Opening a restaurant can be stressful, especially if you have no idea where to start.
It’s not just the cost of the building you have to consider. There’s also the equipment, staff, utilities, and licenses. There are costs involved with software and other tools. Then, there’s the steady stream of supplies you need to manage your operations.
All this might leave you with a question: How do I know if I can make this work?
That’s why we’re here: to pin down your startup costs and expenses so that you can plan ahead and launch a successful business.
Of course, restaurant startup costs vary since every situation will have unique variables. But in this article, we provide a comprehensive overview of approximate startup costs. We’ve gathered together industry averages and recent statistics so you have all the information you need to get started.
Restaurant startup costs and expenses in 2024
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.
![Various appliances in restaurant kitchen](https://framerusercontent.com/images/CCw6bhH9fNHKvCX4yBKBoQTc.png)
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:
Recruitment costs:
Advertising for job postings: $500 - $2,000
Recruitment agency fees: $1,000 - $3,000
Training costs:
Training materials and sessions: $500 - $2,000
On-the-job training expenses: $1,000 - $2,000
Uniforms:
Uniforms for all staff: $1,000 - $3,000
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:
![Table of the costs of a restaurant](https://framerusercontent.com/images/n8nZFbHIfEdgPLA4YpWpZ8djw.png)
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:
![Table showing monthly expenses](https://framerusercontent.com/images/OW3F2TtMJJnZTFijhfecyp4NjVo.png)
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.
![Table showing average startup cost](https://framerusercontent.com/images/NUprXDpA7wg4Uq7dM9AyeWc9BD8.png)
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.
How much is it to open a restaurant? 5 cities compared
With both startup costs and monthly expenses, the variables that are likely to fluctuate the most are location and staff. Using research from LoopNet and general numbers on minimum wage and salaries, we provide restaurant startup estimates below for five cities from all over the US.
New York City
New York City is one of the most expensive places to open a restaurant. Premium real estate drives up those costs significantly. In addition, the high cost of living means higher salaries needed for staff.
Location lease/buy: $200,000 - $800,000
Minimum wage: $16/hour
Hiring staff: $30,000 - $80,000
Total startup costs range: $263,000 - $1,290,000
Total monthly expenses range: $46,700 - $125,000
Los Angeles
LA's diverse neighborhoods fluctuate greatly in cost, with upscale areas like Beverly Hills demanding particularly steep prices. Staff salaries are also relatively high but slightly lower than those in NYC.
Location lease/buy: $150,000 - $600,000
Minimum wage: $17/hour
Hiring staff: $25,000 - $70,000
Total startup costs range: $263,000 - $1,160,000
Total monthly expenses range: $39,700 - $110,000
Chicago
Chicago's costs, while lower than New York City’s and LA’s, are still substantial. The city offers a mix of high-end and more budget-friendly neighborhoods.
![Fine dining restaurant in the city](https://framerusercontent.com/images/Lz3x8oFqkt0CPCfJlpKJobU1yeA.png)
Location lease/buy: $100,000 - $500,000
Minimum wage: $16/hour
Hiring staff: $20,000 - $60,000
Total startup costs range: $263,000 - $960,000
Total monthly expenses range: $31,700 - $95,000
Austin
Austin is known for its lower cost of living and booming restaurant scene. While its popularity is driving up prices, affordable real estate and a competitive labor market still make it an attractive option for restaurant owners.
Location lease/buy: $80,000 - $400,000
Minimum wage: $7.25/hour
Hiring staff: $15,000 - $50,000
Total startup costs range: $263,000 - $780,000
Total monthly expenses range: $24,700 - $83,000
Tulsa
Tulsa is the most affordable city on this list when it comes to real estate and staffing costs. These costs make it and comparable cities ideal locations for new restaurateurs, as they offer lower-risk entry into the market.
Location lease/buy: $50,000 - $200,000
Minimum wage: $7.25/hour
Hiring staff: $10,000 - $30,000
Total startup costs range: $263,000 - $455,000
Total monthly expenses range: $18,700 - $60,000
How using Lark for your technology needs can reduce your restaurant startup costs and monthly expenses
A comprehensive solution can help slash your new restaurant's expenses. Lark includes many tools, including Lark Docs, Lark Messenger, and Lark Meetings. Let’s take a look at how each of these can help your establishment succeed.
Lark Docs
Lark Docs allows for real-time collaboration on documents. It’s essential for the following tasks:
Menu planning
Policy updates, such as changes to health & safety regulations
Staff training materials
![Screenshot of Lark Docs interface](https://framerusercontent.com/images/Vugv8eKjcRnL7EDW2c5wEt0xw.png)
You can easily share documents in chat and take advantage of our many pre-made templates.
Pro tip: By using Lark Docs, you save on the costs of using other tools, such as Google Workspace ($6 per user/month) or Microsoft 365 ($6 per user/month).
Lark Messenger
Lark Messenger integrates messaging with file sharing and task management. It’s essential for the following tasks:
Scheduling meetings
Sharing documents
Assigning tasks without leaving the conversation
It also offers automatic translation and rich formatting. It’s a central hub for all team communication.
Pro tip: By using Lark Messenger, you save on tools such as Slack ($7.25 per user/month) and WhatsApp Business (varied pricing).
Lark Meetings
Lark Meetings offers powerful video conferencing capabilities with features like smart meeting minutes. It’s essential for the following tasks:
Training sessions
Meetings
Coordinating with suppliers
![Screenshot of Lark Meetings interface](https://framerusercontent.com/images/WWkcWc3BiqVLh4Ed9slbVpbQz9Y.png)
With Lark Meetings, you can automatically transcribe meetings and allow participants to view documents in real time.
Pro tip: By using Lark Meetings, you avoid the costs associated with Zoom ($14.99 per host/month) or Microsoft Teams ($5 per user/month).
To put it simply, Lark’s all-in-one functionality cuts costs dramatically. Plus, you get task management, saving on tools like Asana ($11 per user/month).
So, for a team of just 20 users, using Lark means saving $780/month or $9,360/year.
Customer success stories
Here are two real-life stories of companies that were transformed after using Lark.
Mama Lou’s Italian Kitchen
Mama Lou's embraced Lark's digital tools to streamline their communication and processes. This resulted in better staff coordination and customer satisfaction.
Using Lark Moments for customer feedback reduced approval times from days to hours. Plus, digitizing sales reporting with Lark Base cut down on manual data entry and increased the company’s efficiency.
Ultimately, transitioning to Lark led to:
Better organization
Less employee stress
Great reviews on social media
CEO quote:
"As a family-based business, we embrace the power of Lark to nurture our team's potential. By consolidating platforms and streamlining processes, we create a harmonious work environment where everyone can thrive." - David Sison, CEO
Vikings Philippines
Vikings Philippines used Lark to maintain consistent standards across 65 outlets and 14 brands. They streamlined their sales reporting and created a sense of community among their 3,000 employees.
Lark Base centralized various checklists and maintenance requests, Lark Approvals made approval processes transparent, while Lark Messenger enhanced communication. This digital transformation saved up to 70% of Vikings’ time, supporting its rapid expansion.
CEO quote:
"Lark has been a game-changer for us, particularly in the way we organize and manage the expanding scale of our operations across multiple brands." - Jackson Go, CEO
Common FAQs about restaurant startup costs
Here are the answers to a few common questions about the cost of starting a restaurant:
Are restaurants a good business to start?
Restaurants can be a rewarding business venture. They offer the opportunity to pursue a passion for food and hospitality and to serve a community.
However, they come with high risks due to the significant initial investment and the cost of operation. A well-researched business plan and effective management increase the likelihood of success.
How do I fund my startup restaurant?
There are five primary ways to fund a startup restaurant:
Personal savings: Using personal savings is common but risky.
Loans: Small business loans from banks or credit unions are a traditional option.
Investors: Angel investors or venture capitalists may help fund an innovative concept.
Crowdfunding: Platforms like Kickstarter can help raise funds through community support.
Grants: Some organizations and government programs offer grants for small businesses.
What is the most profitable type of restaurant?
Fast food restaurants and quick-service restaurants tend to be the most profitable. They have high customer turnover, lower operating costs, and simpler menus, and they typically require less space and fewer staff members.
What is the most important thing when opening a restaurant?
The most important thing when opening a restaurant is thorough planning. This includes a detailed plan, market research, and financial projections.
Planning will help you understand your target market, choose the right location, and develop a unique restaurant.
What is the #1 reason that restaurants fail?
The number-one reason that restaurants fail is poor management. This includes poor financial management, ineffective marketing, and an overall lack of experience. All these things can lead to cash flow issues, poor customer service, and an empty restaurant.
Launch your restaurant to success
You now know the many variables that go into opening your own restaurant. With this comprehensive resource of what restaurant startup costs could look like for you, you’re ready to start planning.
Lark is a superapp for productivity that can save you big money on other subscriptions. Whether you’re in the brainstorming stage or ready to execute your strategy, it has countless tools to help you streamline and level up your business.
Try it for free today!