How Much Does It Cost to Open a Restaurant? [Restaurant Startup Costs]

Ryan Gromfin

Ryan GromfinAuthor

Getting your restaurant idea out of your dreams and into the real world is a challenging project, but it can also be incredibly rewarding. As with most big decisions in life, the question after “How do I open a restaurant?” is “How much does it cost to open a restaurant?

There are a lot of startup costs to consider and dozens of variables, which makes it a challenging question to answer. But in this guide, we'll review all of the restaurant startup costs you will need to prepare and budget for, and you can use our customizable restaurant opening calculator to find out the specifics for your business.

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How much does it cost to open a restaurant?

How Much Does It Cost to Open a Restaurant [Average Cost 2023]

Depending on your rent, furniture choices, and how you’re renovating your space, total restaurant startup costs can range from $95,000 to over $2 million. 

Restaurant Opening Cost by Square Foot

For the space alone, according to collaboratemeetings.com, you can expect to pay around $200-$500 per square foot – but this can vary widely depending on your location and whether you choose to rent or buy. For a restaurant operating out of hundreds or even thousands of square feet, that number can add up quickly.

If you’re looking to rent, thestorefront.com reports that restaurants can expect to pay between $3,500 and $10,000 monthly on rent, using Toronto as an example. 

If you’re looking to purchase a 1,500-square-foot restaurant that’s going out of business with all furniture, fixtures, and equipment, you could be looking at the lower end of our $175,000 to $750,000 range. On the other hand, building a restaurant from the ground up will cost exceedingly more, with the cost to build adding to the total - not to mention equipment, furniture and decor.

Remember, these are just ballpark costs to open a restaurant – there are many variables involved, and these numbers can change from business to business. Keep in mind that it's wiser to use an equation – or a custom restaurant opening calculator – to figure out your anticipated costs based on your specific scenario and concept. 

Your individual restaurant business plan also plays an important part here, so make sure you have that squared away. 

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Restaurant Business Plan Template

No matter where you’re at in your restaurant ownership journey, a business plan will be your north star. Organize your vision and ensure that nothing is overlooked with this free template.

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What Restaurant Startup Costs You Can Expect

There are many variables involved in opening a restaurant — there is no one size fits all answer to how much you can expect to pay. But having a thorough understanding of the areas where you intend to spend your money will offer you more clarity on final expected costs.

Failing to plan properly is the best plan for failure. When starting out, you and your team should take the necessary time to plan your course — which includes knowing how you’ll pay for every aspect of starting your restaurant. 

By nature, restaurants work on very small margins and have many moving parts, so if you start with a poorly designed layout, you may lose thousands in additional labour and lost customers. An uncomfortably seating area will discourage people from lingering and ordering a second drink. Spotty construction and poor equipment choices can cost you twice as much down the road.

Here are some of the biggest restaurant startup costs and restaurant expenses you can anticipate.

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Restaurant Startup Costs Breakdown

Use this restaurant startup costs checklist to get you going as you begin budgeting for your new project.

1. Utilities

While you won’t be fully operational during your restaurant’s buildout, utilities such as gas, water, and electricity need to be. Restaurant utility costs can add up quickly: according to Direct Energy, restaurants in Canada spend 3-5% of their total operating costs on energy. 

Energy consumption in restaurants can be broken down by area: 

  • Food Preparation: Approximately 35%.
  • HVAC: Heating and cooling use up to 28%.
  • Sanitation: Sanitation and water usage is responsible for around 18%.
  • Lighting: Lighting takes up to 13%.
  • Refrigeration: Keeping your produce chilled uses up to 6%.

Price Range: Calculate utilities at 3-5% of your total operating costs; expect the higher end if your restaurant is larger in size. 

2. Location

One of the most important decisions you’ll have to make when opening your restaurant will be its location.

Generally speaking, it's wise to spend the money on a better location that has good foot traffic, rather than have to rely solely on marketing to drive guests into your restaurant.

Depending on your concept, you might also be in a position to consider a few different options:

  • Building from the ground up and investing in new construction

  • Opening in an existing building and purchasing an operating restaurant

  • Converting an existing commercial space to a restaurant space

Each of these options have their pros and cons and will dramatically affect your upfront costs — there are no right or wrong answers here — but with diligent research, you can make an informed decision on which option is best for you.

3. Interior Finishes and Equipment

This is where all the little things start to add up. You know that you need kitchen equipment and large kitchen appliances. Your restaurant will also need furniture and decor to bring your brand to life for your guests. And don't forget the back-end requirements like signage, lights, a music system, and a phone system.

It's easy to get carried away here, so careful budget planning is essential to controlling your opening costs. The biggest driver of the price range here is kitchen equipment and furniture, largely depending on the size of your kitchen and dining room, respectively.

Price Range: According to Ownr, you can expect an average of $50,000 for furniture and $43,000 for kitchen equipment. 

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Restaurant Business Plan Template

No matter where you’re at in your restaurant ownership journey, a business plan will be your north star. Organize your vision and ensure that nothing is overlooked with this free template.

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4. Pre-Opening Expenses

Everything needs to be ready to go the second you unlock the doors for your restaurant's grand opening.

You'll need to invest in a proper training program to ensure your staff is ready and efficient. You'll also need to have plenty of inventory ready in your back of house and freezer to get you through your opening period. This inventory includes food, plates, drinks, cups, water pitchers, and whatever items will help you create an exceptional guest experience.

Price Range: $18,750 on kitchenware and $12,500 on opening inventory

5. Marketing

This section is contingent on exactly what kind of restaurant you're running. If you open up a franchised location, your advertising may be taken care of. But a new restaurant in a saturated market might require heavy advertising and promotional costs across various channels and outlets.

If you're opening an upscale restaurant in a busy city, you might work with a PR agency to get coverage, or you might be approached by a news outlet for details on a story about the restaurant.

You can also start with harnessing the power of social media — and once you’ve got a growing customer list, venture into email marketing.

Like every other variable in opening a restaurant, the cost of marketing and PR depends on your concept, your competition, and other factors that only you, as the restaurant owner, will know.

Price Range: 3 - 6% of sales 

6. Capital and Contingency

Even if your restaurant becomes a hit, it will still take some time to get things up and running. You need to plan for gradual sales growth and realize that your customers will take a while to become regulars. Put aside some much-needed capital and contingency funding for your restaurant to get you through at least six months of unpredictable or low sales volume.

Price Range: $20,000-$250,000

7. Exterior Finishes

The restaurant shouldn't just look spectacular on the inside. If you have any control over the exterior of your building, you may want to make investments in outdoor design, lighting, and landscaping. And if you have an outdoor dining space, you’ll definitely want to make the most of it during spells of warmer weather.

Even without control over the exterior, you’ll still need signs outside of your restaurant to let your new guests know that you're open for business.

Price Range: $150-$55,000 with the possibility of additional planning permit costs.

8. Organizational and Development Costs

This is probably everyone's least favourite part of opening a restaurant, but it’s one of the most important. You'll definitely need to file and pay for your restaurant licenses and permits, make your insurance deposits, and make utility deposits for gas, electricity, and water.

This might take up time as much as it does money, so start brushing up on the necessary licenses and permits you’ll need to open your restaurant.

Price Range: Approximately $1,000 - $3,000 for yearly licensing and insurance, depending on your location.

9. Professional Services

First-time restaurant owners likely shouldn't dive in without some helping hands. A restaurant consultant — not to mention expert advice from professionals like architects, lawyers, and designers — would be wise to invest in for a strong start and opening of your restaurant.

Price Range: $0- $70,000 can be ballparked depending on whether you use professionals. 

10. Technology

Your technology stack will allow your restaurant to run smoothly. All restaurants need a restaurant point-of-sale system, and — depending on your concept — you'll likely need other features and technologies to help your restaurant go off without a hitch.

Full-service restaurants might want a handheld POS system to turn tables faster, and quick-service restaurants might want a kitchen display system and performance metrics to unleash business insights. You can learn more about each here.

Price Range: Get a Quote

11. Food Cost

As this is literally the bread and butter of your restaurant (pun intended), you’ll want to ensure that you have everything needed for a successful opening. Running short of food items — especially in the beginning — sets the wrong impression with guests. In addition, a well-stocked inventory guarantees that the back of the house has everything they need for seamless service. As with everything, the average food cost per month will vary, depending on the type of cuisine and menu offerings. 

Price Range: $12,500 is the typical food cost for restaurants opening in Canada.

Bonus Cost: Franchise Fees

Clearly, this cost doesn't apply to you if your restaurant isn't part of a franchise, but if it is, be ready to write a hefty check. Here’s a list of average franchise fees for popular U.S restaurant chains:

  • McDonald’s: Willing to invest $700,000 of non-borrowed funds

  • Tim Horton’s: $25,000 - 50,000 franchise fee

  • Mary Brown’s Chicken: $30,000 franchise fee

  • Pizza Pizza: $150,000 franchise fee

  • Subway: $15,000 franchise fee

*Data collected in November of 2023 and subject to change. 

Assembling Your Restaurant Startup Dream Team

We all know that restaurants tend to fail when they are underfunded. Under capitalization will make an already challenging business more difficult to keep afloat. In order to avoid the pitfalls, you have work with professionals every step of the way. Here is a list of trades and professionals that you should consult as you plan to open your restaurant:

  • Real estate agents

  • Attorneys

  • Accountants

  • General construction contractors

  • Marketing firms

  • Architects

Enlisting the help of professionals like the ones above will ensure that you’re doing things right. If possible, seek out professionals that have experience working specifically with restaurants.

Open a Restaurant without Closing Your Bank Account

Before making the big decision to open a restaurant, calculate how much capital you have to spend and how much you're willing to allocate to each area. For example, you might want to spend more on renovations than advertising.

Budget smart and try to be precise as possible. While you could end up spending way more or much less than you had planned, starting a restaurant with a reasonable, well-considered budget will better set you up for success.


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