Restaurant Start Up Costs and How to Budget
What it costs to open a restaurant, in the buckets that matter: lease, fit out, equipment, technology, licences, opening stock, staff and a cash reserve.
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Key takeaways
- There is no standard cost: build your own from the buckets, using real quotes for your city.
- The reserve for the first months is a cost, not a luxury, and the most common gap in budgets.
- Technology is a small part of the total, but a bad choice of till or ordering system costs more over time.
- Add a contingency of at least 10% for the fit out, since works rarely run to plan.
In short: a restaurant budget has ten buckets: premises, build, equipment, technology, licences and professional fees, opening stock, pre opening wages, marketing, a contingency and a cash reserve. Get a real quote for each one, add them up, then add the reserve. If the total frightens you, simplify the concept before you sign a lease.
You will find articles claiming an average cost to open a restaurant. Treat them with care. Costs differ by country, by city and above all by what you rent: a unit that was a restaurant last month is very different from a shell that needs ventilation, drainage and a new floor. This guide gives you the structure, and you fill in the numbers from quotes.
All figures below are made up, round, and only there to show how the arithmetic works.
The ten buckets
1. Premises: deposit and rent during fit out
Landlords commonly ask for a deposit and rent in advance. Rent often starts before you open, so count it for the whole period of works. Ask for a rent free period for the fit out and check who pays business rates or local property taxes and service charges.
2. Building work and fit out
This includes walls, floors, ceilings, toilets, lighting, signage, furniture and decoration. If you need new extraction, gas supply, electrical capacity or drainage, quote them first because they drive both cost and timing. Get at least three quotes, compare the scope line by line and check what happens when work runs late.
3. Kitchen equipment
Cooking line, refrigeration, preparation tables, sinks (including a separate hand wash basin), shelving, dishwashing and small items such as pans, knives, containers and thermometers. Cost it from your menu, not from a standard list. A kitchen layout done first often saves a unit of equipment.
4. Technology
Till or POS, tablets, printers or a kitchen display, card readers, router and Wi-Fi, a website with online ordering, and music and security systems. Count hardware once and software yearly. Our POS cost guide lists what to compare, and the technology checklist lists what you need on opening day. DineHarbor offers a 30 day free trial and its pricing page shows the current plans.
5. Licences, permits and professional fees
Registration and licence fees, solicitor for the lease, accountant set up, architect or designer fees, food safety consultant or training, and insurance. See licences and permits. Fees differ greatly between councils and countries, so ask each authority for its current schedule.
6. Opening stock
Food, drink, cleaning materials, packaging, uniforms, paper goods and small wares. Order for the first one or two weeks only. A bigger opening order is a way to spend cash on things that may spoil.
7. Pre opening wages
Pay for the chef, manager and team during training and practice services. This is usually four weeks or more before the first paying guest. It is easy to forget and large.
8. Marketing and opening
A simple website or ordering page, photos, signage, a Google profile, a soft launch, printed menus and local promotion. Keep it modest and measured. See the Google Business Profile guide.
9. Contingency
A buffer of at least 10% on building and equipment. Works rarely end exactly on quote: hidden pipes, delays and design changes are normal.
10. Working capital reserve
Cash that covers rent, wages, suppliers and loan payments while sales build. Take your weekly fixed costs from the business plan and multiply by the number of weeks you want to survive without profit. Three months is a minimum for most new restaurants.
A worked example
A made up budget for a 30 seat restaurant in a leased unit that needs partial fit out. All numbers are examples.
| Bucket | Example amount |
|---|---|
| Deposit and rent during works | 18,000 |
| Building work and fit out | 45,000 |
| Kitchen equipment | 30,000 |
| Technology | 6,000 |
| Licences, fees and insurance | 5,000 |
| Opening stock | 4,000 |
| Pre opening wages | 12,000 |
| Marketing and opening | 3,000 |
| Contingency (10% of build and equipment) | 7,500 |
| Subtotal | 130,500 |
| Reserve (three months of fixed costs) | 30,000 |
| Total cash needed | 160,500 |
Notice the reserve is almost a fifth of the total. Skipping it does not remove the cost, it only makes it arrive as a crisis.
Ways to reduce the total without hurting the concept
- Take over an existing restaurant unit. Existing extraction, drainage and a licence can save weeks and large sums. Check that they are legal and working.
- Buy used equipment with a warranty from reputable dealers for the items that do not define your food.
- Start with a shorter menu that needs less equipment and less stock.
- Open in phases. Start with lunch and takeaway, add dinner later.
- Use a simple, tested tech stack that includes online ordering from day one, so the website starts to earn before the dining room fills. See online ordering without commission.
- Negotiate the lease. Rent free periods, stepped rent and a contribution to works are common asks.
Costs people forget
- Rent while the works run late.
- Utility connections and deposits.
- Waste collection contracts and grease trap servicing.
- Replacement of broken glass, crockery and cutlery in the first month.
- Payment fees on cards, which are a running cost, not a start up cost.
- Training time for staff to use the till and the kitchen system. See training.
- Insurance during the build, not only after opening.
Check the budget against the model
Take the total cash needed and decide how you will fund it: savings, loans, partners, landlord contributions. Then check the break even weekly sales from your business plan. If repaying the borrowing pushes break even to a level that the area cannot support, reduce the build or choose a smaller site.
Remember that start up money is only part of the story. Your cash flow after opening decides whether you stay open.
Before you commit
- Get at least three quotes for each big bucket.
- Ask an accountant to check the budget and tax treatment of equipment and works.
- Ask a solicitor to review the lease and any finance agreement.
- Write down the point at which you would stop or slow spending.
Equipment: buy new, buy used or lease
Each option has a place.
- Buy new for items that run all day and define your food, such as the main cooking line and refrigeration, where reliability and warranty matter most.
- Buy used for steel tables, shelving, sinks, some small appliances and furniture. Check that anything gas or electric carries a safety certificate and that a local engineer will service it.
- Lease or finance large items when cash is tight, but compare the total paid over the term with the purchase price, and check what happens to the equipment at the end.
Whichever you choose, ask each supplier for the energy use of the machine. A cheaper fridge that uses much more power can cost more over three years.
Funding options to discuss with an adviser
Owners usually combine several sources. Your own savings show commitment to a lender. Family or partners can invest or lend, but write down the terms so the relationship survives the business. Bank loans and government backed small business schemes exist in many countries, and a landlord may contribute to the fit out in exchange for a longer lease. Equipment finance spreads the cost of the kitchen.
Whatever the mix, calculate the monthly repayments and add them to your fixed costs in the break even calculation. A loan that pushes break even beyond what the area can support is a loan that is too large. Speak to an accountant before you sign anything.
Want to test your till and online ordering before you pay for hardware? Start the 30 day free trial with no card needed.
Questions and answers
How much does it cost to open a restaurant?
There is no single answer. It depends on the country, the city, the size, and whether the unit is already fitted out. A small takeaway in a ready kitchen costs a fraction of a full service restaurant needing a new extraction system. Build your own number from quotes.
What is the biggest hidden cost?
Usually the extraction and ventilation system, delays to opening while you still pay rent, and the cash needed to survive slow early weeks.
Should I buy or lease equipment?
Leasing preserves cash but costs more over time. Buy items that hold value and are central to your menu, lease or finance the large items if cash is tight, and consider used equipment from reputable dealers with a warranty.
How much working capital do I need?
A common rule of thumb is three to six months of fixed costs, plus payroll. Use your own break even figure to decide how long your reserve must last.
What does restaurant software cost?
It varies by supplier, number of devices and card processing fees. Compare total yearly cost, not only the monthly fee. See our POS cost guide and the DineHarbor pricing page.
See it in DineHarbor
About the author
Editorial team
The DineHarbor team writes this blog for restaurant owners and managers. Every article is checked against the product before it is published, so what we describe is what the software does.
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