Report Reveals the Costs of Starting a Restaurant

The Costs of Starting a Restaurant

If you are looking to open a restaurant, ascertaining the initial startup and expected operational cost will help you determine what kind of establishment you can open. The new infographic from Bid on Equipment goes into great detail as to what it will cost you to start and operate a restaurant.

The difficulties of opening, running and most importantly keeping a restaurant going for the long haul are well documented. What Bid on Equipment looks to do is give you a comprehensive view of the business, with detailed information from the initial security deposit to location, what customers want and much more.

As of 2017, the National Restaurant Association reported there were more than 1 million restaurants in the US, and the majority are small businesses. Nine in 10 of these restaurants have less than 50 employees and 7 in 10 are single-unit businesses.  With the right cuisine and operations, you can get your share of the $799 billion in total industry sales reported for 2017.

So with that in mind, Bid on Equipment says your journey as a restaurateur can be a good one if you have, “… accurate expectations, sound budgeting, and attention to the customer, a great restaurant can see years of successful and satisfied service.”

The Costs of Starting a Restaurant

It is important to point out the amount of data Bid on Equipment has collected. It goes into the nuts and bolts of restaurant operations to find out what it will really cost you to get one up and running. It also goes without saying there will be great variations dependent on location, regulations, taxes, supplies and more. However, the infograpic gives you a great primer as to what you can expect to spend.

The type of restaurant will dictate the total cost. The most successful restaurant types are quick service, fast casual, fine dining, family dining, and casual dining. If you’re looking to go the least expensive route, you can get food trucks for $15,000-$100,000.

If on the other hand you are looking for a franchise, the most expensive can start at $1.5 million and go all the way up to $3.5 million. Within his range are KFC, Taco Bell, and Wendy’s. Chick-fil-A is one of the cheapest franchises, but the pay structure is designed to collect an ongoing fee of 15 percent of sales as well as 50 percent of pretax profit.

Once you have your place, kitchen equipment can go for anywhere from $75,000-$115,000. This doesn’t include the tables, furniture, plates, silverware and glassware, which can add up to $25,000 or more.

The staff comes next. And this is critically important in ensuring the long-term survival of your restaurant. As the report says, “The difference between a great restaurant and a terrible one relies on the happiness of the customer. And often, the customer’s experience relies on the interactions with the restaurant staff.”

Depending on the number of employees and talent level, your executive chef, sous chefs, cooks, servers, busboys and managers, as well as all of the other support staff, can start at $35,000 and go much higher.

Don’t forget marketing, websites, technology, opening events and other tools needed to keep your restaurant operating smoothly. After the initial capital investment, monthly upkeep can go anywhere from $3,000 to $5,000 and up.

Should you buy or lease? You can expect to pay an average of $735,000 or $178 per square foot if you decide to own your restaurant. Leasing will provide a slightly more affordable alternative, with average leasing options coming around $495,000 or $159 per square foot.

The Costs of Starting a Restaurant

Photo via Shutterstock

1 Comment ▼

Michael Guta Michael Guta is the Assistant Editor at Small Business Trends and currently manages its East African editorial team. Michael brings with him many years of content experience in the digital ecosystem covering a wide range of industries. He holds a B.S. in Information Communication Technology, with an emphasis in Technology Management.

One Reaction
  1. This is great for all those people who are thinking of entering this type of business. And since food will always be a priority, this type of business will always be quite popular.