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Costs for Starting a Restaurant #CRE | Commercial Main N State

Over the past couple years I have been involved with representing retail shopping centers more and more. One of the most common prospect is restaurant prospects. In recent months the calls for start-up restaurants have kicked up. In each call I discuss with the prospect their concept, experience and in the end it comes down to the finances. Many start-ups have big dreams but do not realize the costs involved. Once I have talked through all the financial aspects it is clear if the prospect can afford to move forward or if they can not. Now this vetting is very important for my business as I represent the landlord but it is also very important to the prospect.

Below I have put together a simple table outlining estimated costs for starting a resturant business. This goes for carry out or sit down, though inventory and other aspects may vary. Costs can also vary if you are converting a former restaurant or taking a non-restaurant suite and doing a conversion. The costs are significantly higher in this case.

In the table below for rent, I used an average net rental cost of $20.00 psf per year and additional rent of CAM and Tax of $7.50. Understandably rents can fluctuate from what type of property, location and term of lease you execute.

This table of costs hopefully will assist you as you plan your next restaurant venture. If there are costs outlined here that are not accurate please let me know. I welcome your thoughts and comments regarding the costs to start-up a restaurant.

Estimated Restaurant Start Up Costs1,600 SF Leased Premises

Lease Security Depost (2 months Gross Rent) $7,200
Inventory $15,000
Insurance $7,000
Build-out/Code Compliance Cost $120,000
Fixtures, Equipment & Signs Cost $130,000
Professional Legal Fees (Accounting & Legal) $5,000
Licenses and Permit Fees $4,500
Utilities Deposits and Hook Up Costs $1,500
Other Fixed Start-Up Costs (Website, Mktg, Etc.) $5,000
TOTAL $295,200
Monthly Operating Expenses
Rent Payment – Gross $3,666.66
Inventory $30,000
Wages $7,000
Advertising/Marketing $1,700
Equipment Lease(s) $500
Utilities $2,500
Other Various Expenses $4,500
TOTAL $49,866.66
Kristian Lee (88 Posts)

Kristian is a licensed Illinois Commercial Real Estate REALTOR since 2003 working with small to medium sized businesses locally and nationally as well as owners of real estate from office, retail to industrial at Village Commercial. in Frankfort, IL. Kristian specializes in branding each property he represents through different marketing tactics, boots on the ground and the latest technologies gained from his experience. For each tenant representation assignment he becomes his client's "in-house" broker walking them through the process from initial meeting till occupancy. He is the founder of Commercial Main N State, a blog and VBlog providing tips and market rental trends to small businesses on #CRE. He currently on the Board of Directors of the Mainstreet Organization of Realtors®


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