Restaurant Economics
How Much Does It Cost to Open a Restaurant?
What it costs to open a restaurant depends most on the space you take: in the best survey available, a ground-up build cost more than twice as much as taking over an existing restaurant. A line-by-line startup checklist, a budget sheet for your own quotes, licenses to plan for, and how restaurants fund an opening.
What it costs to open a restaurant depends most on the space you take. The best survey we could find, of RestaurantOwner.com members reported in 2018, put the median at about $375,000: around $275,000 to take over an existing restaurant, and around $650,000 to build from scratch. Costs have risen a lot since then, so read them as a dated starting point that is likely low for today. Below: what moves the total, a line-by-line checklist, a budget sheet for your own quotes, licenses to plan for and how restaurants fund an opening.
What drives the total: the space you take
The figures below are medians from a survey of RestaurantOwner.com members, as reported by the trade publication Restaurant Dive in November 2018. They are the most specific figures we could trace to an actual survey.
| Type of space (survey reported 2018) | Median cost to open | What usually makes the difference (our explanation) |
|---|---|---|
| Existing restaurant space | about $275,000 | Kitchen services, ventilation and often some equipment are already in place |
| Space that was not a restaurant | about $425,000 | You add the kitchen, ventilation, plumbing and restrooms |
| New construction | about $650,000 | You pay for the building as well as the build-out |
| All respondents | about $375,000 |
The restaurants surveyed were fairly large: a median of 120 seats and $1.1 million in annual sales. A smaller place will usually cost less, and a bigger one more.
Two more warnings before you use them. They were reported in 2018: since then the National Restaurant Association estimates that a typical restaurant's running costs rose 36% between 2019 and 2026. And they are medians: half of the restaurants spent more. Use them to understand the shape of the decision, then build your own number from quotes.
A dining room with tables and chairs wrapped in plastic during renovation
Restaurant startup costs, line by line
Every opening budget is built from the same lines. Get at least one written quote for each before you sign a lease.
| Cost line | What goes in it |
|---|---|
| Lease deposit and early rent | Security deposit, first months of rent, any rent you pay during the build before you can open |
| Build-out and renovation | Construction, ventilation hood, plumbing, electrical, grease trap, restrooms, flooring, architect and contractor fees |
| Kitchen equipment | Ranges, ovens, fryers, refrigeration, dishwasher, prep tables, smallwares |
| Furniture, fixtures and decor | Tables, chairs, bar, lighting, signage, tableware |
| POS, tech and phones | Point-of-sale system, card readers, networking, music, a website |
| Licenses, permits and professional fees | Business registration, permits and inspections (below), legal and accounting fees |
| Opening inventory | Food, drink and supplies to open the doors. Our food cost calculator shows what each dish should cost you |
| Pre-opening payroll and training | Paying your team to train and run practice services before you take money |
| Marketing before launch | Signage, a Google Business Profile, opening events, early promotion. See our guide to restaurant marketing |
| Working capital | Cash to cover running costs until sales do. Our guide to restaurant profit margin shows how thin the margin usually is once you are open |
The same survey gives one useful figure for a single line: median pre-opening and training costs of about $12,000 for limited-service restaurants, $20,000 for bars and $25,000 for full-service restaurants.
Build your opening budget
Fill in the quotes you have. Leave a line blank if it does not apply. This sheet only adds up your figures; it does not guess any for you. Nothing is sent anywhere.
Add your first quote above and the total will build here.
A commercial kitchen with stainless steel equipment
Licenses and permits to budget for
The exact list depends on your state, county and city, so the costs vary too much to give one figure. Most restaurants need some version of:
- Business registration with your state, and a federal tax ID (EIN).
- A food service or food establishment permit from the local health department, which usually follows a health inspection.
- Food handler or food manager certification for you and your staff.
- A building permit and certificate of occupancy for the build-out, and a fire department inspection.
- A sign permit for exterior signage.
- A liquor license, if you will serve alcohol. In some states the number of licenses is capped, which can make them slow and expensive to get, so check early.
- A seller's permit to collect sales tax, if your state has one.
Start with your city or county business office and health department. The SBA's guide to applying for licenses and permits explains how federal, state and local requirements fit together.
How to lower your opening costs
- Take over a former restaurant (a "second-generation" space). In the survey reported in 2018 it was the cheapest of the three options by a wide margin.
- Lease or buy used equipment for anything that does not need to be new, and get it inspected before you buy.
- Open with a short menu. Fewer dishes means less equipment, less inventory and faster training.
- Phase the build-out. Open the dining room and kitchen first; leave the patio, the private room or the second bar for later.
- Test the concept first with a pop-up, a farmers' market stand or a food truck before committing to a long lease.
- Negotiate the lease. Ask for a rent-free period during the build-out and a contribution from the landlord toward improvements. A landlord will not always agree, but it costs nothing to ask.
A lease agreement and pens on a wooden desk
How restaurants fund an opening
Most openings combine several sources. What each one asks of you:
| Source | What it involves |
|---|---|
| Your own savings | No repayments or partners, but your own money at risk. Lenders will want to see how much you are putting in yourself |
| Partners or investors | Money in exchange for a share of the business and a say in it. Put the terms in a written agreement |
| SBA 7(a) loan | Made by a bank or other lender and partly guaranteed by the SBA. Up to $5 million; can pay for working capital, equipment, furniture and real estate. You must show you cannot get the credit on reasonable terms elsewhere |
| SBA 504 loan | Long-term, fixed-rate financing for major fixed assets such as buildings and large equipment, arranged through a Certified Development Company with a bank. Cannot be used for working capital or inventory |
| SBA microloan | Up to $50,000 (the SBA says the average is about $13,000) through nonprofit intermediary lenders. Can pay for equipment, inventory and working capital, not real estate |
| Equipment finance or leasing | Spreads the cost of kitchen equipment over time; the equipment itself often secures the loan |
Loan terms, rates and eligibility change, and every lender sets its own conditions, so check the current details on sba.gov and with lenders directly. An accountant who works with restaurants can help you compare offers. Nothing on this page is financial advice.
Sources
- Kristine Sherred, "Survey: Restaurant remodels still cost less than building from the ground up", Restaurant Dive, November 16, 2018: RestaurantOwner.com member survey medians for startup cost by type of space, pre-opening and training costs, and time to profitability.
- National Restaurant Association, "Elevated costs continue to pressure restaurant profitability" (July 8, 2026): total restaurant expenses up 36% between 2019 and 2026.
- U.S. Small Business Administration: 7(a) loans, 504 loans, microloans and apply for licenses and permits (checked October 11, 2026).
Frequently asked questions
How much does it cost to open a restaurant?
There is no reliable current national figure. The best survey we could find, of RestaurantOwner.com members reported in 2018, put the median cost at about $375,000: about $275,000 to take over an existing restaurant space, about $425,000 to convert a space that was not a restaurant, and about $650,000 to build from the ground up. Costs have risen considerably since, so treat them as a dated starting point, likely low for today, and build your own budget from real quotes.
What is the cheapest way to open a restaurant?
Take over a space that was already a restaurant. In that survey, remodeling an existing restaurant space had the lowest median cost of the three options, about $275,000, against about $650,000 for new construction, most likely because the kitchen ventilation, plumbing, grease trap and much of the equipment may already be there. Leasing or buying used equipment and opening with a short menu also keep the first bill down.
How much working capital do I need to open a restaurant?
Enough to pay your running costs until sales cover them, plus a cushion. Work out your monthly running costs (rent, payroll, utilities, insurance, loan payments and the rest), then decide how many months to hold in reserve. In the survey reported in 2018 a quarter of new restaurants were profitable within two months, another quarter needed a year, and the survey says nothing about the other half or about restaurants that had already closed. So plan for a slow start, and do not treat a year as the worst case.
How long does it take a new restaurant to become profitable?
It varies widely. In the RestaurantOwner.com survey reported in 2018, a quarter of respondents reached profitability within two months and another quarter needed a year. The survey does not say how long the other half took, and restaurants that had already closed were not asked. Your own timeline depends on your costs, your location and how quickly you build regulars.
Do I need a business plan to open a restaurant?
If you are borrowing, almost certainly: lenders want to see one, and the SBA lists a feasible business plan among the eligibility standards for its 504 loans. Even if you are self-funding, writing down your budget, your expected sales and how long your cash lasts is the cheapest way to find a problem before you sign a lease.