How much money to fund your own restaurant (including upfront costs & investments)

How much money to fund your own restaurant (including upfront costs & investments)

You have developed an entrepreneurial mindset and a strong flair for food. But you have been brooding on what makes up the investment for a restaurant set up. How much is required to start a restaurant? What will it cost to set up a pizza shop or kick start a deli? What is the upfront cost, and what's the entire investment required? There is no general answer to all these answers to all these inquiries. The average cost to start is between $275,000 and $3,046 for a leased building per seat. You can sum that up to $425,000 or $3,734 per seat.

Here is the breakdown of costs to make your dream come through as a wanna-be restaurant owner:

One-time costs

They sound like one-time costs or money you need to spend once. However, not all of them will be categorized as one-off costs. Kitchenwares and equipment, for instance, may have to be changed or replaced as time goes on while security deposit on the real estate may be a one-time cost.

A lease security deposit or a down payment on loan

This cost also varies by the location and size of your restaurant. You could save between $2000 to $12,000 for a lease security deposit. In case you want to take a loan to buy the building, it is ideal to have about 10% of the purchase price as an upfront payment.

Business permits/licenses

This includes liquor permits, city licensing fees, and compliance permits like health and safety permit. There may be variation in cost so you can find out the cost of local permits in your locality. They should range between $100 and $300.

Legal and processing fees

Starting a restaurant would require a lot of paperwork and legalities. Thus, you will need the help of a lawyer to ensure you are compliant with all regulations. That's not going to be a pro bono, expect to spend between $500 and $2000 for a lawyer to check your files and documents. Attorneys are essential when it is time to sign contractual documents. It is very crucial to visit the Public Record Department to learn about insect infestation or violations rules and regulations, temperature, and changes in business ownership. Going through a legal team will save you extra costs in the future.

Related: Paperwork to open a restaurant of your own

Kitchen and cooking equipment

From the onset, you could incur between $50,000 for a small-scale establishment or $150,000 of a large-scale restaurant. Coupled with kitchen hardware, you will require adequate refrigeration, as well as a commercial dishwasher. You can save money by opting for second-hand gadgets, but don't forget to look for quality and durability.

Furniture, tables, and tableware

There is no fixed or general cost because of the quality and quantity required. Nevertheless, you can budget between $80,000 to purchase chairs, tables, decor, and more.

Payment and ordering technologies

restaurant funds

If you want to be more open, you will need to devise faster methods to track records, make a payment, and manage your inventory. You can budget between $20,000-$30,000 upfront for POS.

Accessibility to the physically-challenged

You may have to procure accessible bathrooms and ramps for disabled patrons if you intend to operate a sit-down restaurant. It may cost you about $30,000 to make your restaurant available.

Some recurring costs

Some ongoing costs come along with setting up a restaurant. If you want to be successful, be ready to spend money to make more money. Here are some core areas to consider:

Lease/Mortgage payments

This is the most apparent ongoing and recurring cost of managing a restaurant. You can spend between $2000 to $12000 every month to settle the lease arrangement. If you are buying the facility, you will need to pay taxes on both land and property.

Employee remuneration

Your workers form a crucial part of your business. It is essential to make provision for their salaries to ensure smooth operations. Have it at the back of your mind to spend between $28,000 to $55,000 for a manager. Your head chefs may go home with $1,300 to $1,800 every week, while your line and prep cooks can have $575 to $650.

Food and beverage expenses

This is the core area. Meanwhile, the costs depend on the size of the restaurant and the kind of food you want to serve. You can save on liquor license by considering a satellite license. Most states permit restaurants to get a satellite license from a winery, brewery or distillery.


There would need to keep the light on and ovens active. You will need to factor in the electric, water, gas, phone and internet, trash removal costs. You should be envisaging about $2,500 for each month.

Marketing and advertising

What can you do without social media these days? Virtually nothing! Website, ads space, print or broadcasting, as well as social media ads are recurring expenses that you cannot do without.

Related: Best restaurant social media competitions you can use

Miscellaneous expenses

These are unexpected costs on hardware and software part of your business. It is better to prepare for the what-ifs. Also, insurance, licenses, permits can destabilize you when it gets to the time to renew them. It is better to keep $10,000 for this purpose.

Having the end in mind when setting up a restaurant will set you up in sustaining your business through the thicks and thins.

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