What are the Different Types of Restaurant Start up Costs?

Susan Grindstaff

Restaurant start up costs usually cover a wide range of areas, including food inventory, dining room furnishings, and cooking equipment. In addition, if the restaurant is a brand new structure, those costs include building, water and sewer, and the cost of the building lot. If the location for the restaurant is leased, in many cases, property owners require very large deposits and may even require that several months lease be paid in advance.

A set of commercial pots and pans.
A set of commercial pots and pans.

It is usually less expensive to lease a building that has previously operated as a restaurant. This may help defray restaurant start up costs associated with remodeling, expenses which can add up to a great deal of money. Remodeling costs could include adding wiring to support commercial grade appliances, and installing commercial kitchens and customer restrooms. A building that has previously operated as a restaurant would likely have many of these upgrades in place and might only require cosmetic changes.

Table settings and other elements that add to decor are part of a restaurant's start up costs.
Table settings and other elements that add to decor are part of a restaurant's start up costs.

Purchasing kitchen equipment is usually a major expense related to restaurant start up costs. Commercial ovens and ranges are much larger and durable than those designed for residential use, and can cost several thousands of dollars for one unit. In addition, most restaurants need convection style ovens, which cook faster and more evenly than traditional ovens. These ovens are usually much more expensive than ovens that cook with traditional heating elements. In addition to cooking appliances, restaurants usually need expensive walk-in coolers and freezers for storage of food items.

Professional quality kitchen equipment is a major start up cost.
Professional quality kitchen equipment is a major start up cost.

In most cases, restaurants have to follow very strict health guidelines, many of which concern how cooking and eating utensils are cleaned. This can require the purchase and installation of commercial grade dishwashers. These dishwashers are designed to hold a large number of items and sterilize the utensils as they are being cleaned. In addition, in most cases, the kitchens must be equipped with several deep sinks for cleaning utensils, foods, and other supplies.

A restaurant should have enough capital to pay staff wages when starting out.
A restaurant should have enough capital to pay staff wages when starting out.

Dining room furnishings and décor can be a huge part of restaurant start up costs. This area is typically the first thing the customer sees, and most of the time, creating a good impression in the dining area is the first step toward pleasing the customer. This could include expenses such as hiring an interior designer and purchasing tables, chairs, and eating utensils.

Major restaurant expenses include employee wages, benefits, and other labor costs.
Major restaurant expenses include employee wages, benefits, and other labor costs.

Other items that generally play a part in restaurant start up costs include food inventory, cash registers, and staff uniforms. In addition, restaurant owners will need at least two types of insurance. Typically, they will want to insure the restaurant and the contents against fire, flood, or theft. They will also often be required to purchase liability policies to cover both employees and customers in the event of accident or injury while on the premises.

The start-up costs at an elegant restaurant often cover silver flatware and serving pieces, as well as high-quality linens.
The start-up costs at an elegant restaurant often cover silver flatware and serving pieces, as well as high-quality linens.

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