Restaurant Startup Costs. It Will Make You Plan Your Tasty Business Better.

Many people dream of running a tastefully designed restaurant full of satisfied guests enjoying the precious atmosphere and tasty food. Unfortunately dreaming isn’t enough when it comes to starting any business, no exception for restaurants. If you want to gain success, you need to plan everything carefully. As you probably know, 9 out of 10 startups fail. The statistics should be a warning for all of the beginning startups and their founders, also for those who are more into catching their client’s attention by delicious smells issuing from the kitchen.

According to The Times, it doesn’t matter where the restaurant opens – whether it’s a crowded street in the Manhattan or smaller lane in Texas – it has to make the same equation. The costs of real estate, labor and food should add up to 75% of its projected sales, leaving a profit margin of 10% once smaller expenses are figured in.

That’s true, but there are much more hidden extras than you may expect. Being too optimistic while evaluating the restaurant startup costs leads to the miscalculation and then to failure. If you want to start a restaurant remember the statistics mentioned in the first paragraph – consider it as a warning and plan your restaurant startup as well as it’s possible.

Ok, but enough of the doom prophecy. The key to success is to kick off properly with a well-designed plan and a great piece of knowledge. Let’s take a brief look at some costs.

Talking About Rent Costs

As I’ve mentioned before The New York Times reported that restaurants should pay around 10% of the revenue on rent. Other sources say that it’s 5 to 8% of the restaurant’s total revenues – in fact, it all depends on numerous factors. If you choose a cheaper space, you’d probably spent more on all the equipment needed to change it into a cozy restaurant. On the other hand, if you’ll find something which design and equipment work for your restaurant, you’ll probably pay more for rent, but you’ll avoid additional costs of rearranging the place. The best advice you can take is to find a space needing as little renovation as possible – at the end, it turns out to pay off the most.

How Much Does The Equipment Cost

According to Forbes, you’ll need 100.000 to 300.000$ for stuff like industrial cooking and ventilation equipment, freezers, refrigerators, dishwasher, tables, bar stools, chairs, shelving, stations for cooking, heating, and cutting. When it comes to kitchen supplies, again, it’ll be much easier to rent a space with fully equipped kitchen.

While making a list of the needed equipment, don’t forget about the smallest expenses. List all the knives, forks, bowls, cutting boards, the oven gloves, and a catch sign that will draw the attention of your potential guests. Do you have to be so accurate? If you don’t want your startup restaurant to fail, you definitely should be. It’ll be easier to estimate how much money you need before you even start investing amounts you’ve already raised.

You need to think about sale system due to collecting money and manage the floor and the kitchen. When more and more people are visiting your place, it’ll be impossible for the staff to pass all the guests’ orders to the kitchen. Of course, you’ll need to set up an account due to get your money from Visa and American Express.

Now we’re talking about the biggest costs of running a restaurant. To gain success, you can’t forget about small yet pricey expenses. Whatever you choose, remember to ask yourself a question – is it a thing I need, or maybe can I make do without it. Is this expensive pottery or cutlery something that you can’t run your restaurant without? The best you can do is to create the list with all the must have and not necessarily needed things. It’ll help not to spend too much money at the beginning.

As you see, it’s not so easy to start a restaurant. It’s not just about the best cooks, and brilliant services – the thing that matters the most is a well-designed business plan and a lot of work. If running a well prospering restaurant has been your dream since you remember, you should go for it – just don’t forget to get to know the gastronomic market as close as possible, and to plan every step you take. Good luck!

Emilia Pluta

Traveler, business psychology student, and analog photography enthusiast. Crazy about Southeast Asia and everything that comes from this part of the world, especially smiling people and food. Planning to go on a trip around the world in more than 80 days, to have enough time to feel the smells, tastes and talk to as many people as it’s possible. Dreaming of doing both – writing and lying under the palm tree in the future.

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Emilia Pluta

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