If you’ve dreamed of owning your own restaurant, there are a lot of considerations to think about. At the top of your list, you’re probably asking yourself, “Just how much does it cost to build a restaurant?” More goes into a business like this than you might think, so we’re breaking down the average restaurant startup costs to show what you want to expect.
Here’s What We’ll Cover:
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By the Numbers
Opening Cost by Square Foot
Building Location
Key Takeaways
By the Numbers
For starters, if you buy your restaurant location, you can expect to pay approximately $178 per square foot. But if you’re a restaurant owner who rents their location, your costs are a bit lower by comparison. As such, you can expect to pay approximately $159 per square foot.
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What’s more, the total startup cost of a restaurant can range from anywhere between $95,000 and more than $2 million, depending on:
- Furniture and kitchen equipment
- Monthly rent
- Décor
That’s quite the margin of difference. Of course, there are many variables involved with being a restaurant business owner that you must consider.
Opening Cost by Square Foot
On average, the cost of opening a restaurant is anywhere from $100 to $800 per square foot. These costs depend on factors like:
- New or existing location
- Cooking equipment
- Materials
- Location
- Concept
- Size
Based on the above figures, that comes out to a median cost of around $450 a square foot. And if you have a restaurant covering hundreds or possibly even thousands of square footage, this number can increase rapidly. Let’s look at a couple of examples of how you might buy your restaurant.
You could buy a 1,500 square foot restaurant that’s shutting down for as little as $7,000 — and that includes all fixtures, furniture, and kitchen equipment. But you’ll likely need to invest more working capital into the fledgling building to get it up to code and up to date. So let’s assume you invest another $20,000 in remodeling costs for a grand total of $27,000.
Or, you can forego investing in an existing property and build your restaurant from scratch. In this scenario, you could easily spend more than $1 million on construction costs for a 5,000 square foot location.
As we already mentioned, there are many variables involved in opening a restaurant, and there isn’t a universal answer that you can fall back on. Therefore, a thorough understanding of where you intend to invest your money will give you a clearer picture of the final expected cost.
So let’s examine some of the most prominent parts of your business plan that you need to think about when building your own restaurant.
Utilities
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Although you will not be fully operational during construction, you’re going to need utilities like water, gas, and electricity. For restaurants between 4,000 and 4,500 square feet in size, you can expect your average utility bill to be between $1,000 and 1,200 per month.
Service Equipment
It’s here that things start adding up. You know you need kitchen equipment and commercial kitchen appliances. You’re also going to need to decorate your restaurant and fill it with the appropriate furniture before opening up for business.
You will have to invest in many back-end items, as well, including:
- Inventory management system
- Credit card payment options
- Estimating software
- Telephone system
- Bar equipment
- Music system
- Lighting
- Signage
What’s more, careful budget planning is essential to control your opening costs.
Building Location
When opening a restaurant, one of the most important decisions you must make is its location. It is generally wise to spend extra capital on locations with better foot traffic. Especially instead of relying solely on marketing to attract guests.
Key Takeaways
On average, you’re looking at anywhere from $95,000 to $2 million to build a restaurant from the ground up. If you’re on a limited budget, it may be best to invest in an existing property and fix it up to your liking. Your out-of-pocket expenses will be far less, but you will also be bound to the design and layout of the pre-existing restaurant.
For more expert advice on running a small business, be sure to head on over to our Resource Hub. There, you will find a wealth of information designed to improve your operations.
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