Do you want to start a burger restaurant and want to know the cost? If YES, here is a cost breakdown to open a burger restaurant and the profit margin/ROI.
A burger restaurant is a niche restaurant that specifically prepares and sells burgers. Apart from burgers, a burger restaurant can also sell other snacks and drinks. Please note that a burger restaurant can operate as a small detached restaurant, or as a regular fast-food restaurant that also sells burgers as their major product.
The burger restaurant line of business has minimal barriers to entry, with low startup capital and no specific licensing requirements and the capital costs of establishing burger restaurants are not substantial relative to many other restaurant industries, such as fine dining restaurant or fast food restaurant.
On the other hand, the high level of competition and market saturation in a declining industry can prove challenging to aspiring entrepreneurs who want to start their own shop. Most players in the burger line of business are small to medium sized establishments that cater to the local community.
No doubt the burger restaurant line of business is profitable and it is open for any aspiring entrepreneur to come in and establish his or her business; you can choose to start on a small scale in a street corner like the average mom and pop business or on a large scale with several outlets in key cities or buy an existing and successful burger restaurant franchise.
Estimated Cost Breakdown to Open a Burger Restaurant
When it comes to starting a standard burger restaurant business, one is expected to spend the bulk of the startup capital on renting a restaurant and kitchen facility.
Aside from that, you are expected to purchase furniture and kitchen utensils, large stock of burger making ingredients (you can actually go into credit agreement with flour importers or flour production companies), paying of your employees and utility bills.
In view of that, here are the key areas where you are expected to spend your startup capital on;
- The total fee for registering the business in the united states of America – 0.
- Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $3,300.
- Marketing promotion expenses for the grand opening of the burger 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 a business plan – $2,500.
- Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
- The cost for payment of rent for 12 months at $1.76 per square feet in the total amount of $46,000.
- The cost for kitchen remodeling (construction of racks and shelves) – $5,000.
- Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500) – $3,000
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $40,000
- The cost for start-up inventory (stocking with flours, vegetable oil and other ingredients and packaging materials) – $30,000
- Zoning Expenses – $1,000
- Storage hardware (bins, rack, shelves, food case) – $3,720
- The cost for counter area equipment (counter top, sink, ice machine, etc.) – $9,500
- The cost for store equipment (cash register, cash and inventory control system, security, ventilation, signage) – $13,750
- The cost of purchase and installation of CCTVs, and car tracker devices – $5,000
- The cost for the purchase of furniture and gadgets (frying pans, oven, microwave, dishwasher, refrigerator, blender, serving wares, computers, printers, telephone, TVs, sound system, tables and chairs et al) – $9,000.
- The cost of launching a Website – $600
- The cost for our opening party – $3,000
- Miscellaneous – $1,000
From the rough estimate as listed above, you would need a minimum of two hundred and ten thousand, one hundred USD ($210,100) to establish a medium-scale but standard burger restaurant business in any city in the United States of America.
Please note that this is a rough estimate and we usually advise our readers who are interested in opening a burger restaurant to go to the market or directly contact sellers of the items (cooking utensils, Food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.), Storage hardware (bins, utensil rack, shelves, food case),
Counter area equipment (counter top, sink, ice machine, etc.), receipt issuing machines, sound system (for playing music), Point of Sale Machines (POS Machines), CCTV cameras and flat screen TVs and other supplies) they would need to get the real time prices of these items.
The truth is that if you are a good bargainer, you can get a better deal that will help you beat down the estimated price as listed above.
Factors Influence the Cost of Opening a Burger Restaurant
Your Choice of Location
The cost of opening a burger restaurant can vary widely and this will be based on factors such as the region, city, neighborhood, and even specific street or building. As expected, locations that are considered to be prime locations, that is locations with high foot and vehicular traffic, and visibility usually come with higher rent or property prices.
The Size and Layout of Your Burger Restaurant
Another major factor that can influence the cost of opening a burger restaurant is the size and layout of the burger restaurant.
Trust me, the size and layout of your burger restaurant will affect the overall cost of opening the business. As expected, a burger restaurant that operates from larger spaces will generally have higher rent or leasing costs, and conversely, smaller spaces will have lower rent or leasing costs.
In addition, the layout and design of the space, including any necessary renovations or interior decoration, will attract more costs.
The Cost of Equipment and Supplies
The cost of acquiring the needed equipment and supplies for your burger restaurant is yet another major factor that will influence the overall cost of opening a burger restaurant.
You should at least create a budget for grills, fryers, refrigerators, freezers, prep stations, exhaust hoods, and other commercial-grade kitchen equipment. Please note that the quality, brand, and quantity of equipment you will buy will significantly influence the cost of opening the burger restaurant business.
So also, the variety and quality of ingredients you plan to offer on your menu will affect the cost of opening the restaurant. For example, organic or locally sourced produce tends to be more expensive than conventional options.
The Cost of Licensing and Permits
If you are planning to open a burger restaurant in the United States of America, you will be required to apply for the required licenses and permits. In the United States, opening a burger restaurant typically requires obtaining health permits, food handling permits, business licenses, and possibly liquor licenses if you plan to serve alcohol.
Please note that depending on your location, there may also be specific regulations and requirements related to food safety, health inspections, signage, and accessibility. Ensuring compliance with these regulations may involve additional costs.
The Cost of Hiring and Training Your Employees
Another major cost that can influence the overall cost of opening a burger restaurant business is the cost of hiring and training your employees. The truth is that you will need employees to run your burger restaurant business. In essence, expenses for hiring and training staff members should be taken into account if you are considering opening a burger restaurant business.
The Cost of Marketing and Advertising
The cost of marketing and advertising your burger restaurant is yet another major factor that can influence the overall cost of opening a burger restaurant. Of course, you should know that promoting your burger restaurant and attracting customers will require marketing and advertising efforts.
Please note that your marketing and advertising costs may include the cost of website development, social media campaigns, printed materials, signage, and other promotional activities et al.
Utilities and Operational Expenses
Finally, if you are planning to open a burger restaurant, then you should be prepared to spend money to take care of your utilities and related operational expenses.
Basically, you should have a budget that will take care of your electricity bill, water bill, gas, and waste disposal bills. So also, running a burger restaurant will attract recurring operational costs that might be unique to your business or the location where you choose to open your burger restaurant.
For example, you are expected to spend money on insurance, cleaning services, waste, and maintenance amongst others. Trust me, this cost can also influence the overall cost of opening a burger restaurant business.
It is important to note that there are other factors not listed above that can influence the overall cost of opening a burger restaurant business. Interestingly, the costs not listed above may just be unique to your location, your preferences, and perhaps the governmental regulations in your state or country. You may want to find out what the additional factors are so you can add them to this list.