Do you want to know exactly how much it cost to start a restaurant business? If YES, here is a detailed cost analysis for starting a restaurant business and raising finance.

One good thing about the restaurant business is that an owner has the sole right to determine the price they want to sell their menu irrespective of what others around them are offering – especially if they are good with the delicacies they whip up.

There is no contesting the fact that food is one of the basic needs of people. It is for that reason that   people do all it takes to eat when they are hungry and restaurants are places that are designed to address such needs. Having provided you with a:

  1. Restaurant Industry Overview
  2. Market Research and Feasibility
  3. Restaurant Business Plan
  4. Restaurant Marketing Plan
  5. Restaurant Name ideas
  6. Restaurant Licenses and Permits
  7. Restaurant Marketing ideas

We will consider how much it cost to start a restaurant business from scratch including the operating costs.

  • Industry Overview

When it comes to starting a restaurant business, loads of factors influences the amount that will be required to successful launch the business. Factors like the location you intend starting the business, the type of restaurant you want to start, the size of restaurant you want to start, and of course the state of the economy as at when you intend start the business.

There are various kinds of restaurants all over the world, here are a few examples; fast food restaurants,  intercontinental restaurants, local restaurants, family style cafeterias, casual dining restaurants, fast casual restaurants, amongst others. These cafes are designed to meet the various needs of different tribes, creeds and races.

In most cases, it is the community where the restaurant is to be situated that determines the style of restaurant service to be offered. For example; if one decides to start a restaurant business around a construction site; choosing an intercontinental style of restaurant or a family style restaurant might just be the best option.

Restaurants might not be entirely easy to start, but it is a straight–forward business that can generate huge and steady profits if well managed. People often think that the restaurant industry is a safe industry to invest in, this is basically true because people are expected to eat every day.

If you are considering starting a restaurant business, all you would need is some capital to purchase or lease/rent a suitable facility, the required equipment and furniture. You would also need some additional capital to purchase the required ingredients, pay your employees at least for the first 3 months, and also to pay your utility bills. These expenses are called “working capital.”

The fact that the required amount needed to start a restaurant business especially when you choose to start a small or moderate restaurant is not on the high side, loads of entrepreneur who are interested in the business can come into the industry at any time they desire; the entry barriers are quite affordable and there are various types of restaurant that one can choose to start.

Conversely, some might want to start a local restaurant, casual dining restaurant or even a fast food style restaurant irrespective of where they are located. However, if you choose to start a restaurant in a city that hosts thousands of international tourists and migrants, then starting an intercontinental restaurant will be your best option.

Over and above, it pays an individual to acquire culinary skills as well as undertake a thorough and exhaustive feasibility studies before choosing the style of restaurant to start, the location to set up the business and the pricing system to adopt for the business.

How Much Does It Cost to Start a Restaurant Business?

When starting a restaurant business, you just have to get your costing cum economic analysis right if your intention of building the business is to generate profit, grow the business and perhaps expand the business beyond one location to other locations within your country and other cities in the world.

When conducting costing and economic analysis for your restaurant business, you have to critically examine these key factors; place, product, pricing and promotion. As a matter of fact, you would have to review these key factors at regular intervals while running your restaurant business. As a restaurant owner, you have to have a proper grasp of your competitive landscape.

Restaurant owners should also know that running their own single restaurant (an independent restaurant) is different from managing or operating a restaurant chain or franchise. Managing or operating a restaurant chain or franchise attracts additional impediments like incentive alliance, bureaucracies, growth strategy, operational guidelines et al.

It is important to note that food cost is one of the most important factors contributing to the overall cost of a restaurant business and should be considered as a major factor when carrying out your costing and economic analysis.

Over and above, the cost analysis as it relates to starting a standard restaurant in the United States of America, Canada, United Kingdom and Australia can be said to be almost the same except for few variations. For example, the cost of setting up a standard restaurant facility with a government approved commercial kitchen are same especially when bench–marked against the US Dollars.

Other factors that may be slightly different in terms of costing when it comes to starting a standard restaurant business in any of the countries listed above are cost of labor, cost of food ingredients, cost of transportation and logistics, local tax, insurance policies, business incorporation fee, promotion and branding cost, rent/leasing amongst other factors.

Over and above, when it comes to starting a medium scale restaurant business, you should be prepared to either rent or lease a standard and centralized facility with good human and vehicular traffic; this is going to be one of the areas where you are expected to spend the bulk of your start–up capital.

How Much Does It Cost to Start a Restaurant Business in the United States?

These are the key expenses you are expected to make when starting a medium scale but standard restaurant business in the United States of America;

  • The total fee for registering the business in the United States of America – $750.
  • Legal expenses for obtaining licenses and permits (Health department license and business license)and permits (Fire department permit, Commercial Kitchen permit, Air and water pollution control permit, Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
  • Marketing promotion expenses for the grand opening of the restaurant in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – $30,400.
  • The cost for leasing a standard facility in a good and centralized location – $200,000.
  • The cost for remodeling the facility and construction of a commercial kitchen – $100,000.
  • Other start-up expenses including stationery ($500), phone and utility (gas, sewer, water and electric) deposits ($6,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000.
  • The cost for start-up inventory, restaurant furniture and gadgets (Tableware, Utensils, Dishes, Bar and Kitchen equipment, Fridges, TVs, microwave oven, Sound System, Tables and Chairs, Work Tables, Sinks, Slicers, Scales, Ingredient Bins, Filing Cabinets, Noticeboard and Staff Uniform et al) – $100,000.
  • The Cost for supply of raw food, ingredients, drinks and beverages for a month – $5,000.
  • The cost for store equipment (cash register, security, ventilation, signage) – $13,750.
  • The cost of purchase and installation of CCTVs – $5,000.
  • The cost for building and hosting a website – $600.
  • The cost for opening party – $8,000.
  • Miscellaneous – $5,000.

You will need an estimate of seven hundred and fifty thousand dollars ($750,000) to successfully set up a medium scale but standard restaurant business with a government approved kitchen in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

Starting a small scale but standard restaurant business without a commercial kitchen facility within the restaurant facility in the United States of America will cost from fifty thousand dollars to one hundred and fifty thousand dollars ($50,000 to $150,000). Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

When it comes to starting a standard and large scale restaurant business with several outlets in key cities in the United States of America, a restaurant business with the intention of selling franchise, then you should look towards budgeting well over two million dollars ($2 million). Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

How Much Does It Cost to Start a Restaurant Business in the UK?

These are the key expenses you are expected to make when starting a medium scale but standard restaurant business in the United Kingdom;

  • In the United Kingdom, online applications are usually registered within 24 hours and cost £12 (paid by debit or credit card or PayPal). Postal applications take 8 to 10 days and cost £40 (paid by check made out to ‘Companies House’). There’s a same day service costing £100.
  • Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Commercial kitchen permit, Air and water pollution control permit, Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – £13,300.
  • Marketing promotion expenses for the grand opening of the restaurant in the amount of £3,500 and as well as flyer printing (2,000 flyers at £0.04 per copy) for the total amount of £3,580.
  • The cost for hiring business consultant (including writing business plan) – £2,500.
  • The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – £28,400.
  • The cost for leasing a standard facility in a good and centralized location – £187,000.
  • The cost for remodeling the facility and construction of a commercial kitchen facility – £95,000.
  • Other start-up expenses including stationery (£300), phone and utility (gas, sewer, water and electric) deposits (£1,500).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – £60,000.
  • The cost for start-up inventory, restaurant furniture and gadgets (Tableware, Utensils, Dishes, Bar and Kitchen equipment, Fridges, TVs, microwave oven, Sound System, Tables and Chairs, Work Tables, Sinks, Slicers, Scales, Ingredient Bins, Filing Cabinets, Noticeboard and Staff Uniform et al)- £95,500.
  • The Cost for supply of raw food, ingredients, drinks and beverages for a month – £4,700.
  • The cost for store equipment (cash register, security, ventilation, signage) – £9,500.
  • The cost of purchase and installation of CCTVs –£4,500.
  • The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, flat screen TVs, Sound System, tables and chairs et al) –£20,500.
  • The cost for building and hosting a website –£600.
  • The cost for opening party – £6,300.
  • Miscellaneous –£8,000.

You will need an estimate of seven hundred and thirty thousand Pounds Sterling (£730,000) to successfully set up a medium scale but standard restaurant business with a government approved commercial kitchen in the United Kingdom. Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

Starting a small scale but standard restaurant business without a commercial kitchen facility within the restaurant facility in the United Kingdom will cost from forty five thousand Pounds Sterling to one hundred and forty thousand Pounds Sterling (£45,000 to £140,000). Please note that this amount includes the salaries of all the staff for the first 3 months of operation .

When it comes to starting a standard and large scale restaurant business with several distribution outlets in key cities in the United Kingdom, a restaurant business with the intention of selling franchise, then you should look towards budgeting well over one million, eight hundred thousand Pounds Sterling (£1.8 million). Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

How Much Does It Cost to Start a Restaurant Business in Canada?

These are the key expenses you are expected to make when starting a medium scale but standard restaurant business in Canada;

  • For federal incorporation of business in Canada, the cost to incorporate is $200 if filed online through Corporations Canada’s online Filing Centre ($250 if filed through other means).
  • Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Commercial Kitchen permit, Air and water pollution control permit, Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
  • Marketing promotion expenses for the grand opening of the restaurant in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – $30,400.
  • The cost for leasing a standard facility in a good and centralized location – $200,000.
  • The cost for remodeling the facility and construction of a commercial kitchen – $100,000.
  • Other start-up expenses including stationery ($500), phone and utility (gas, sewer, water and electric) deposits ($6,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000.
  • The cost for start-up inventory, restaurant furniture and gadgets (Tableware, Utensils, Dishes, Bar and Kitchen equipment, Fridges, TVs, Microwave oven, Sound System, Tables and Chairs, Work Tables, Sinks, Slicers, Scales, Ingredient Bins, Filing Cabinets, Noticeboard and Staff Uniform et al) – $100,000.
  • The cost for supply of raw food, ingredients, drinks and beverages for a month – $5,000.
  • The cost for store equipment (cash register, security, ventilation, signage) – $13,750.
  • The cost of purchase and installation of CCTVs – $5,000.
  • The cost for building and hosting a website – $600.
  • The cost for opening party – $8,000.
  • Miscellaneous – $5,000.

You will need an estimate of seven hundred and fifty thousand dollars ($750,000CAD) to successfully set up a medium scale but standard restaurant business with a government approved kitchen in Canada. Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

Starting a small scale but standard restaurant business without a commercial kitchen facility within the restaurant facility in Canada will cost from fifty thousand dollars to one hundred and fifty thousand dollars ($50,000CAD to $150,000CAD). Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

When it comes to starting a standard and large scale restaurant business with several outlets in key cities in Canada, a restaurant business with the intention of selling franchise, then you should look towards budgeting well over two million dollars ($2 millionCAD). Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

How Much Does It Cost to Start a Restaurant Business in Australia?

These are the key expenses you are expected to make when starting a medium scale but standard restaurant business in Australia;

  • In Australia, the fees to register your business name with ASIC include: $34 for 1 year. $80 for 3 years.
  • Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Commercial Kitchen permit, Air and water pollution control permit, Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
  • Marketing promotion expenses for the grand opening of the restaurant in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  • The cost for hiring a business consultant (including writing business plan) – $2,500.
  • The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – $30,400.
  • The cost for leasing a standard facility in a good and centralized location – $200,000.
  • The cost for remodeling the facility and construction of a commercial kitchen – $100,000.
  • Other start-up expenses including stationery ($500), phone and utility (gas, sewer, water and electric) deposits ($6,500).
  • The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000.
  • The cost for start-up inventory, restaurant furniture and gadgets (Tableware, Utensils, Dishes, Bar and Kitchen equipment, Fridges, TVs, Microwave oven, Sound System, Tables and Chairs, Work Tables, Sinks, Slicers, Scales, Ingredient Bins, Filing Cabinets, Noticeboard and Staff Uniform et al) – $100,000.
  • The Cost for supply of raw food, ingredients, drinks and beverages for a month – $5,000.
  • The cost for store equipment (cash register, security, ventilation, signage) – $13,750.
  • The cost of purchase and installation of CCTVs – $5,000.
  • The cost for building and hosting a website – $600.
  • The cost for opening party – $8,000.
  • Miscellaneous – $5,000.

You will need an estimate of seven hundred and fifty thousand dollars (AUD$750,000) to successfully set up a medium scale but standard restaurant business with a government approved kitchen in Australia. Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

Starting a small scale but standard restaurant business without a commercial kitchen facility within the restaurant facility in Australia will cost from fifty thousand dollars to one hundred and fifty thousand dollars (AUD$50,000 to AUD$150,000). Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

When it comes to starting a standard and large scale restaurant business with several outlets in key cities in Australia, a restaurant business with the intention of selling franchise, then you should look towards budgeting well over two million dollars (AUD$2 million). Please note that this amount includes the salaries of all the staff for the first 3 months of operation.

Estimating Start-Up Cost for Restaurant Business Based on the following factors;

Specific Location

The fact that there are different types of restaurant scattered across the United States does not mean that restaurant business can thrive in every location. Before choosing a location for your restaurant, ensure that you conduct a thorough feasibility studies.

There possibility of you coming across a restaurant that just closed shop in the location you want to start your restaurant can’t be ruled out. This is why it is very important to gather as much facts and figures before choosing a location to set up your restaurant.

  • Staff/Manpower

When it comes to starting a standard restaurant business on a large scale, you would need the services of the following professionals;

  • Chef/Cook
  • Restaurant Manager
  • Waiters and Waitresses
  • Human Resources and Admin Manager
  • Accountant/Cashier
  • Merchandize Manager
  • Marketing and Sales Executive
  • Cleaners
  • Security Guard

Can a Restaurant Business be Bootstrapped on a Lean Budget Right from Home?

If you a looking for a small scale business that you can successfully bootstrap on a lean budget right from your home, then you should not consider starting a restaurant business. Because of the nature in terms of size and cost of the kitchen equipment involved in starting and operating a restaurant business, it is obvious that it cannot be bootstrapped on a lean budget from home.

As a matter of fact, the business is open to the general public and you would not want complete strangers to continue to storm your house on a regular basis and at different times of the day simply because you want to them to patronize the meals and drinks you sell in your restaurant. Besides, you can hardly get government approval to make use of your home for a restaurant business.

How Much Does It Cost to Buy a Restaurant Business Franchise?

In the United States of America, the Average Cost of Purchasing a Restaurant Franchise is $150,000. Examples of 3 Well – Known Restaurant Franchising Companies in the United States of America are;

  • Little Greek Restaurant
  • Quaker Steak & Lube
  • Buffalo Wild Wings

In the United Kingdom, the Average Cost of Purchasing a Restaurant Franchise is £100,000. Examples of 3 Well – Known Restaurant Franchising Companies in the United Kingdom are;

  • East Coast Wings & Grill
  • Hwy 55 Burgers Shakes & Fries
  • Bonanza Steak & BBQ™

In Canada, the Average Cost of Purchasing a Restaurant Franchise is $160,000 (Canadian Dollar). Examples of 3 Well – Known Restaurant Franchising Companies in Canada are;

  • Pumpernickel’s Franchise Corp.
  • MR MIKES SteakhouseCasual
  • Boston Pizza International Inc.

In Australia, the Average Cost of Purchasing a Restaurant Franchise is AUD$160,000. Examples of 3 Well – Known Restaurant Franchising Companies in Australia are;

  • BK’s Takeaway Australia
  • Bucking Bull – Australia
  • Crust Gourmet Pizza

Financing Your Restaurant Business

It is often said that money is the blood of any business. No doubt raising start – up capital is perhaps one of the major concerns for entrepreneurs; it can be challenging raising capital to launch a business idea. Your idea must be workable and promising for you to secure finance from financial institutions or from investors.

The first thing to put in place before sourcing for start – up capital for your business is to draft a detailed business plan. With a good business plan, you can easily convince investors to invest in your business. The truth is that no bank can give you a loan if you don’t have a good and workable business plan.

Besides, investors will not take you seriously if you don’t have a business plan on ground before launching out to source for start – up capital. There are several options when it comes to raising money to finance a start – up business. Some of the options are;

  • Raising money from personal savings and sale of personal stocks
  • Raising money from investors and business partners
  • Applying for loan from bank
  • Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
  • Sourcing for soft loans from family members and friends.