We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Business

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Are the Different Types of Restaurant Startup Costs?

Alex Tree
By
Updated: May 17, 2024
Views: 5,045
References
Share

Some different types of restaurant startup costs are getting and setting up a place of business, systems to manage money, and food. Buying a building and commercial cooking equipment is a large investment, one that can set up the owner for failure if too much money is spent. Having a point of sale system makes processing payments smoother for employees and guests alike. In addition, among one of the most important restaurant startup costs is food, since it's best to stock everything on the menu. Also, it is necessary to set aside money for payroll because employees expect to be paid soon after starting, and the business likely cannot run without them.

Buying a building to house the business and setting it up are two of the most expensive restaurant startup costs. It is usually cheapest to purchase a building that was once a restaurant and still has some of the necessary equipment. Otherwise, it is sometimes more than three times the amount to buy everything new. If renting an old restaurant, a restaurateur should keep in mind that rent is often higher because the place is established rather than newly built.

Most modern restaurant startup costs include money for a point of sale system. This system helps employees manage orders, keep track of bills and tips, and process credit cards. These systems usually have large upfront costs, plus processing a credit card transaction can have a flat flee and cost up to 2.5 percent of the total bill. Some restaurants can do record-keeping with pen and paper if they exclude credit and debit card transactions.

The restaurant startup costs for food largely depends on the type of food being sold. In general, expensive foods like steak and lobster cannot be marked up as much as pizza or burgers and still sell well. On the low end, food costs are usually about 25 percent of the restaurant's revenue. When selling expensive food items, the food might cost more than 40 percent of the revenue.

Payroll also needs to be taken into account. Many people expect to be paid within two to three weeks of starting a new job. The business might also owe taxes to the local government because of employees and may be required to provide health benefits if the employee works full time. It is also important to have a regular schedule to pay employees, not only because it might be the law or part of the employees’ contract, but because they may lose faith and morale in the business otherwise.

New restaurateurs often focus on the large start up costs, but there are many smaller costs that can add up when establishing a restaurant. Many localities require licenses to operate a restaurant, and cost will vary by area. A menu needs to be developed and printed, which may necessitate hiring a graphic designer and printer. Decor can range from simple to elegant, and how extensively the restaurant will be redecorated dictates how small or large the decorating budget should be. Equipment such as kitchen tools and appliances, as well as furniture, plates, glasses, paper goods and silverware are all necessities. Owners will need to get the word out about the new restaurant, so a marketing and advertising budget will be part of the start up costs as well.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Link to Sources
Alex Tree
By Alex Tree
Andrew McDowell is a talented writer and WiseGeek contributor. His unique perspective and ability to communicate complex ideas in an accessible manner make him a valuable asset to the team, as he crafts content that both informs and engages readers.

Editors' Picks

Discussion Comments
Alex Tree
Alex Tree
Andrew McDowell is a talented writer and WiseGeek contributor. His unique perspective and ability to communicate complex ideas in an accessible manner make him a valuable asset to the team, as he crafts content that both informs and engages readers.
Share
https://www.wisegeek.net/what-are-the-different-types-of-restaurant-startup-costs.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.