How Much Does it Cost to Open a Restaurant?

The restaurant business is a very profitable business. A large part of the reason for the level of profitability in the restaurant business is because it is in the food industry and feeding is an essential need for all animals.

If you have been considering the idea of starting a restaurant, you should know that you are thinking in the right direction. Apart from affording you the opportunity to start and own a business, starting a restaurant would afford you an opportunity to be part of a most profitable industry.

Starting a restaurant requires very serious planning and preparedness. Although starting a restaurant, just like any other business comes with its own unique challenges.

One of the challenges which you can face while starting a restaurant is the cost. The ability to understand the cost implications of starting a restaurant business goes a long way in determining the level of preparedness to put into starting a restaurant.

In determining how much it would cost to start a restaurant, certain factors should be put into proper consideration. Some of the important factors to be duly considered are such factors as size and location and the target market.

Some of the costs that would make up part of the cost component for the restaurant include the cost of equipment and insurance among others. We are going to do a careful cost analysis to find out how much it would cost to start a restaurant.

So how much money do I need to open a small restaurant?


Here is a breakdown of the required cost to start a restaurant.

  1. Registration Cost

The very first cost that should be duly considered in starting a restaurant is the cost registering the business. The cost of registering the restaurant could come up to $800 (U.S. dollar).

  1. Licensing Fee

Before you can operate a restaurant, you need to get the required license and permits. Some of the required licenses and permits include the fire department license, health department license and the air and water pollution permit, among others.

The cost of getting the license could come at a cost of $3,000 (U.S. dollar).

  1. Business Plan and Consultancy

You would need to put together a well-written business plan for the restaurant. You also need to pay for the needed consultancy. The cost of writing a business plan and consultancy could come up to $2,500 (U. S. dollar).

  1. Cost of the Facility

You would need to get a space for the restaurant. The facility could be leased or rented for starting the restaurant.

The cost for the restaurant facility could come at a cost of $250,000 (U.S. dollar).

  1. Remodelling of the Facility

When procured, the restaurant facility would have to be remodelled to fit the purpose of the restaurant. The cost of remodelling the facility could come at a cost of $300,000 (U.S. dollar).

  1. Cost of Cooking Equipment

The restaurant would need commercial cooking equipment. Some of the required commercial cooking equipment includes gas ovens, commercial grills, deep fryers, steam kettles, steamers, breakfast equipment, toasters and more.

The cost of the needed commercial kitchen equipment could come up to $80,000 (U.S. dollar).

  1. Furniture and Fixtures

The restaurant would also need furniture and fixtures such chairs and tables, including dining tables. The cost for furniture and fixtures could come up to $50,000 (U.S. dollar).

  1. Cost of Insurance

The restaurant would also need insurance, which includes property insurance, and general liability insurance. The cost of insurance for the restaurant could come up to $3,000 (U.S. dollar).

  1. Cost of Utilities

The cost for utilities includes the cost of water and electricity, including phone bills. There should be a budget for the first three months. The cost of utilities could come up to $4,500 (U.S. dollar) for the first three months.

  1. Labour Costs

The restaurant should make provision for the salaries and wages of staff for at least the first three months of the operation of the restaurant. This cost could come up to $9,000 (U.S. dollar) for the first three months.

  1. Cost of Bar Equipment

You will also need to provide for the cost of equipment in the bar. The required equipment includes commercial refrigeration equipment, bottle opener, cocktail shakers, glasses and more. The cost for these could be up to $70,000 (U.S. dollar).

Total Cost

To start a restaurant, it could cost up to $772,800 (U.S. dollar). Depending on the location and size of the restaurant, the cost could go up to $1.5 million (U.S. dollar) and above.


A great advice would be not to ignore an opportunity to start a restaurant. Also, study the cost implications that have been presented in this article so as to ensure that you make the restaurant a success from the very start.

One of the reasons why some people have failed in the restaurant business was because they did not have access to the right cost information, well, now that you do, go ahead and make that restaurant a success.

You must also ensure to stay within your budget while starting a restaurant and watch your costs carefully. Note that the cost of inventory was not included. You should also make provision for miscellaneous expenses.