Quick Summary
The average cost to open a restaurant can vary depending on a number of factors. Factors that influence cost include the size of the location, the number of employees, the size and variety of the menu items, and more. On average, it costs between $175,000 and $750,000 to open a new restaurant.
Many people have always dreamed of opening a restaurant. Perhaps you are known for your excellent cooking or party hosting. You might also just have a great idea for a unique concept that could do really well in your area. This may lead you to wonder exactly how much money you would need to turn that dream into reality.
The total cost to open a restaurant can vary significantly based on factors like location, size, and the type of restaurant. Generally, you could spend around $200,000 for a small, casual restaurant, or as much as $2,000,000 for a more expansive concept. Along the way, you can make smart, economical choices to keep your costs as low as possible.
At Disposable Design, we are entrepreneurs ourselves, so we know the financial pressure that small business owners face. We help independently owned and operated restaurants stretch their budget by offering high-quality custom-branded products, such as custom plastic cups, paper bags, and wax paper, at fair prices. Reach out today to talk to a member of our branding team about how we can help you get started.
Typical Costs for a New Restaurant
When opening a restaurant, the first step often involves drafting a business plan. This document will serve as a roadmap for how to build your business. One of the key elements of any business plan is a section that details exactly how much it will cost to start and run your restaurant.
This will require doing a fair amount of research based on your market and plans. For example, you might tour various commercial spaces or even consult with a contractor to get an idea of how much it will cost to buy, rent, or build a physical location for your restaurant. You could also visit a restaurant supply store to figure out what you will likely spend on things like kitchen equipment and dinnerware.
This research will give you a good idea of how much of an investment you will need to make – or how much funding you will need – to make your restaurant dreams a reality. Below, we outline some of the major costs that should be considered when working on this aspect of your business plan.
| One-Time Startup Costs | |
| Equipment | $25,000 – $150,000 |
| Furniture & Decor | $20,000 – $100,000 |
| Renovations | $5,000 – $250,000 |
| Staffing & Training | $1,000 – $5,000 |
| Hardware | $1,000 – $5,000 |
| Initial Licenses & Permits | $500 – $200,000 |
| Opening Inventory & Supplies | $5,000 – $20,000 |
| Pre-Opening Marketing & Branding | $1,000 – $10,000 |
| Security Deposit Or Leasehold Costs | $2,000 – $12,000 |
| Professional Fees | $1,000 – $50,000 |
| Cash Cushion | $20,000 – $250,000 |
| Total One-Time Startup Costs | $81,500 – $1,052,000 |
| Fixed Costs | |
| Location | $40,000 – $150,000 per year |
| Ongoing Marketing & Branding | $6,000 – $36,000 per year |
| Software | $1,200 – $6,000 per year |
| License & Permit Renewals | $500 – $2,000 per year |
| Insurance | $700 – $2,000 per year |
| Total Fixed Costs | $48,400 – $196,000 per year |
| Variable Costs | |
| Inventory & Supplies | $75,000 – $450,000 per year |
| Labor | $75,000 – $450,000 per year |
| Utilities | $12,000 – $30,000 per year |
| Payment Processing Fees | $7,500 – $45,000 per year |
| Maintenance & Repairs | $6,000 – $24,000 per year |
| Total Variable Costs | $175,500 – $999,000 per year |
One-Time Startup Costs
Equipment
Average Cost: $25,000 – $150,000
The next big expense for most restaurant owners comes when purchasing equipment. If you are buying or renting a space that is already outfitted with a commercial kitchen, then you probably won’t need to buy much in the way of appliances. However, if the location doesn’t already have equipment or you want to upgrade, then you will have to budget for things like:
- Ranges, ovens, and ventilation hoods
- Commercial refrigerators and freezers
- Dishwashers
- Steam tables
- Slicers
- Mixers
- Food processor
You will also need all of the basic equipment or kitchenware that you will use day-to-day when preparing food. This could include everything from prep tables to storage racks to cutting boards, knives, pots, pans, and utensils. The exact type and number of these items that you will need will depend on the size of your kitchen and what type of food you will be selling.
You’ll also need other supplies related to food preparation, such as labels and food storage containers, fire extinguishers, and first aid kits. Your shopping list will also likely include non-slip mats for the kitchen floors, garbage cans, and more. Finally, you will have to buy all of the tableware (including plates, cups, and utensils) that you will need to serve food.
Budget-Saving Tip: You can lower your equipment costs by purchasing used or refurbished units, leasing larger items, and selecting ENERGY STAR-rated appliances to reduce your monthly utility bills. Sites like Caplan Cookware or Central Restaurant Products can be good places to find deals on used commercial restaurant equipment.
Furniture and Decor
Average Cost: $20,000 – $100,000
Part of the allure of any restaurant is its ambiance. You will need to budget for your restaurant’s finishes as part of your business plan. This will include both interior and exterior decor.
Typically, a restaurant owner will need to buy tables and chairs, a phone system, decorations, and a sound system. Outside, you might put up signage, install benches, or even do some landscaping. If you have outdoor seating, then you will need additional items such as patio heaters and umbrellas.
Budget-Saving Tip: Many restaurateurs save money by sourcing gently used furniture from restaurants that have closed or by combining high-impact statement pieces with more affordable basics. Facebook Marketplace can be a good source for affordable used furniture and decor.
Renovations
Average Cost: $5,000 – $250,000
Unless you get very lucky, you’ll likely need to renovate the location you find to create the look and feel you desire for your restaurant. You may have to install new flooring, paint the interior walls, or pour concrete and install fencing to accommodate outdoor seating. Renovation and build-out costs can vary tremendously depending on whether you’re starting from a blank shell or a second-generation restaurant space. On average, renovations run between $50 and $250 per square foot, which can translate to $125,000 to $625,000 for a 2,500-square-foot venue.
Budget-Saving Tip: To keep costs down, try to minimize structural changes and negotiate tenant improvement allowances with your landlord before signing a lease.
Staffing & Training
Average Cost: $1,000 – $5,000
Staffing and training expenses before opening are often overlooked but are essential for a smooth launch. You should budget $1,000 to $5,000 to cover recruiting, onboarding, and initial payroll.
Budget-Saving Tip: To save, consider cross-training staff to handle multiple roles and using free online training materials to supplement in-person sessions. Alison offers several free restaurant training courses for staff members.
Hardware (Displays & POS Software)
Average Cost: $1,000 – $5,000
Your restaurant will also need modern hardware to manage orders and payments. Purchasing POS terminals, receipt printers, kitchen display screens, and tablets typically costs $1,000 to $5,000 upfront,
Budget-Saving Tip: Many hardware providers offer bundle discounts on hardware and software or flexible plans that scale with your needs. Don’t hesitate to ask providers what promotions or bundles they may have available.
Initial Licenses & Permits
Average Cost: $500 – $200,000
Before you open your doors, you’ll also need to secure the necessary licenses and permits. Basic food service licenses often cost between $100 and $1,000, while liquor licenses can range from a modest $3,000 to over $400,000, depending on your location and whether a quota system is in place.
Budget-Saving Tip: Hiring an expediter or licensing consultant can help speed up the process and avoid costly delays.
Opening Inventory & Supplies
Average Cost: $5,000 – $20,000
Stocking your kitchen with initial inventory and supplies is another key step. Most restaurants spend between $5,000 and $20,000 on their opening orders of food, beverages, paper products, and cleaning materials.
Budget-Saving Tip: Limiting your initial menu and carefully forecasting demand can help reduce waste and manage cash flow.
Pre-opening Marketing & Branding
Average Cost: $1,000 – $10,000
Your launch will also benefit from targeted pre-opening marketing. Google Ads, social media campaigns, and grand opening promotions typically run $1,000 to $10,000. Building buzz early is key to a successful grand opening. The general recommendation is to start promotion 4-6 weeks before the opening date, but working on networking, building a following, and creating an email list 2-3 months before opening will help to make your initial launch a success.
Budget-Saving Tip: Leveraging free or low-cost platforms like TikTok and email marketing can stretch your budget further as you work on pre-opening marketing.
Security Deposit or Leasehold Costs
Average Cost: $2,000 – $12,000
Don’t forget your lease-related costs. Security deposits and utility deposits can add up to $2,000 to $12,000 or more, depending on your lease terms.
Budget-Saving Tip: Negotiate where possible. Landlords sometimes offer rent abatement or reduced deposits in exchange for longer leases.
Professional Fees
Average Cost: $1,000 – $50,000
Professional services are another crucial category. Legal fees to set up your business entity, review contracts, and assist with licensing can add up quickly, with total costs ranging from $3,000 to $10,000. If you’re planning extensive renovations, architect and designer fees can easily add another $10,000 to $50,000.
Budget-Saving Tip: While working with a professional is well worth the investment, you can economize by tapping into small business legal clinics or using design-build contractors who bundle their services.
A Cash Cushion
Average Recommendation: $20,000 – $250,000
When estimating costs for any start-up business, you should also include some extra funds for a “cushion.” Even if your restaurant is an immediate hit, it will probably take some time to start turning a profit. For example, if you invested $50,000 in starting a food truck, it might take 3 – 4 months (or longer) until you pay off your initial costs and start making money.
Generally, it is a good idea to set aside a minimum of 6 months of operating expenses to account for gradual sales growth. Take the time to estimate how much you will spend to run your restaurant each month (rent/mortgage, labor, inventory, and recurring bills). This will give you a good idea of how much extra cash you should have on hand to give you some financial breathing room.
Fixed Recurring Costs
Physical Location
Average Cost: $40,000 – $150,000 per year
One of the biggest upfront expenses for most restaurateurs is the location. Even if you are operating a food truck, you will need to purchase the actual truck. The amount that you will spend on this part of your business will depend on your geographical region, the size of the space, and whether you plan to rent or buy.
First, location makes a huge difference when it comes to the cost of your restaurant space. In New York City, you might spend $1,000 per square foot to rent a retail location. In a smaller city like Columbus, Ohio, that cost may drop to under $50 per square foot.
Even within a particular region, the cost might vary considerably based on the precise location. Typically, you will spend more to rent a place that has a lot of foot traffic or plenty of parking. You might be able to save money by picking a place that is off the proverbial beaten path, but you’ll have to take into account how the lower cost will impact your sales.
Of course, there are other factors at play when it comes to this particular expense. If you buy a restaurant instead of renting, you will have more upfront costs. If you need to renovate to make the location suitable, that will be an additional expense. Just be sure to include all of these extra costs when adding up the total investment you will need for a physical location.
Budget-Saving Tip: Consider negotiating rent abatements during your build-out or choosing a smaller footprint to lower these costs.
Ongoing Marketing & Branding
Average Cost: $6,000 – $36,000 per year
Marketing and branding expenses will continue as you work to attract and retain customers. Many restaurants spend $500 to $2,000 per month on advertising, loyalty programs, and social media management.
Budget-Saving Tip: Your marketing doesn’t exclusively need to be ads. Focusing on organic content and community partnerships can help keep these costs affordable.
Software Subscriptions
Average Cost: $1,200 – $6,000 per year
You’ll also rely on various software subscriptions to keep your operations running smoothly. Between POS software, scheduling tools, and accounting platforms, you can expect to pay $100 to $500 monthly.
Budget-Saving Tip: Bundling services with your POS provider and exploring free tiers can often cut your expenses significantly.
License & Permit Renewals
Average Cost: $500 – $2,000 per year
Licenses and permits don’t end with your grand opening. Most health and liquor licenses require annual renewals, which typically cost $500 to $2,000 per year. Staying compliant helps you avoid fines and operational disruptions.
Insurance
Average Cost: $700 – $2,000 per year
Insurance is another fixed cost that’s critical to protect your business. General liability, property, and workers’ compensation insurance together usually cost between $700 and $2,000 annually, depending on your coverage levels.
Budget-Saving Tip: Comparing policies annually and bundling with one carrier often yields better rates.
Variable Recurring Costs
Inventory & Supplies
Average Cost: $75,000 – $450,000 per year
Food and beverage inventory is often your largest variable cost. Without the ingredients needed to produce your menu items, you wouldn’t have a food or beverage service business. Inventory and supplies typically average 30% to 35% of sales.
Budget-Saving Tip: Standardizing recipes, tracking inventory carefully, and negotiating with suppliers can keep food costs under control.
Labor
Average Cost: $75,000 – $450,000 per year
Your employees are the secret to your success, which is also why they account for another large chunk of your budget. Labor expenses, which include wages, overtime, benefits, and payroll taxes, also average around 30% to 35% of sales.
Budget-Saving Tip: Cross-training employees and using scheduling software to match staffing levels to forecasted demand can help you avoid overstaffing and overtime costs.
Utilities
Average Cost: $12,000 – $30,000 per year
Utilities quite literally power your restaurant. Stoves, sinks, dishwashers, refrigerators, lights, fryers, and more all require energy or water. Utilities such as gas, electricity, water, and trash removal usually run between $1,000 and $2,500 per month.
Budget-Saving Tip: Investing in energy-efficient equipment and turning off appliances when not in use can reduce these expenses over time.
Payment Processing Fees
Average Cost: $7,500 – $45,000 per year
Every card swipe comes with payment processing fees, which typically cost 2% to 3% of sales. While small per transaction, these fees add up quickly.
Budget-Saving Tip: You can negotiate lower rates with your processor or encourage customers to pay with cash to help preserve your margins.
Maintenance & Repairs
Average Cost: $6,000 – $24,000 per year
Ongoing maintenance and repairs, including equipment servicing and general upkeep, often cost $500 to $2,000 each month. Scheduling preventive maintenance can extend the life of your equipment and reduce costly emergencies.
Average Cost By Type Of Eatery
As previously mentioned, the cost to open a restaurant can vary depending on a number of factors. One of the larger factors is the type of restaurant you aim to open. Different types of restaurants require more space, more equipment, or higher-end furnishings than others. You can compare the average start-up costs by type of restaurant below.
| Type Of Restaurant | Average Cost To Open |
| Casual Restaurant | $250,000 – $500,000 |
| Fine Dining Restaurant | $500,000 – $1,500,000+ |
| Food Truck | $75,000 – $150,000 |
| Fast Food | $200,000 – $1,500,000+ |
| Ghost Kitchen | $20,000 – $60,000 |
| Fast Casual | $250,000 – $700,000 |
| Bar/Pub | $250,000 – $600,000+ |
How Much Should I Budget to Open a Restaurant?
It is hard to provide an estimate of how much any business owner should expect to spend when starting a new venture. The exact amount really depends on the type of restaurant that you are opening and where you are opening it. On average, you might spend in the neighborhood of $300,000 to open a restaurant – but that cost could be significantly higher or lower based on the factors described above. For example, if you live in an area with a high minimum wage, then your labor costs will be a lot higher than if you are opening a restaurant with a tipped minimum wage.
According to one survey of restaurant owners, the startup cost ranged from $175,500 to $750,500. Generally, smaller restaurants with a lower annual revenue (of roughly $550,500) spend the lowest in opening costs. Bigger restaurants that grossed over $1,800,000 had much larger initial expenses.
Ultimately, the total investment in your restaurant will be based on factors that are both within your control (like how much you spend on technology) and outside of your control (like real estate costs in your region). When drafting a business plan, be sure to spend plenty of time digging into the numbers so you will have a more accurate idea of how much you will need to get your restaurant off the ground.
How To Fund Your Restaurant
Funding your restaurant idea can be a challenge. Depending on your location and concept, you could be looking at hundreds of thousands of dollars before you even serve your first meal. If you don’t have that kind of cash sitting in the bank, you’re in good company. Many aspiring restaurateurs need to get creative when it comes to securing funding, combining loans, investors, and alternative financing to make their vision a reality. Below are several proven ways you can raise the money you need to open your restaurant.
Leverage Support from Family and Friends
Before approaching banks or professional investors, many business owners turn to their personal networks to raise seed capital. Borrowing money from relatives or close friends can be advantageous since there’s already a foundation of trust and, in some cases, a willingness to provide funding without strict repayment schedules or high interest rates.
However, mixing personal relationships and finances can be tricky. Money issues can create tension, resentment, or misunderstandings that damage lifelong bonds. The best way to avoid problems is to set clear expectations from the outset. Treat these individuals like any other investors by putting agreements in writing and outlining repayment terms. Establishing professional boundaries helps everyone stay on the same page and minimizes the risk of conflict later on.
Apply for a Small Business Loan
The U.S. Small Business Administration (SBA) offers programs designed to help entrepreneurs access capital through approved lenders. By guaranteeing a portion of the loan, the SBA reduces the lender’s risk, making it easier for qualified applicants to secure financing. SBA loans can be an excellent option if you have a strong business plan, good credit, and some assets to pledge as collateral. They typically offer lower interest rates and longer repayment terms than conventional loans.
Bring in a Business Partner
Even if you’ve managed to save a portion of your startup costs, you may need additional financial support to cover the gap. Taking on a partner who can contribute funding and possibly bring valuable expertise can strengthen your business.
That said, choose partners carefully. A poor partnership can lead to disputes and even cause the business to fail. Before committing, ask yourself:
- Do you trust them completely?
- Do you share similar values about work ethic, financial goals, and business philosophy?
- Can you rely on them to bring skills that complement yours?
- Are you aligned with your vision for the restaurant?
- Are they flexible enough to compromise when needed?
Once you’ve found the right partner, document your agreement thoroughly. A well-drafted contract outlining roles, equity shares, and exit strategies will protect everyone’s interests.
Attract Investors
Private investors aren’t limited to Silicon Valley startups. Many investment groups and individuals actively back promising restaurant concepts. Research investors in your area who have funded restaurants you respect, and reach out with a compelling pitch.
Before you approach potential investors, make sure you’ve developed a detailed business plan and a professional pitch deck. Clearly articulate what sets your restaurant apart, how you plan to operate profitably, and what kind of return investors can expect. Showing that you’ve done your homework demonstrates credibility and increases your chances of securing funding.
Explore Crowdfunding
Crowdfunding has become an increasingly popular way to finance restaurants by tapping into community support and online audiences. Platforms like Kickstarter and Indiegogo allow you to raise capital directly from the public, often in exchange for perks or early access to your offerings.
There are generally two main types of restaurant crowdfunding:
- Reward-based crowdfunding, where supporters receive incentives based on their contribution level, like complimentary meals, branded merchandise, tickets to your opening night, or exclusive experiences like cooking classes or private tastings.
- Equity crowdfunding, which gives backers a stake in your business. This approach appeals to those interested in long-term investment opportunities.
Because hundreds of crowdfunding campaigns compete for attention at any given moment, it’s vital to make yours stand out. Develop a compelling story about why your restaurant is unique and how it will benefit your community. Use engaging visuals, clear messaging, and thoughtful rewards to draw in supporters.
Remember that many crowdfunding platforms require you to reach your funding goal before any funds are released. A campaign that doesn’t gain traction can mean walking away empty-handed, so be prepared to promote your campaign tirelessly across social media and email.
While most restaurateurs can’t bankroll an entire startup themselves, there are plenty of options to finance your dream. Whether you tap into your network, find a partner, seek out investors, or launch a crowdfunding campaign, the right combination of funding sources can set you on the path to opening your doors. Choose the approach that best matches your resources, risk tolerance, and vision, and don’t be afraid to ask for help along the way.
Set Your New Restaurant Up For Success With Disposable Design
Whether you plan to open a fine dining restaurant in the downtown area of a major metropolitan area or a mom-and-pop style diner in a rural location, you will likely need to invest 6 to 7 figures to get your business running. While these numbers can be daunting, there are ways that you can save while making smart business decisions. This includes buying high-quality custom-printed disposable products from Disposable Design.
Our company sells premium promotional products in smaller quantities and at great prices. Our promotional products, such as custom coffee cups, custom napkins, and custom deli bowls, are a great way to market your business for pennies on the dollar. Whenever you serve a meal or a drink to-go, your customers will do your advertising for you, for little additional expense compared to plain disposable products.
If you’d like to learn more about our custom-printed items, we’re always happy to chat. To learn more about our custom-printed plastic cups and other disposable products or to speak to a member of our branding team, fill out our online contact form or hit the live chat button at the bottom of the screen.
