Restaurant Startup Costs Breakdown—How Much Does It Cost?
Having a successful restaurant is a lucrative position to be in—the full-service restaurant market in the United States is worth $334.8 billion—but getting there is a difficult quest.
In this article, we will show you what restaurant startup costs there are and how big of an investment you have to make to get the restaurant up and running.
When you start a new business, you have two types of costs to take care of:
- One-time investment
- Recurring costs
When you start any business, you need to take care of initial expenses to make your company operational—restaurants are no different.
The costs will vary immensely depending on the type of restaurant you want to open—a full-service restaurant will be costlier than a fast-food kiosk.
For the former, the first cost comes in the shape of securing a place. Depending on its size and location, the purchase price can go over $1 million. On average, owners pay $178 per square foot.
You will also have to cover other expenses before you can greet your guests.
Take a look at the following table to see one-time restaurant startup costs:
|Renovation and decor||$5,000–$50,000|
|Licenses and permits for:
It is good practice to include a 15% contingency in your budget for any unexpected expenses. With it, the initial startup costs for a restaurant can amount to $786,025.
Once you open the restaurant, you will have many costs that occur every month. You need to pay salaries and bills, restock your inventory, and cover maintenance costs.
If you do not have the money to buy a place (or do not want to), you can opt to rent. Renting space for a restaurant goes from $40,000 to $150,000 annually—that is $3,333–$12,500 per month.
The following list is a recurring restaurant startup costs breakdown, aside from the rent:
- Utilities—$2 per square foot on average
- Inventory—$5,000–$25,000, depending on what kind of dishes you serve
- Equipment maintenance—$1,000
- Sous chef—$44,000
- Restaurant manager—$46,000
- Line cook—$29,000
Running a restaurant is a costly affair in the beginning when you do not have a full house every evening. It is reasonable to believe that you will be in the red for the first six months. You should make sure you have enough savings put aside to cover the costs for that period.
If you cannot secure the money on your own, you can get a small business loan to help you fund the restaurant.
Many banks and credit unions tend not to provide funds to newcomers as they look to minimize their risk and allow only respectable businesses to get a loan. Still, you can find many startup loans for your company.
Small business loans come with their conditions—lenders decide on the interest rates, repayment schedules, and collaterals. Collaterals serve as a guarantee—lenders take it away from you if you fail to repay the loan on time.
Another aspect of a loan is its type. Different kinds of loans offer varying terms, and some of them accept requests for a specific purpose—you will need to declare exactly what the loan is for. Some of the best small business loans are as follows:
- Equipment loans
- Loans for restaurant owners
- Credit lines
- The United States Small Business Administration (SBA) small business loan
Startup costs for a restaurant are not the only aspect of opening up a business that you will have to take care of. You will also need to hire staff, get the necessary equipment, obtain mandatory licenses, etc.
If you need a small business loan on top, it may prove too much to handle by yourself, especially with how complicated the application process is.
As lenders want to minimize their risk, they have business owners go through a detailed process to prove they qualify for the loan. To do that, you will need to give detailed answers about yourself and the company. You will also need to submit thorough paperwork, including:
- Financial statements on:
- Cash flow
- Profit and loss
- Budget sheets
- Business and personal credit score reports
- Business plan
Due to the nature of the application, many business owners fail to tick all the boxes and do not receive a loan. DoNotPay can help you secure the necessary money by helping you create a watertight loan request.
Our app will make sure you submit all the necessary documents and include every detail lenders require. All you need to do is sign up for DoNotPay and:
- Navigate to the Business Loan Request Letter product
- Gather your personal and business credit scores
- Prepare paperwork to prove you qualify
- Answer a few questions
- Upload all the necessary documents
If you’re still uncertain as to which lender you want to take out a loan from—we can assist you in finding the best one!
You can opt for our Find Online Business Loan Lender feature to get a list of three best lending institutions for the type of loan you need.
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As a business owner, you are bound to deal with various complex processes. Luckily, DoNotPay can help you handle most of those procedures stress-free. Do you need to register your business name as a trademark, file the self-certification request with the Privacy Shield program, or report illegitimate and inappropriate negative reviews? Our app enables you to do it within minutes.
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Drafting legal documents does not have to be complicated or expensive. DoNotPay has a variety of tools that you can use to get a:
- Letter requesting a loan for your small business
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