cost of restaurant equipment and furniture typically varies with the size of the restaurant, type of food, service style, and atmosphere. Used equipment can also help cut costs, or you can ask for financial assistance. Here is a breakdown of what you’d typically spend:
- Kitchen Equipment: Ranges from $10,000 to $50,000 or so and up, depending on how large the restaurant is, for ovens, fryers, refrigerators, and other major items. Smaller ones, like slicers and blenders, cost a few hundred to several thousand dollars.
- Dining Furniture: Dining tables can cost between $200 and $1,000, and chairs range from $100 to $500 each, depending on style and quality.
- Online Ordering System: The cost to maintain an online ordering system can range from $49 to $10,000 monthly, depending on whether one builds a platform from the ground up or engages a third party in the service.
- POS System: A point-of-sale system will at least cost $1,000-$5,000 and above depending on how many terminals one requires and includes the software; it also has a monthly subscription which varies between 50 to 300 dollars per terminal.
- Website Builders: Restaurant website builder software ranges anywhere from $50 to $3,000 for design and activation depending on what features and capacity they offer.
Staff:
The most important thing to consider in budgeting for a restaurant is staffing costs can be considerable. Costs include labor wages, benefits, taxes, and other expenses for hiring and managing employees. The actual amount varies according to some parameters: size, service level, concept e.g full service and quick service- and local labor market conditions.
- Staff Wages: The cost will vary based on headcount, position, and local minimum wage. Calculate payroll expenses based on hourly rates for positions like chefs, cooks, servers, bartenders, hosts, and dishwashers.
- Additional Costs: Besides wages, includes payroll taxes such as social security, Medicare, and unemployment taxes.
With careful research, consultation by industry professionals, and knowledge of local employment law, you will be able to estimate and plan staffing and training costs.
Utilities and Operating Expenses
Utilities and operating expenses are among the vital services necessary for the day-to-day operation of a restaurant, and their costs can vary, having been influenced by the size, location, and even usage. These costs typically include expenses for electricity, gas, water, waste management, insurance, and routine maintenance.
Get quotes from utility providers, waste management companies, insurance agents, and maintenance service providers so that you can develop more concrete figures for this consumption category. It also helps better manage the continuing expenses of operations and plan from that point on.
- Electricity: From $500 to $2,000 or more per month, depending on the size of the restaurant and the number of electrical appliances.
- Gas: If used for cooking or heating, gas costs may range from $200 to $1,000 or more per month, depending on equipment and usage
- Water and Sewer: Water and sewer costs amount to approximately $100 to $500 a month, based on the size and seating capacity of the restaurant.
- Garbage Collection: Garbage collection charges from $100 to $300 per month, depending on collection frequency and building size.
- Recycling: Recycling programs typically range from $50 to $200 monthly depending on the amount collected for recycling.
- General Liability Insurance: This covers accidents, injury, or property damage. Typical costs run from $1,000 to $5,000 each year depending on the size and location of your restaurant.
Workers’ Compensation, another policy you must have if your establishment employs people, with the range for its cost from a few hundred dollars to thousands of dollars annualized, varies according to the number of employees and their work type.
Estimating those values and collecting quotes from service providers would generally help in basing the budget around realistic numbers, with most providers.
Restaurant owners must count the costs before opening
Before opening a restaurant, the owners must count the costs. According to a report by the James Beard Foundation, 26 percent of restaurants fail within their first year because new owners overestimate startup and operating costs. Successful restaurant owners are known to be very careful about having enough capital to reach the break-even point.
It usually takes a long time for any restaurant concept to start to gain traction, and it usually requires tweaking based on customer feedback. During the ups and downs, it is essential to have enough financial reserves to afford unplanned expenses and provide a runway until the profitability level is reached. While it is very difficult, opening a restaurant is also a very rewarding achievement.
Conclusion
Cost to Buil a restaurant is an expensive affair and costs vary considerably based on several factors. An overall average cost, in general, falls somewhere in the range of between $95,000 to over $2 million to open a restaurant. This range is dependent on the size, location, and concept of the restaurant. For instance, build-out costs usually run anywhere from between $150 and $750 per square foot, which, for larger spaces, can add up quickly. Furthermore, furniture, fixtures, equipment, and permits should all factor in because they often cause the total investment to significantly undermine its estimation.
