Cost for Opening a Restaurant

Opening a Restaurant

Due to the vast number of variables involved in different restaurant types, the cost for opening a restaurant will depend on a number of factors. How big will your restaurant be and what kind of food will you serve? Entrepreneurs looking to open a restaurant will have to decide whether or not to build their business from scratch, buy an existing business or invest in a franchise.

Cost for Opening a Restaurant from Scratch

If you plan to build your restaurant business from the ground up it will probably take $200,000 or more. Since there's no way to determine an average cost for opening a restaurant the best way to get an overall idea of cost is to know what to figure into your business plan budget. Start up costs include:

  • Rent or Mortgage
  • Staff (recruiting, training, relocations as related to development of management and hourly help)
  • Stock
  • Utilities
  • Cost of drawing customers
  • Any other costs incurred in relation to start up

Buying an Existing Business

When you buy an existing restaurant it's important to gather all the information you can before you make your purchase. Be sure to consult with an attorney or accountant to help you get a clearer understanding of what you would be purchasing. Double check earnings claims to be sure they are accurate. Along with this, take the time to cover the disclosure documents and contract and ask any questions that arise.

Compare Price with Similar Operations

No matter which route you choose to take when starting a restaurant business, it pays to take time to look at other similar restaurant operations first, especially if you buy an existing business or plan to purchase a franchise. Call the local Chamber of Commerce, Better Business organization, local consumer affairs office and other similar organizations for more information.

Cost of Goodwill

When buying an existing restaurant business there is an intangible asset to consider. It's called goodwill. This is the dollar value placed on the business enterprise above the value assigned to its physical assets. The importance of goodwill is recognized by:

Goodwill is also an asset that has to be renewed constantly and is a factor to keep in mind when you purchase a business.

Role of Investors

Many don't have the out-of-pocket means to start up the restaurant of their dreams. That's why 90 percent of restaurants are opened with the help of private investors to help supplement personal money.

Figuring Cost

Typically fast food businesses cost less to start than a family-style or high-end restaurants. It makes sense that self-serve costs less to operate than paying a wait staff. If you buy a restaurant in a high-traffic location it will cost more than one found in a rural setting. With these particulars in mind, you'll be able to pull together numbers that more closely reflect what it will cost you to open your restaurant business.

Restaurant Startup Products can help you figure start up costs for your business as other restaurant related aids:

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Cost for Opening a Restaurant