How Much Does It Cost to Open a Restaurant?

The total cost of opening a restaurant ranges between $175,000 and $750,000. The reason for that wide range is that costs vary greatly depending on several factors, including your location, size, and concept. 

Getting a handle on your startup costs is essential to a successful launch. Let’s look at where your money goes so you’re ready to open your doors with confidence. 

Key expenses to open a restaurant

Cost estimates are a critical part of any restaurant business proposal. While the list below isn’t exhaustive, it includes many of the biggest budget items to keep in mind.

Real estate costs

Real estate—whether leasing a space or building from the ground up—is often one of the largest expenses when opening a restaurant. Most new restaurants lease commercial property, which usually requires a security deposit, first month’s rent, and broker fees.

Commercial property rent varies by location, size, and market conditions, but costs can range from around $2,000 to $12,000 or more per month.

Most spaces need to be built out to function as a restaurant. That process can include:

• Upgrading the plumbing, electrical, and HVAC systems
• Customizing the interior layout and design
• Bringing the space up to code

Depending on your location and the condition of the space, a restaurant buildout may cost $100 to $800 per square foot.

If you’re building a new restaurant, costs increase significantly. In addition to construction, you’ll need to account for land acquisition, architecture, engineering fees, and site work like parking and landscaping. This pushes the average cost to $200 to $500 per square foot, which can translate to $500,000 to $2 million or more, depending on the scope of your project.

Restaurant equipment and furniture

Outfitting your restaurant with the equipment, finishes, and systems it needs is usually your next biggest expense. Kitchen equipment alone—everything from pots and pans to heavy-duty appliances—might run you $50,000 to $150,000 or more.

The front of house also requires equipment, including:

• Point-of-sale (POS) system
• Security system
• Reservation system
• Host stand
• Service stations
• Tableware
• Linens
• Furniture
• Bar supplies
• Menus and menu boards
• Décor

Depending on the size of your space and the quality of the materials, furniture and tableware could add another $10,000 to $80,000 to your startup costs.

POS and security systems often come with monthly subscription fees and may also require hardware, which can add $1,300 to $1,700 or more upfront. Reservation systems typically charge a monthly subscription fee.

Permits and licenses

Most restaurant permits and licenses are handled at the state and local levels, so costs vary by location. Some of the more common ones include:

• Business license
• Certificate of occupancy
• Seller’s permit
• Resale permit
• Food service permit
• Building permit
• Fire department permit
• Liquor license
• Sign permit

Permits and licenses typically cost anywhere from a few thousand to $18,000 or more. Your location, size, and concept all play a role in total licensing costs. For example, a full-service restaurant often pays more than a smaller operation.

Serving alcohol can also increase the overall cost of permits and licenses. Liquor licenses may cost a few hundred dollars for a basic beer and wine license, while full liquor licenses can reach tens—or even hundreds—of thousands in some markets.

Staffing costs

Estimating staff salaries can be tricky when you’re opening a new restaurant. Without sales data, it can be difficult to know exactly how many team members you need.
Most restaurants budget labor at around 25% to 35% of revenue, including front-of-house staff, kitchen teams, and management. Payroll begins before your first service, so you’ll need to account for hiring, onboarding, and training costs. In addition to wages, factor in payroll taxes, workers’ compensation insurance, and any benefits you plan to offer.

One way to start is with an online employee cost calculator. Entering a few details about pay type, location, and benefits can help you build a more accurate staffing budget. Even a small team can add up quickly once you factor in wages, taxes, and training time.

Food and beverage inventory

Food and beverage costs can vary widely based on your concept, menu, and location. A high-end restaurant might spend $25,000 or more on initial inventory, while a smaller or more casual operation may spend closer to $5,000. Typically, restaurant owners try to keep food and beverage costs between 28% and 35% of their revenue.

Keep in mind that your first inventory order often includes nonperishable items like condiments, canned goods, and spices, along with staple ingredients you’ll use across multiple dishes. As a result, your upfront costs may be higher than your typical weekly inventory spend.

Marketing

Marketing costs largely depend on how you want to get the word out about your new restaurant. For example, a freelance digital marketer might charge between $15 and $45 per hour. Hiring a marketing agency on retainer could cost around $3,500 per month.

That said, many new owners choose to promote their restaurant themselves via social media or easy email marketing campaigns. This approach can help you save on upfront costs, but it also requires a consistent time investment.

Working capital

Opening a restaurant isn’t just about getting the doors open—it’s about staying open long enough to become sustainable. Even with a strong plan in place, new restaurants often take time to become profitable, so having reserves to cover payroll, rent, and inventory can help you stay on track during the early months.

Experts generally recommend having three to six months of operating expenses on hand. Depending on your restaurant, that might be anywhere from $50,000 to $200,000.

FAQs on restaurant startup costs

What common startup costs do operators underestimate when opening a restaurant?

One of the most common costs that new restaurant owners underestimate is renovating a commercial space to fit their needs. Construction may expose issues that need attention before you can open, such as hidden mold or outdated wiring. Failing to account for these surprises can lead to costly overruns.

Delays in permitting can also create challenges. If those delays aren’t factored into your timeline, you may end up paying rent on a space that isn’t yet generating revenue.

How does the 30/30/30 rule apply when planning a new restaurant’s financial model?

The 30/30/30 rule is a framework for allocating revenue when operating a restaurant. It suggests spending about 30% on food costs, 30% on labor, and 30% on overhead, such as rent and utilities, leaving roughly 10% as profit.

When planning a new restaurant, this framework can help you estimate whether your concept is financially sustainable. If your projected costs fall outside these ranges, you may need to adjust your pricing, staffing, or expenses before opening.

The takeaway

Opening a restaurant requires a significant upfront investment, but understanding your costs early can help you make smarter decisions along the way. Each expense—from real estate to staffing to working capital—plays a role in setting your restaurant up for long-term success. With careful planning and realistic expectations, you can build a budget that supports both your opening and your growth.