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Industry Survey: How Much Does it Cost to Open a Restaurant?

Our members are always asking, "How much does if cost to open a restaurant?"

As part of our ongoing effort to answer this question, we responded by asking each of our members to share their unique experiences with regard to their startup costs. We received more than 700 responses from a variety of restaurants. Of course no two restaurants are the same, and the cost per square foot to open a restaurant varies greatly depending upon a litany of factors such as service style, decor, size, and location. Nevertheless, we were able to uncover a number of statistics that can be useful when planning your startup.

In an earlier survey, "How Independent Operators Finance Their Restaurants", the focus was on the various methods that restaurateurs employed to raise money for their startup, irrespective of service style, theme, size, or location. This segment of our Industry Surveys reveals more detailed statistics.

The report below shows the collective responses for all respondents. While this information is beneficial, more meaningful comparisons can be made by reviewing the results of only those restaurants that more closely resemble your own concept. To help you, we have filtered the responses and prepared summary reports for the following areas:

Service type (full service, limited service, bar, etc.)
Geographic region
Tenant space vs. Free-standing building
New construction vs. remodel

We have other tools to help you determine the cost of opening a restaurant. They include:

Survey Summary - All Respondents
Sales-Investment Results Lower Quartile Median Upper Quartile Average # of Respondents
Annual sales $425,000 $950,000 $1,375,000 $1,172,629 680
Sales per sq. ft. $170 $286 $433 $355 679
Sales per seat $5,278 $9,106 $13,750 $10,534 673
Annual profit-$ $12,813 $52,000 $130,000 $91,103 665
Profit-% 2.5% 8.0% 12.0% 6.5% 665
Sales to Investment Ratio (no land purchase) 1.7 to 1 2.9 to 1 5.0 to 1 2.3 to 1 489
Sales to Investment Ratio (with land purchase) 1.1 to 1 1.8 to 1 3.6 to 1 1.7 to 1 138
Annual return on investment (ROI) 4.5% 17.6% 40.0% 33.5% 611
# of months it took to become profitable 1 6 24 18 440
Cost Estimates Lower Quartile Median Upper Quartile Average # of Respondents
Total startup cost (no land purchase) $125,000 $275,000 $550,000 $494,888 489
Total startup cost (with land purchase) $175,000 $425,000 $925,000 $735,326 138
Startup cost per sq. ft. (no land purchase) $45 $95 $173 $159 488
Startup cost per sq. ft. (with land purchase) $64 $131 $234 $178 138
Startup cost per seat (no land purchase) $1,418 $3,046 $5,571 $4,244 482
Startup cost per seat (with land purchase) $1,808 $3,734 $7,315 $5,452 138
Cost overrun compared to budget 0% 15% 45% 33% 626
Construction cost-$ $49,500 $140,000 $350,750 $279,807 547
Construction Cost-% of Overall Startup 29% 47% 64% 47% 547
Construction cost per sq. ft. $19 $50 $91 $72 532
Construction cost per seat $500 $1,452 $2,943 $2,126 539
Kitchen & bar equip. cost-$ $30,000 $75,000 $150,000 $115,655 569
Kitchen & bar cost per sq. ft. $43 $88 $150 $136 564
Land & building cost-$ $25,000 $125,000 $400,000 $406,657 138
Space Requirements Lower Quartile Median Upper Quartile Average # of Respondents
Total sq. ft. 2000 3200 5000 3945 723
Kitchen sq. ft. 500 900 1375 1051 722
Kitchen % of overall sq. ft. 20% 28% 38% 29% 721
Total # seats 62 100 170 140 716
Sq. ft. per seat 26 31 39 34 414

 




Printer-Friendly Format
·  Audio: What Every Operator Should Know About Restaurant Construction
·  Survey Results: How Independent Operators Finance Their Restaurants
·  DOWNLOAD: Restaurant Leasing Checklist
·  How to Create Realistic Financial Projections for Your New Restaurant
·  DOWNLOAD: Sample Restaurant Business Plans
·  How to Create a Winning Restaurant Business Plan
·  DOWNLOAD: Restaurant Business Plan Financial Models
·  DOWNLOAD: Restaurant Business Plan Template
·  How to Prepare a Restaurant Business Plan: Financial Section
·  DOWNLOAD: Restaurant Startup Checklist