{"id":15608,"date":"2022-02-09T15:08:17","date_gmt":"2022-02-09T21:08:17","guid":{"rendered":"https:\/\/www.partstown.com\/about-us\/?p=15608"},"modified":"2024-03-29T13:28:27","modified_gmt":"2024-03-29T18:28:27","slug":"how-much-does-it-cost-to-start-a-small-restaurant","status":"publish","type":"post","link":"https:\/\/www.partstown.com\/about-us\/how-much-does-it-cost-to-start-a-small-restaurant","title":{"rendered":"How Much Does It Cost to Start a Small Restaurant?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Figuring out how much it\u2019s going to cost to start a small restaurant is no easy task. According to <a href=\"https:\/\/www.restaurantowner.com\/public\/Survey-How-Much-Does-it-Cost-to-Open-a-Restaurant.cfm\" target=\"_blank\" rel=\"noopener\">RestaurantOwner.com<\/a>, it costs between $175,500 and $750,500 to open a restaurant, this large range including establishments of all types and sizes. Usually, it\u2019s hard to find information regarding small cafes, neighborhood pizzerias or local pubs.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Fortunately, this article gives a detailed breakdown of the cost to start a small restaurant. Once you have a better idea of what goes into becoming a restaurateur, you can better prepare financially for the process of <a href=\"https:\/\/www.partstown.com\/about-us\/how-to-start-a-restaurant\" target=\"_blank\" rel=\"noopener\">opening an independent restaurant<\/a>.<\/span><\/p>\n<h2><strong>Breakdown of Restaurant Startup Costs<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">When opening a new restaurant, a lot needs to be done\u2013and a lot of money needs to be spent\u2013before you even serve your first customer:<\/span><\/p>\n<h3><em><span style=\"font-weight: 400;\">Restaurant Permits and Licenses<\/span><\/em><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Business License: $50-$250<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">In most areas you need to register with the state and local government in order to conduct business. A restaurant business license usually costs $50, but fees may be higher in some cities.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Incorporation Fees: $50-$300 or more<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">In order to become a legal business, you have to choose a business structure. Most restaurants in the United States are either LLCs or corporations, so the cost of incorporation varies from $50 to multiple hundreds of dollars, depending on the state and if you need the help of a lawyer.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Food Service License: $100-$1,000<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">You need a license to serve food to the public, as well as a passing score on periodic <a href=\"https:\/\/www.partstown.com\/about-us\/health-department-checklist-for-food-establishments\" target=\"_blank\" rel=\"noopener\">health inspections<\/a>. Costs vary by location.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Liquor License: $3,000-$14,000\u00a0<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Varies by state. A license for only wine and beer is usually significantly cheaper than a full <a href=\"https:\/\/www.partstown.com\/about-us\/how-to-get-a-restaurant-liquor-license\" target=\"_blank\" rel=\"noopener\">liquor license<\/a> that includes hard alcohol.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><em><span style=\"font-weight: 400;\">Commercial Space<\/span><\/em><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Buy: $100,000-$1,000,000<\/strong><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Lease: average $2,000-$12,000 per month for 5-10 years<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">As the saying goes, \u201clocation, location, location\u201d is very important. <a href=\"https:\/\/www.partstown.com\/about-us\/how-to-choose-a-restaurant-location\">Choosing a restaurant location<\/a> in a busy downtown area with many potential customers will be more expensive than a low-density area with minimal foot traffic.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">If buying, expect to make a 10% down payment. If leasing, a significant deposit is normal. Also, restaurant leases are a lot longer than apartment leases, so signing a 5 or 10-year lease is standard.<\/span>\n<ul>\n<li aria-level=\"3\">The commercial space will likely be your biggest expense, so choosing one location over another can affect the cost to start a small restaurant dramatically.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><em><span style=\"font-weight: 400;\">Restaurant Build-Out<\/span><\/em><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Renovations: a few thousand to $100,000<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">The layout, HVAC, plumbing and electrical are all important. If you&#8217;re starting a small restaurant in a space designed for a food or beverage business, you may not have to make many changes. However, if you are moving into a former accounting office, the restaurant build-out will be much more expensive.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><em><span style=\"font-weight: 400;\">Exterior Design<\/span><\/em><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Signage: $5,000<\/strong><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Exterior decorations, outdoor seating: $100,000 and up<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">A big, attention-getting sign tells people where you are and that you are open for business. Local permits included, a basic outdoor sign will likely be about $5,000. If you want more than just a sign, such as a high-end exterior with outdoor seating, be prepared to spend a lot of money.<\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><em><span style=\"font-weight: 400;\">Restaurant Equipment<\/span><\/em><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>New: $50,000 for a small shop, $150,000 for a larger kitchen, $115,000 average<\/strong><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Used: usually 10%-40% less<\/strong><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Lease: $1,000-$5,000 per month for a full kitchen set<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Commercial kitchen equipment is one of the greatest expenses for a small restaurant, so buying used equipment or leasing appliances is a good money-saving strategy.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<div id=\"attachment_15664\" style=\"width: 415px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-15664\" class=\"size-full wp-image-15664\" src=\"https:\/\/www.partstown.com\/about-us\/wp-content\/uploads\/2022\/02\/How-Much-Does-It-Cost-to-Start-a-Small-Restaurant-Commercial-Kitchen-with-Equipment.png\" alt=\"How Much Does It Cost to Start a Small Restaurant - Commercial Kitchen with Equipment\" width=\"405\" height=\"247\" \/><p id=\"caption-attachment-15664\" class=\"wp-caption-text\">Commercial kitchen equipment is one of the biggest expenses for a new restaurant.<\/p><\/div>\n<h3><em><span style=\"font-weight: 400;\">Restaurant Furniture<\/span><\/em><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Dining Area Tables and Chairs: $40,000<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Restaurant tables and chairs are surprisingly expensive. According to an article on Lightspeedhq.com, restaurant furniture for the dining area can cost $40,000. Since furnishing a small restaurant is so expensive, many places only offer take-out.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><em><span style=\"font-weight: 400;\">Restaurant D\u00e9cor<\/span><\/em><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Dining Room Area: varies, average of $120-$300 per square foot<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Creating a nice ambience with top-notch interior design can make a great impression on guests. Take-out only and lunch counter restaurants usually have minimal interior decorating, but spending $120 to $300 per square foot on restaurant d\u00e9cor is normal.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><em><span style=\"font-weight: 400;\">Restaurant Insurance<\/span><\/em><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Business Property Insurance: about $700 per year<\/strong><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>General Liability Insurance: about $800 per year<\/strong><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Workers\u2019 Compensation Insurance: about $1,500 annually\u00a0<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Insurance company Farmers recommends that restaurants have three types of insurance:\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"4\"><b>Business Property &#8211;\u00a0 <\/b>for <span style=\"font-weight: 400;\">fires and other disasters<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"4\"><b>General Liability &#8211;<\/b><span style=\"font-weight: 400;\"> in case of injury or illness<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"4\"><b>Workers\u2019 Compensation &#8211;<\/b><span style=\"font-weight: 400;\"> in case employees are injured at work<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><em><span style=\"font-weight: 400;\">Professional Fees<\/span><\/em><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Lawyer: $500-$2,000<\/strong><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Accountant: $100-$400 per month<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Good legal advice when opening a new restaurant is important, so expect to pay for it. Although an accountant may not be absolutely necessary in the pre-opening phase, it is a good idea to budget a few hundred dollars per month early on so that there are no surprises in the future.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><em><span style=\"font-weight: 400;\">Restaurant Management Software<\/span><\/em><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Point-of-Sale (POS) Software: $1,500-$5,000 setup, $200-$500 installation; $6-$400 per month<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">A Point-of-Sale system tracks orders, payments, and inventory, allowing restaurant managers to manage workflow digitally.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">POS systems also offer analytics reports, such as best-selling menu items and busiest times of the day, so that restaurant managers can make changes to be more profitable and efficient.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">A POS system includes both software and hardware, so getting your new restaurant set up will likely take a few thousand dollars. Once set up, most POS systems also have a monthly payment.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"4\"><span style=\"font-weight: 400;\">There are many POS systems on the market with varying features and prices, so be sure to shop around.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Employee Scheduling Software: about $10 per month<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">With many part-time employees, new restaurants need a way to manage their schedules. Scheduling software makes planning and adjusting schedules a lot easier.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><em><span style=\"font-weight: 400;\">Employees<\/span><\/em><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Food Handler\u2019s Permit: minimal to $100-$500 including course and test<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Depending on the state, some or all restaurant employees must obtain a food handler\u2019s permit by taking a self-directed course, passing an exam and then paying the permit fee. Check your state health department for more information.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>General Training: a few hundred to a few thousand<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Your employees need to know how to do their jobs, so a few hours to a few days of training on the POS system, the menu and other aspects of the business is necessary.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">The cost of training new restaurant staff depends on the number of employees and their experience, so this figure varies widely.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><em><span style=\"font-weight: 400;\">Marketing<\/span><\/em><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Website: none to a few thousand<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Nowadays, almost everyone expects any legitimate business to have a website, so <a href=\"https:\/\/www.partstown.com\/about-us\/how-to-create-a-website-for-your-restaurant\" target=\"_blank\" rel=\"noopener\">creating a website for your small restaurant<\/a> is essential. Options range from a free, do-it-yourself site to a large, impressive website that requires you to hire help for thousands of dollars.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Social Media: none to a few thousand<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\"><a href=\"https:\/\/www.partstown.com\/about-us\/6-restaurant-social-media-tips\">Marketing your restaurant on social media<\/a> can be a great way to build its customer base. Although you could build a Facebook page or Instagram account on your own, hiring someone to help would make life easier.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Traditional Media: none to multiple thousands<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Even though a lot of restaurant marketing has gone digital, other forms of marketing are not dead. Things like flyers and radio commercials can definitely make people aware of your new pizza place or caf\u00e9.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><em><span style=\"font-weight: 400;\">Initial Food Inventory<\/span><\/em><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><strong>Pre-Opening Food: average $5,000-$25,000<\/strong>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">Although it is important to not overstock and overspend, you do not want to run out of food on the first day. Depending on the type of restaurant and if you serve alcohol, stocking your new restaurant with food will likely cost between $5,000 and $25,000.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><strong>Average Cost To Start a Small Restaurant<\/strong><\/h2>\n<h3><em><span style=\"font-weight: 400;\">Total Startup Costs: Between $100,000 and $300,000<\/span><\/em><\/h3>\n<p><span style=\"font-weight: 400;\">After going through the breakdown, it\u2019s clear that there are a lot of expenses associated with opening a restaurant.\u00a0 Even though you can save money by doing things like buying used equipment or forgoing a liquor license, it\u2019s still going to cost a lot of money.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Considering the range of expenses, <strong>the cost to start a small restaurant is between $100,000 and $300,000.<\/strong> In terms of cost per square foot, restaurant consultants say a good estimate is <strong>$100 to $800 ($450 average) per square foot<\/strong> to get your new restaurant up and running.<\/span><\/p>\n<div id=\"attachment_15665\" style=\"width: 415px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-15665\" class=\"size-full wp-image-15665\" src=\"https:\/\/www.partstown.com\/about-us\/wp-content\/uploads\/2022\/02\/How-Much-Does-It-Cost-to-Start-a-Small-Restaurant-Co-Workers-Behind-Counter.png\" alt=\"How Much Does It Cost to Start a Small Restaurant - Co-Workers Behind Counter\" width=\"405\" height=\"247\" \/><p id=\"caption-attachment-15665\" class=\"wp-caption-text\">Knowing the average cost to open a small restaurant is important for people thinking about starting their own business.<\/p><\/div>\n<h3><em><span style=\"font-weight: 400;\">Don\u2019t Forget \u201cStartup Runway\u201d When Opening a Restaurant<\/span><\/em><\/h3>\n<p><span style=\"font-weight: 400;\">In addition to the significant initial investment<strong>,<\/strong> there are even more expenses over the first few months. As stated in an article on the <a href=\"https:\/\/home.binwise.com\/blog\/restaurant-profit-margin#:~:text=It%20takes%20an%20average%20of,into%20your%20restaurant%20business%20plan\" target=\"_blank\" rel=\"noopener\">Binwise.com blog<\/a>, the average restaurant takes 2 years to become profitable. So, you need extra money to cover expenses as your business grows.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The entrepreneurial world calls this extra money startup runway, a fund you use to support the business until it can \u201cfly\u201d on its own. Just like any other entrepreneur, you will need at least a few months of startup runway to cover costs like rent and salaries until revenue takes off, so plan accordingly.\u00a0<\/span><\/p>\n<h3><em><span style=\"font-weight: 400;\">Summary<\/span><\/em><\/h3>\n<p><span style=\"font-weight: 400;\">As you can see, the cost to start a small restaurant is very significant. Realistically, opening the caf\u00e9, pizzeria or pub you\u2019ve always dreamed of is going to cost at least $100,000 of initial investment, along with extra money to cover expenses as the business grows.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With this information in mind, you can better plan your finances by choosing to spend less on things that are not important and more in areas that are essential. Now that you know what to expect, you are much better prepared for the entrepreneurial journey ahead.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Figuring out how much it\u2019s going to cost to start a small restaurant is no easy task. According to RestaurantOwner.com, it costs between $175,500 and $750,500 to open a restaurant, this large range including establishments of all types and sizes. Usually, it\u2019s hard to find information regarding small cafes, neighborhood pizzerias or local pubs. Fortunately, [&hellip;]<\/p>\n","protected":false},"author":558,"featured_media":15637,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[10,15],"tags":[1342,38,184,489,1343,301,1214],"class_list":["post-15608","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-foodservice-tips","category-restaurants","tag-entrepreneurship","tag-food","tag-independent-restaurants","tag-marketing","tag-restaurant-business","tag-restaurants","tag-starting-a-restaurant","wpautop"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How Much Does It Cost to Start a Small Restaurant? - Parts Town<\/title>\n<meta name=\"description\" content=\"The total cost to start a small restaurant is hard to judge, but this detailed breakdown of 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