Restaurant startup costs : 7 expenses you shouldn’t forget!
Whether you’ve got a passion for gourmet food or are looking for a lucrative startup idea, opening a restaurant is an enticing opportunity. But, as with any business, if you’re looking for success you need a good grasp on your finances. Understanding restaurant startup costs before you dive in is a smart move for any budding entrepreneur.
How much will setting up a restaurant cost? What financial solutions are best for tracking your costs as a startup? Should you be thinking of permits and licences now?
One of our key aims at SumUp is to help startups gain the financial knowledge they need to run a thriving business, and that all begins with the initial costs.
To get started, we’ve put together 7 restaurant startup costs and expenses you shouldn’t forget before opening night.
1. Creation costs
Creation costs are the expenses you’ll see when turning the idea of your restaurant startup into a reality.
If you hire a professional to help you write a business plan, for example, that’ll be classed as a creation cost. Or, if you decide to write the plan for your restaurant yourself, you might use a paid-for template which, though small, will also be considered as part of your restaurant startup cost.
Most entrepreneurs carry out thorough market research before opening their restaurant startup, too. You might pay for online surveys or outsource the work to a third party, all of which incur fees.
Don’t forget details like trademarking your restaurant name, opening up business accounts, and any processing fees involved in legally setting up your restaurant.
2. Commercial premises
Once the basic details of your restaurant startup are defined, it’s time to find a suitable commercial premise to start attracting customers for your opening night.
You have two options when choosing a commercial premises: rent or mortgage.
These will be ongoing costs for your restaurant either as rent payments to your landlord or as mortgage payments to your lender.
How much your premises costs will vary depending on your location, the size of your space and the condition it’s in when you sign the contract.
If you buy your building, don’t forget additional startup costs including stamp duty, legal fees and ongoing taxes.
Rental buildings may come with fewer extra costs but be prepared for building restrictions and contract renewals.
Before choosing which option is right for your restaurant, take time to consider the pros and cons of each.
3. Personnel costs
Hiring staff is essential for any restaurant startup. This will be a pretty substantial cost so be sure to factor it into your startup costs before opening.
In the UK, take a look at the national minimum wage to get a better idea of how much you’ll be paying your staff. Remember, too, that jobs like head chef or restaurant manager will require higher pay if you want to retain top talent.
It’s a good idea to do some research on how much your competitors are paying for similar roles. Not only will this help you finalise a fair wage for your team, but it could also give your restaurant startup the chance to edge out competition with a slightly higher salary.
Don’t forget all the little extras for onboarding new team members, either. From restaurant uniforms to employer’s liability insurance, remember the details for an accurate idea of your costs.
4. Advertising and communication
When opening a restaurant, you can start to cover some of your costs by getting customers through the door. That’s why marketing is one of the key expenses on your list that’ll bring a return on investment (ROI).
To keep things simple, outsource your entire restaurant marketing and communication strategy to a third party.
You’ll have a set ongoing cost (usually monthly) and a team of professionals working hard to drive diners to your restaurant.
Our free Business Account helps you manage your restaurant’s repeat payments with ease. With no sneaky fees, you can take control of your startup finances and schedule payments to your partners.
5. Material investments
No restaurant opening is complete without tables and chairs. When building your startup, put aside money to cover the cost of material investments, including:
Kitchen equipment and appliances.
Don’t forget to invest in technology to make your service seamless.
Digital devices are a must-have for modern startups. For example, a SumUp card reader enables contactless payments quickly and securely so that your restaurant can welcome cashless diners.
To get a better idea of how much you’ll need for material furnishings, start with a predicted budget.
Use online prices and quotes to estimate how much each item will be before working out how much you can afford to spend and the volume of orders.
6. Stock of goods
If you’re going to earn money from opening a restaurant, your startup will need a stock of goods to offer your customers. What ingredients do you need to bring your menu to life?
When it comes to costs, consider the number of guests you’ll serve on opening night and how much food they’ll eat. Market research will give you a more accurate idea.
Get started by:
Finding people in your startup’s target audience before opening night
Asking which dishes they’d choose to eat from your restaurant menu
Using the answers as a rough indicator of order quantities
After opening your restaurant, you can begin to build up a better idea of the stock you need. Using the SumUp POS system, you can track dishes being ordered and predict future favourites, ensuring you buy based on demand.
7. Permits, licenses, and training
Restaurant startups are strictly regulated in the UK. Make sure you have the budget to comply with the law and secure the required permits before opening.
Your restaurant will need a variety of licenses and permits, some of which have application fees and ongoing costs.
Begin your research by looking into:
Food business registration
Food premises approval
Don’t forget staff training costs, too. From your chefs to your restaurant servers, your team is likely to need training either by hired managers or by an outsourced company.
8. Financing solutions
Managing your restaurant expenses marks the perfect time to look into financing solutions.
These make it easier to manage your money and keep track of your costs, saving you time before and after the opening of your restaurant.
At SumUp, we have a range of finance tools designed for small business owners and startups. We recommend POS for restaurants as an all-in-one system to optimise your processes. The SumUp POS Pro can:
Take and manage customer orders.
Accept card and contactless payments.
Manage restaurant tables on-screen.
Enable easy menu editing.
Organise restaurant reservations.
Communicate between the kitchen and front-of-house.
Ensure tax compliance.
More than just a financial tool, the SumUp POS Pro helps you maintain consistent, high-quality service throughout your restaurant. Book a free POS demo today to learn moreBook a free POS Pro demo
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