Are you looking for ways to showcase your love for food to the world? Or, have you suppressed your passion after assuming that opening and managing a restaurant is expensive?
You’ve come to the correct place if you fit into either of the categories. The piece talks about the cost to start restaurant. It has thoroughly discussed every aspect of setting up a restaurant and talks about what assets you need. Let’s go as it’s time you should operate your dream restaurant.
What is included in the Cost?
Running a restaurant smoothly needs money and to let you make an informed decision, here is the cost breakdown for restaurant opening and working –
#1. Location of Your Restaurant
Let’s begin with the selection and nature of the place from where you’ve decided to open your dream restaurant. And it is one of your biggest expenses. You have two choices – either buy the place or lease it. If you opt for a lease, then be ready to pay – $3000 to $7000 monthly.
If you buy the property, it costs more upfront but gives you full ownership. Leasing costs less initially, but you must keep paying rent every month. Moreover, the price depends on where your is located –
- Prime Locations
The cost to start a restaurant depends on whether it is located in
- A big city
- Tourist Spots
- Near Football/ Baseball Grounds
- Some Richie Rich Areas
- Shopping Centers
If we talk about shopping malls, the number of visitors, and their location decide the price.
- Luxury Malls – These are created for ultra-rich people
- Regular Shopping Malls – Here, the restaurant startup cost would be moderate.
- Outlet Malls – It is set up for discounted items and tourists, so the prices here are comparatively lower.
- Neighborhood Malls – Such places are available at affordable rates if you wish to launch your restaurant here.
- Heritage Buildings
Such places hold the history of a particular place or country. So, you’ve to spend thousands of dollars to get the space and run your restaurant here.
#2. Some Permits You Need
Now, you’ve decided about the location and whether you’re buying it or leasing it, the other step is to get all the necessary permissions. Opening a restaurant isn’t just about cooking delicious food – it’s about ensuring your business is legal and safe. You need these to legally run your business, and they’re a part of restaurant business expenses –
- Business License – Costs $75 to $7,000, depending on your city.
- Employer Identification Number (EIN) – Required for taxes and hiring employees.
- Certificate of Occupancy (COE) – This proves your restaurant building is safe.
- Food Service License – Costs $100 to $1,000 and allows you to serve food.
- Food Handler Permit – Required for staff to ensure food is handled safely.
- Liquor License – If serving alcohol, this costs $300 to $14,000, depending on state laws.
It’s best to start early, as some permits take weeks or months to process. Without these, your restaurant can’t open legally!
#3. The Set Up
Do you have the required docs in your hand? Yes.
Perfect.
So, let’s go and design your dream and have the restaurant setup cost analysis. Establishing your restaurant requires careful planning and budgeting. You need to spend on both the interior and exterior to create a great experience for customers.
- The Outdoors
A well-designed exterior attracts customers and makes your restaurant stand out. If you have design control over the facility, spend money on designing gardens, lighting, and outdoor seats.
This is especially important if you have a patio for outdoor dining. Even if you can’t change the building, you’ll still need signs to let people know you’re open. The cost of exterior designing can range from $1,000 to $40,000.
- The Interiors
After the appealing exteriors, you’ve to decorate the inner part of your restaurant. The approx. amount needed is $20,000 to $400,000 and is a part of the cost to start restaurant. But what does the amount bring?
- Furniture matched with the theme or if you opt for mix & match settings
- Sound System – lighting, music, and band (if you wish any)
- Innovative Sign Boards
- Wall Decors
- Communication setup within the restaurant.
- The Cooking Ground
The heart of the restaurant – the kitchen. And it needs stoves, ovens, refrigerators, and utensils to cook mouthwatering dishes. So, this delicious menu needs some wonderful tools which can, however, cost $50,000, to $150,000. If that sounds expensive, buying used equipment from closed restaurants can be a great way to save money—it’s a smart and practical choice!
#4. Food/ Alcohol Cost
While restaurant financial planning, the next big thing you have to handle is food and beverage costs. On average, food costs make up 28% to 35% of total expenses.
Each month’s spending is between $5,000 and $25,000 on food, depending on the menu and portion sizes you offer. Moreover, prices can go up due to weather, supply problems, or food trends.
So, to save money, try to negotiate prices with vendors and reduce your food waste. Ensure to be mindful before ordering the ingredients, and cross-check these with your inventory.
If you serve alcohol, you also need a liquor license, which adds extra costs. Through careful planning, you can cut waste and increase profit!
#5. Staff’s Salary
Employees are a big part of running a restaurant, and so, is their salary. Hence, when starting a restaurant budget, plan for it as well. Before opening, you must pay employees for training and recipe testing, even though there are no sales yet. Some full-time employees like managers and chefs, may need to start months before opening, which adds to costs.
A restaurant manager earns $28,000 to $55,000 per year. Head chefs make $1,300 to $1,800 per week, while line and prep cooks earn $575 to $650 per week. And the waiters get the minimum wages, but they keep all the tips received from the customers.
You also have to pay extra taxes on these wages. Planning such restaurant initial investments carefully helps certain that the restaurant runs smoothly and successfully!
#6. Marketing Expenses
When starting a restaurant, you need to let people know about it. And marketing is a big part of the cost to start a restaurant. Most people spend almost 3-6% of their sales on advertising.
If you open a franchise, the company may cover advertising costs. But, if you start your restaurant, then you’ll need to plan for restaurant funding requirements like ads, social media, and promotions. Many uses social media marketing, ‘cause it’s cheap and works well. Moreover, having a website with good SEO helps more people find your restaurant.
Other advertising options include radio ads ($20–$80 per spot) and TV ads ($200–$1,500 per 30-second ad). You can even hire PR agencies to get media coverage.
Having enough capital for starting a restaurant means you can market it well. A strong marketing plan helps bring in more customers and makes your restaurant successful!
#7. Use of Technology
Your desire for opening a small restaurant cost doesn’t have to break the bank. If you focus on essentials and find creative savings, you can build a strong foundation without overspending.
Starting a restaurant involves various expenses and one key aspect is investing in the right technology for smooth operations.
- A Point of Sale (POS) system is vital for organizing sales, tracking orders, and processing payments quickly.
- Kitchen Order Management systems streamline order fulfillment, ensuring quick and accurate service.
- Adding Self-Service Kiosks can enhance customer experience by reducing wait times and improving order accuracy.
- Organize both online and offline reservations with a modern table booking system. It collects customers’ details, helping you organize seating, and serve guests more efficiently.
When planning the cost to start restaurant, it’s important to allocate funds for these essential technologies. Sparkresto is one such platform that has many features including those mentioned here. New to the restaurant industry? Worry not, your friend Sparkresto is here to align with your success goals.
#8. Contingency Fund
When opening a restaurant, be ready for slow sales. Even if your restaurant becomes popular, it will take time for customers to become regulars. You should save enough money to pay for expenses in the first few months, especially if sales are slow at the start.
If your restaurant has outdoor seating, making it look nice is key. Even without big changes to the building, you need signs to attract customers. Exterior design costs can range from $1,000 to $40,000. This helps ensure you stay afloat while growing your customer base. To increase the sale you need to create restaurant revenue plan.
Your Restaurant is Here
Starting a restaurant takes careful planning and money, but with smart decisions, you can make it work! From choosing the right location to setting up your kitchen and hiring staff, every step plays a big role. Investing in technology helps run things smoothly, and marketing brings in customers.
Don’t forget to save extra money for unexpected expenses! While the cost to start restaurant can vary, careful budgeting and planning can turn your dream into reality. Stay focused, be patient, and soon, you’ll be serving happy customers in your very own restaurant!
