This is the number one question I get asked. Unfortunately, there is no easy answer.
It’s just like asking a car dealer, “How much does it cost to buy a car?” The answer is…it depends…
There are many different types of restaurants; quick casual, full service, fine dining, take-out only, you get the picture. Are you going to lease or purchase? Are you building from the ground up? Is the space you are considering “restaurant ready” (that is, was it previously a restaurant?) Is the landlord offering a TI allowance?
The major expenses in any tenant improvement on a leased space includes, HVAC, exhaust hood, electrical, plumbing, and grease interceptor/trap.
Next you need to consider the interior finishes that are available. This includes counter tops, flooring, wall coverings, furniture, ceiling treatments, etc. All of these can increase the cost of construction considerably. Another major cost to consider is furniture.
What about equipment? Are you purchasing or leasing? Are you purchasing new or used?
What about the POS system? Are you going to purchase or lease?
What is the size of the space you are considering? Does it meet your seating requirements?
You also need to factor in a contingency (construction cost overrun), working capital, initial food and beverage order, uniforms, insurance, workers comp binder, payroll training expense , and many other miscellaneous expenses such as office equipment and supplies.
Don’t forget about lease and utility deposits.
You will also need to allocate funds for interior and exterior signage,
Marketing expense is also something you don’t want to overlook.You will have marketing expenses prior to opening and you should also develop a comprehensive marketing plan for the first 12 months of operation.
These are just a few of the questions you need to ask yourself and have answered before you can determine, “How much does it cost to start a restaurant?”
Based on my 30 plus years in the restaurant industry, I would estimate start-up costs to range between $150.00 to $375.00 per sq. ft. Once again, let me reiterate that these costs can vary greatly based on many factors. An average 1,500 sq. ft. restaurant can cost upwards of $300,000.00. Before you start any restaurant development project, you must complete a comprehensive feasibility study. Our studies include Start-Up Capital Requirements and a Complete Financial Projection Package.
