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How to Estimate Restaurant Start-up Costs

Ujwal Deshmukh
Being a restaurateur is one of the most 'in demand' business ideas, and many people opt to start up a restaurant. If you are one of those who want to step into this industry, then here is some information on the factors to be considered while estimating the start up costs.
Opening up a restaurant is not an easy job. There is a lot of planning involved in it. Decide the type of restaurant you would like to open, its location, the number of staff to be employed, kitchen equipment required, the quality of food to be served, and many more things that will constitute your eatery.
It is advisable to assume that the actual costs would be a little higher than what you have estimated, and accordingly, start looking for financing. Taking this into consideration, the following factors would help you in coming up with your estimation.
  • Permits and Licenses: Firstly, you need to obtain the necessary permits and licenses. This is an important prerequisite, in order to avoid legal issues. There would be some legal charges involved which you will have to pay to the state or federal government.
  • Location: The location is the most important factor to be considered, as it is a major cost.
Areas such as elite neighborhoods would obviously be expensive, whereas a working-class locality would be much cheaper. Also, properties in the downtown areas would cost you much more, than those in the suburbs.
  • Construction: Now, that you have decided the location, you also need to decide on the expenses in constructing or renovating the place. The amount of construction materials required, the interior decor, furniture, and the legal permissions involved, all form a part of the construction costs.
  • Marketing: Market surveys, research, and campaigns, all form a part of the marketing activity, and they carry a cost. Outsourcing the contract to a professional marketing agency will cost even more. However, if you do the marketing yourself, it would not cost you as much.
  • Advertisements: To increase the popularity of the venture, you need to advertise it sufficiently. Therefore, cost of advertising also needs a consideration in your plan. The medium chosen will also have an impact on the budget. For example, a local newspaper ad would be a lot cheaper than a TV campaign.
  • Equipment and Security: This includes purchasing the equipment, kitchen tools and accessories, furniture, safety and security measures, and the installation charges. Decide the quality and jot down a brief estimate of the cost.
  • Employee Recruitment and Payments: You cannot go searching for employees by yourself. To ensure that you hire the best people, you need to contact a local recruitment agency. Therefore, the charges of such an agency would also need to be factored in. Further, employee salaries, incentives, and uniforms, also need to be budgeted.
The correct cost estimation, business planning, management, and most importantly, the overall vision make an ideal entrepreneur. So, go ahead with your plans, and see your dream of becoming a restaurateur turn into reality!