2 answers
Zaylin
Student
DeKalb, Illinois
3
Questions
Asked
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How much does it cost to open up a restaurant?
If I do go for a career in culinary arts, I would like to know how much money opening up and also maintaining a restaurant would be. I know that the price would be a lot because of rent, bills, employees, furniture, food, and more. But what is an estimate for a small establishment? #Food #Restaurant #Businessowner
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2 answers
Aaron Escamilla
Mining Technology Developer
62
Answers
Gilbert, Arizona
Updated
Aaron’s Answer
Hi Zaylin, this entirely depends on your approach. You can find more affordable ways to begin your culinary business such as hosting e-classes for cooking to bring in revenue this way and then creating a catering business so you only purchase on demand as you try to build your client list. This way you avoid the costs of having a storefront or even a small building to house a restaurant. You could start as small as a trailer and hit farmers markets, shows, etc. This is somewhat of a foodtruck route but some people keep it to a trailer/catering and once they know they have a loyal customer base then they jump into a small restaurant space. You can continue to run both the trailer/catering as your restaurant space starts taking off/is under construction. It's hard to total the amount that way as it's more of a continuous investment but of course over that timeline we're talking thousands of the course of a 5-6 years.
Just from personal experience, you can get quotes on storefront spaces in outdoor strip mall areas, etc. Obviously the nicer the area and high traffic, the more you'll pay month to month for rent. You won't typically be able to full out own the space as much as long term lease it. In a nice area around the Mesa, AZ are you are looking at 3-4k a month for renting the space, then you split the trash and recycling and maintenance of the parking area with all the other storefronts, and then you got to pay your own utilities obviously. Time that by 12 and that would be the year to year minimum operating cost. This is why lots of startups start with the more trailer/catering, build a social media following, structure before going for their first full out restaurant.
As you try to build your culinary business, I will say, many struggling businesses that have storefronts are often willing to come to some agreement to share their kitchen so you can run your catering in the back and ease their month to month cost of rent. I've done this for small baking startups at farmers markets who are needing to meet the growing demands of a growing customer base but don't have the money to afford their own kitchen space just yet.
Just from personal experience, you can get quotes on storefront spaces in outdoor strip mall areas, etc. Obviously the nicer the area and high traffic, the more you'll pay month to month for rent. You won't typically be able to full out own the space as much as long term lease it. In a nice area around the Mesa, AZ are you are looking at 3-4k a month for renting the space, then you split the trash and recycling and maintenance of the parking area with all the other storefronts, and then you got to pay your own utilities obviously. Time that by 12 and that would be the year to year minimum operating cost. This is why lots of startups start with the more trailer/catering, build a social media following, structure before going for their first full out restaurant.
As you try to build your culinary business, I will say, many struggling businesses that have storefronts are often willing to come to some agreement to share their kitchen so you can run your catering in the back and ease their month to month cost of rent. I've done this for small baking startups at farmers markets who are needing to meet the growing demands of a growing customer base but don't have the money to afford their own kitchen space just yet.
Hassan Al
Product Management Professional
398
Answers
Austin, Texas
Updated
Hassan’s Answer
The answer will depend on location and the type of restaurant. Opening something brand new will likely be much more expensive than purchasing an existing one. https://www.loopnet.com/biz/illinois/dekalb-county/restaurants-and-food-businesses-for-sale has several for sale in DeKalb ranging from $38,000 to $1.2M.
According to https://pos.toasttab.com/blog/on-the-line/how-much-does-it-cost-to-open-a-restaurant, the range for a new one is $95,000 to $2M+ and this site give you a list of things to consider. https://www.sage.com/en-us/accounting-software/startup-costs/restaurant/ also has a cost calculator.
https://www.cnbc.com/2016/01/20/heres-the-real-reason-why-most-restaurants-fail.html claims that around 60 percent of new restaurants fail within the first year and and nearly 80 percent close within 5 years. https://www.foodindustry.com/articles/what-is-the-failure-rate-for-us-restaurants/ says that statistic is overstated.
The restaurant business can be very tough and you want to have lots of experience before you open one yourself. I'd suggest you get experience in every position in existing restaurants to understand the jobs and your aptitude. Once you have plenty of experience, you'll be in a much better position to determine if opening or buying on is the right move for you. Also, this gives you the opportunity to save money for startup costs and operating experience that a lender will likely require to provide a loan.
According to https://pos.toasttab.com/blog/on-the-line/how-much-does-it-cost-to-open-a-restaurant, the range for a new one is $95,000 to $2M+ and this site give you a list of things to consider. https://www.sage.com/en-us/accounting-software/startup-costs/restaurant/ also has a cost calculator.
https://www.cnbc.com/2016/01/20/heres-the-real-reason-why-most-restaurants-fail.html claims that around 60 percent of new restaurants fail within the first year and and nearly 80 percent close within 5 years. https://www.foodindustry.com/articles/what-is-the-failure-rate-for-us-restaurants/ says that statistic is overstated.
The restaurant business can be very tough and you want to have lots of experience before you open one yourself. I'd suggest you get experience in every position in existing restaurants to understand the jobs and your aptitude. Once you have plenty of experience, you'll be in a much better position to determine if opening or buying on is the right move for you. Also, this gives you the opportunity to save money for startup costs and operating experience that a lender will likely require to provide a loan.