The reality is that startup costs vary widely. What you should budget for depends on the type of restaurant you’re opening, your location, and what purchasing decisions you make.

High-end ovens and cooking equipment? A five-star chef? A prime location?

These things are going to cost more.

But if you have a good plan for marketing your menu and effective day-to-day management, even a pricey new restaurant can be a success.

On the other hand, making budget-conscious decisions can lower your startup costs and help your new business take off without taking on a lot of debt.

What approach you take depends on your funding and your appetite for risk. So let’s dive into all the costs you should account for so you can start thinking about your startup budget.

What are restaurant startup costs?

Here are the main costs you’ll need to include in your budget.

Leasing or renting a location

Leasing or renting is a significant expense. How much you'll need depends on the location's desirability and size, as well as the value of nearby real estate.

Urban areas typically have higher rental costs than suburban or rural locations.

Cost range: $30,000 - $450,000 per year

Details:

• Urban areas: $150 - $200 per square foot annually

• Smaller cities: $20 - $50 per square foot annually

Source: LoopNet

Note: This range is based on small (1,500 square feet) to large (4,000 square feet) spaces. The upper estimate is based on a 2,000-square-foot space in a high-priced area, as larger restaurants in those areas are less common.

Kitchen equipment

Purchasing kitchen appliances is one of the second-largest upfront costs. High-quality, durable equipment is essential for efficient kitchen operations, and it also helps uphold food safety standards.

Costs depend on the size and type of the restaurant.

Cost range: $50,000 - $150,000

Kitchen equipment includes the following:

• Ranges

• Refrigerators

• Freezers

• Dishwashers

• Mixers

• Food processors

Hiring staff

Hiring capable staff is critical to your restaurant’s success. Initial hiring costs include recruitment, salaries, training, and uniforms. Where your operation fits in this range will depend on the scale of your restaurant.

Cost range: $25,000 - $55,000 (for initial hiring and first-month salaries)

Breakdown of costs:

1. Recruitment costs:

   • Advertising for job postings: $500 - $2,000

   • Recruitment agency fees: $1,000 - $3,000

2. Training costs:

   • Training materials and sessions: $500 - $2,000

   • On-the-job training expenses: $1,000 - $2,000

3. Uniforms:

   • Uniforms for all staff: $1,000 - $3,000

4. First month salaries and wages:

   • General manager: $4,000 - $7,000

   • Chef: $3,000 - $4,500

   • Line cooks (3-5): $4,500 - $10,000

   • Bartenders (2-3): $3,000 - $6,000

   • Waitstaff (4-6): $4,000 - $9,000

   • Host(s)/hostess(s) (1-2): $1,250 - $3,500

   • Dishwasher(s) (1-2): $1,250 - $3,000

Note: These figures are ballpark estimates derived from industry research and average salaries. Actual costs may vary based on details such as location and staff size.

Initial marketing expenses

Marketing is essential if you want to attract customers to your new restaurant. Initial marketing expenses include many activities that promote your business.

Cost range: $5,000 - $20,000

Marketing activities include the following:

• Website development

• Social media and email marketing

• Local advertising

• Promotional events

Licenses and permits

Various licenses and permits are required to operate a restaurant legally. These standards vary by state.

Cost range: $3,000 - $15,000

Licenses and permits include the following:

• Business license

• Food service license

• Liquor license

• Health permit

Renovation costs

You’ll likely need to customize your space to fit your theme and needs. These costs will depend on the existing condition of the premises and the extent of changes you’d like to make.

Cost range: $150,000 - $600,000

Details include the following:

• Structural changes

• Interior decor additions

• Accessibility modifications

• Improved lighting and ambiance

Note: These numbers are based on an approximate cost-per-square-foot of $150.

Source: Clover

Summary of restaurant startup costs

Let’s put all of this together. Here is a table summarizing these costs:

What are the most common restaurant expenses?

Here, we discuss what your monthly expenses might look like for the first year so that you can budget accordingly. Recurring costs include monthly rent or mortgage payments and restaurant supplies.

The break-even point for restaurants may differ, but typically, you’ll need to include at least the first year of expenses before you turn a profit.

Software licenses

Modern restaurants rely heavily on point-of-sale (POS) systems and other software. These tools usually have monthly subscription fees. Investing in the right software can streamline your restaurant’s operations, improve its customer service, and enhance its overall efficiency.

Cost range: $200 - $1,000 per month

License upkeep

In addition to the initial costs of obtaining licenses and permits, you must budget for annual renewal fees for your restaurant to keep you compliant with local regulations.

Cost range: $50 - $250 per month (or $500 - $3,000 annually)

Salaries and wages

Staffing is one of the most significant ongoing expenses for a restaurant. In the startup costs section, we detailed the first month of wages and salaries. However, you also need to account for this ongoing expense for the rest of the year.

It's crucial to offer competitive wages to attract and keep skilled employees, as this directly impacts your service quality and customer satisfaction.

Cost range: $25,000 - $55,000 per month

Utility costs

Utilities are essential for the day-to-day operation of a restaurant. These costs can vary based on the size of the restaurant and the daily hours of operation.

Cost range: $1,000 - $2,000 per month

Inventory and supplies

Maintaining a steady supply of inventory is another continual expense. These costs fluctuate based on the menu, season, and supplier pricing.

Cost range: $5,000 - $20,000 per month

Maintenance and upkeep

Regular maintenance and upkeep, including repairs, cleaning, and routine checks, are necessary for keeping your restaurant in good shape. This upkeep doesn’t just prevent expensive repairs — it also ensures that the restaurant’s atmosphere is safe and enjoyable for your guests.

Cost range: $500 - $2,000 per month

Summary of ongoing restaurant expenses

Take a look at the table below for a summary of your new restaurant’s estimated monthly expenses:

Costs and expenses for different types of restaurants

Starting a restaurant is a complex financial endeavor. The process and cost depend greatly on the type of establishment you plan to open.

Here, we take a closer look at how the type of restaurant you’re looking at might impact the cost of the startup. We’ll compare fast food restaurants, casual dining, and fine dining establishments.

Fast food restaurants

Fast food restaurants typically have lower startup and operating costs than other operations. They often lease smaller spaces, which require less investment, and they also rely on efficient kitchen layouts to maximize output. Additionally, the focus on quick service reduces the need for large dining areas and high-end furnishings.

Cost range for a startup: 20% - 40% of the average

• Startup costs: $52,600 - $516,000

• Monthly expenses: $6,750 - $40,100

Tips:

• Fast food restaurants often thrive in smaller spaces with a simple menu and basic decor.

• Be aware of the costs of franchise fees and high turnover rates, which are common in fast food establishments.

Casual dining restaurants

Casual dining restaurants typically have moderate costs. They strike a balance between expense and service.

These restaurants don’t typically require prime real estate. But, with a larger menu and potentially a broader client base, they require a mid-sized investment when it comes to kitchen equipment, seating, and the size of the building.

Cost range for a startup: 40% - 70% of the average

• Startup costs: $105,200 - $903,000

• Monthly expenses: $13,500 - $70,200

Tips:

• Opt for a location in a suburban area or a smaller city where leases are affordable but the pool of customers remains wide.

• Invest in training to reduce the costs of turnover and win customer loyalty.

Fine dining restaurants

Fine dining establishments require a significant investment. They often operate in top-notch locations and offer guests a premium dining experience.

To deliver that experience, you’ll need to bring in beautiful decor, high-end kitchen equipment, and qualified employees.

Cost range for a startup: 90% - 100% of the average

• Startup costs: $236,700 - $1,290,000

• Monthly expenses: $30,400 - $100,250

Tips:

• Location and prime real estate are especially important in a fine dining establishment

• Create a sense of prestige and exclusivity in your restaurant through marketing and the dining experience

Inflation and cost increases over time

The cost of starting and running a restaurant has been steadily increasing over the years.

The average inflation rate from 2014 to 2024 was about 2.9%. Based on that number, you can see how a restaurant that would’ve cost $300,000 in 2014 has gone up over time.

This upward trend can be attributed to several factors:

• Inflation: General inflation has driven up the cost of goods, services, and real estate.

• Labor costs: Minimum wage increases and demands for higher salaries among skilled workers have brought labor costs higher.

• Supply chain disruptions: Global events and supply chain issues have impacted the availability and cost of restaurant supplies and equipment.

• Regulatory changes: New health, safety, and environmental regulations require additional spending on compliance and upgrades.