new restaurant

What Does it Cost to Start a New Restaurant?

May 25, 2021

What Does it Cost to Start a New Restaurant?

Planning is a critical aspect of starting a new restaurant. If you’re looking for investors, you need a detailed business plan. Thus, you must have an extensive idea of the cost of a startup resto. Here are the basic costs you should expect in opening a restaurant.

Location and Space

You can either lease or buy your commercial space. Which one is the most cost-effective? It depends on your capital.

If you’re getting a lease contract, you should have at least 6 months’ worth of deposit. The deposit is refundable.

The rent depends on the location and the size of the commercial space. A location in a primary business area is higher than those located far away from the business district.

Rent computation is based on a square foot. The final decision all boils down to how quickly you can gather patrons and break-even in the next few months after opening.

Don’t forget the down payment. You might need to pay at least 15% of the contract lease.

Decorations and Renovations

The cost of renovation depends on the concept of your restaurant and the condition of the commercial space. Some restaurant newbies prefer space with already existing facilities for cooking and dining. However, many find it costlier than having everything from scratch.

When you’re starting up, focus on getting the essentials such as dining table, kitchen wares, lighting, and the like. You don’t need to buy sophisticated equipment unless it’s part of the concept.

How much cost are we talking about? You could spend as low as $5000 to as high as $100,000 for the renovation and decor alone. Either hire a professional interior decorator or do it yourself. Make sure you have everything covered.

Equipment and Appliances

Your restaurant will need various appliances and equipment for the kitchen, bar, and dining area. The most critical part is getting the most basic tools and equipment.

You wouldn’t want your crew experiencing some issues one the get-go. Remember, you need to make a long-lasting impression on your customers. Thus, you should provide the most essentials. However, it doesn’t mean you have to forgo specialized equipment for your restaurant.

Average costs range from $40,000 to more than $100,000. The exact amount would depend on the concept and other related essentials.


This cost helps you in automating some aspects of your operation. These include POS, scheduling software, reservation tool, and KDS (for the kitchen).

These technologies make your restaurant run smoother. You keep customers happy and earn a break-even (or maybe more) income during the first year.

You would need at least $400 to $1000 to keep an automated restaurant service. Other technologies include a printer, cash drawers.

Licenses and Administration Costs

The law on a license to operate varies from one state to another. So, make sure to check those requirements for a permit. You’ll need this permit to run legally as a restaurant.

Often, the local health unit takes care of the applications. If you serve liquor, you should secure a liquor license. Approval of licenses may take 6 months before you can get them.

License for foodservice costs around 100 to 1000 USD. The liquor license may cost at least $3000 and reach as high as $400,000.

Aside from these permits, you and your crew will need a food handler’s permit, live entertainment, valet parking, building health permit, among others. You should also think of the administration, entity formation, franchise fees if applicable.

During the licensing process, you might need a legal advisor to help you. So, legal fees are also part of the costs.


One of the most important investments for a startup is the marketing cost. You need to increase brand awareness of your product.

Your potential customers don’t know about your restaurant. People may pass by your restaurant (if it’s on a busy street) but they may not know about it.

Use social media, create a website. Any digital marketing would be great. Even if it is a franchise, you still have to advertise.


Aside from the typical cost, Richmond Restaurant Insurance should be your second priority. Serving customers exposes you to many risks. So, protect your business from unwanted incidental costs because of liability.

Since running a restaurant requires high capital, you’d need every protection to survive in the industry. Contact your insurer to get insurance and discover the right combination of policies for your restaurant business.

About Blue Sky Insurance Agency

For over 20 years, family owned Blue Sky Insurance Agency has proudly specialized in insurance and tax services for Virginia residents. Our philosophy is simple: “If you can dream it, we can insure it.” We strive to provide value to our clients by establishing and building relationships and focusing on more than just rates. We are dedicated to providing holistic and strategically tailored solutions to protect all of your assets, and to provide peace of mind wherever life takes you. To get in touch with us, fill out a complimentary quote form, or call us at one of our two locations:

North Chesterfield

Phone: (804) 745-4044

PO Box 35674

North Chesterfield, VA, 23235

Hours of Operation: Mon-Sat 9am-6pm


Phone: (804) 404-2030

9932 Midlothian Turnpike

Richmond, VA, 23235

Hours of Operation: Mon-Sat 9am-6pm