There will always be costs associated with opening a business, and a restaurant is no different. We’ve put together a list of typical costs you can expect to incur when considering opening a restaurant:
Seed Money
Seed money consists of the initial investment made by the founder or partners of the restaurant to complete task of starting the business. Concept development, business description, business plan feasibility and the business’ banking account is also included in seed money.
Branding
Company branding is what sets your business apart from others. Logos, business cards, stationery, website design, and menu printing are all part of your company branding and what helps distinguish you from competitors.
Site Selection
There are costs associated with travel and fees for professionals you might hire to help identify all the various permits needed to lease or purchase a commercial building suitable for your business. Involved in these costs include zoning and other fees related to building conditions and location.
Lease Deposit
You’ll need enough capital to cover a few month’s rent and any fees associated with shared or common areas and site maintenance.
Architect, Design, Construction and Tenant Improvements
Similar to the costs associated with site selection and the professionals that assist with permitting, you’ll want to assess fees that address mechanical, electrical, plumbing and other design elements that fit your restaurant theme or concept.
FF&E- Furniture, Fixtures, and Equipment
These costs are associated with guest seating, cabinetry, and any special features you’ll choose for your kitchen, dining, or bar area.
POS
Unless you’re planning to accept cash only and stash funds in a lock box, you’ll need to purchase a point of sale computer, office computer, and other software that will help you run the business smoothly and efficiently.
Professional Support
If you don’t have one in the family, you’ll occasionally need to consult the services of a lawyer, accountant or financial institution, insurance agents, and other consultants that help a successful restaurant and business run smoothly.
Licenses, Permits, and Deposits
Costs with startup include security deposits, utility deposits, business licenses and special permitting not already mentioned or included in the site selection process.
Small Ware
You’ll need to consider what type and the volume of bar and kitchen accessories, cooking and other serving utensils, such as dishes, glasses, and cleaning supplies that will need to be purchased to support the business during all operating times.
Beginning Inventory
Perhaps the most important part of the restaurant itself is the items on the menu. Part of your start-up costs include the purchase of your produce, dry goods and ingredients, non-alcoholic and alcoholic beverages. These costs will vary depending on your business and your forecasted sales, so be sure to stay on top of your inventory forecasting.
Signage and Marketing
Costs for signage include estimates for new interior and exterior signs, delivery, permits, and insurance to cover these.
When it comes to your grand opening or other special events, you’ll need to consider costs for advertising and promotions, including any special fliers, signage or uniforms you’ll use.
Working Capital and Pre-Opening Labor and Training
To be sure you get started on the right foot, you’ll want to make sure you have enough cash to cover two full weeks of managerial and hourly wages with benefits and payroll taxes.
You’ll want to have enough cash set aside for general operating expenses that can fun your business in each of these relevant areas for around 90 days if you make no profit. Be sure to have some extra cash on hand as well to cover other miscellaneous expenses.
Contingency
As a general rule of thumb, it’s wise to save and set aside 15% of total capital to cover any unexpected costs.
The success of starting and running a business depends on how well you prepare and anticipate your needs. This list is a good start to what you can expect when opening a restaurant.
Need more help?
Contact ZD Hospitality for a complimentary consultation. ZD Hospitality specializes in what it takes to start and run a successful restaurant. We focus on the key elements needed to begin earning profits within the first 90 days of opening.
In your consultation, you’ll receive an analysis of your business so you can easily identify where you’re struggling and pinpoint measurable ways to address these issues, resulting in more employee engagement and lowered turnover overall.