Restaurant Startup Costs: A Line-by-Line Budget
Updated 2026-11-10
Short answer: Published startup ranges for a new restaurant run from $95,000 to over $2 million, and most small restaurants spend around $275,000 to open (The Restaurant HQ). Our full-service template budgets $427,000, of which $130,000 is a cash reserve for the months before sales catch up. The two lines owners underestimate most are build-out and that reserve, not the kitchen equipment.
What the budget looks like
The table sets published ranges (reported by The Restaurant HQ, which cites the National Restaurant Association and supplier prices without linking them) next to the defaults in our restaurant financial projection template. The template defaults are a starting point for a full-service restaurant, not a quote.
| Line item | Low | Typical (template default) | High |
|---|---|---|---|
| Kitchen equipment, furniture, fixtures | $15,000 | $130,000 | $80,000+ |
| Build-out and renovation | $100 per sq ft | $120,000 | $800 per sq ft |
| Deposit and first month's rent | about $6,000 | $17,000 | about $20,000+ |
| Licenses, permits, legal | $700 | $8,000 | $15,000+ |
| Opening inventory | $5,000 | $12,000 | $35,000+ |
| Marketing and training before opening | $350 | $10,000 | $20,000+ |
| Technology (POS, software) | $3,000 | inside the $130,000 above | $10,000 |
| Insurance paid up front | $2,000 | monthly cost in the template | $8,000 |
| Working capital reserve | none set | $130,000 | six months of operating costs |
| Total | $95,000 | $427,000 | $2,000,000+ |
Notes on how to read the table:
- The deposit row is two months of the published rent range ($3,000 to $10,000+ a month), calculated here, because the source gives rent by the month.
- The template's $130,000 for equipment, furniture and POS hardware is above the published $15,000 to $80,000+ range. It prices a full-service line and dining room. If you are leasing a former restaurant with a hood and walk-in cooler already in place, your number can be far lower.
- The template's $120,000 build-out is $60 a square foot at 2,000 square feet, below the published $100 to $800 per square foot. Use it only for a second-generation space. For a bare shell, multiply the per-square-foot range by your own square footage and get a contractor's bid.
- Insurance sits in the template's monthly costs ($650 a month) rather than in startup costs. Many insurers want a deposit or the first payment up front, so check the cash you need on day one.
What owners forget
The cash reserve. The Restaurant HQ recommends setting aside six months of operating expenses plus 10% of revenue for contingencies. Our template's monthly payroll (with 14% payroll burden) and fixed costs total about $48,700 before food cost, so the $130,000 reserve covers roughly 2.7 months of those costs before sales offset them. If your ramp-up is slow, the reserve is the line that runs out first. After you enter your numbers, check the lowest cash balance on the Annual tab and raise the reserve until it never goes negative.
Deposits and first-month costs. Landlords commonly ask for a security deposit plus first month's rent, and some also ask for last month's rent or a personal guarantee. Utilities may ask for deposits too.
Permits that vary by city. The published range for permits and licenses is $700 to $15,000+, a 20-fold spread, because health, fire, liquor and signage rules differ by city and state. Call your city and county offices for a list before you set this line.
Hiring and training. The Restaurant HQ puts staffing costs at about $1,200 per employee. Staff need to be on payroll, and training, before the first paying guest.
Labor and food cost once you open. For the operating side, the National Restaurant Association reports a median labor cost of 36.5% of sales for full-service restaurants and 31.7% for limited-service in 2024 (NRA). Restaurants that reported a loss ran higher, at a median of 42.9% for full-service. A projection with labor well under 34% should have a reason behind it.
How to fund it
Most restaurants combine owner cash with a loan. The SBA 7(a) program lends up to $5 million and allows proceeds for equipment, furniture and fixtures, working capital, and improving buildings (SBA). For equipment with a useful life of 10 years or less, the maximum loan term is 10 years; real estate can go to 25 (13 CFR 120.212).
For a start-up, SBA's current procedures (SOP 50 10 8, effective June 1, 2025) require at least a 10% equity injection of total project costs, as summarized by Whiteford law firm. Many lenders want more, and they will also look at collateral, your experience and your credit. Confirm current rules with your lender.
Our template's default mix is $90,000 of owner cash (about 20% of the money raised) and a $350,000 loan at a placeholder 10.5% over 10 years. That works out to about $4,720 a month, or $56,700 a year, in loan payments. Replace the rate with a real quote, then test the result in the DSCR calculator and the loan payment calculator.
Other sources worth pricing: equipment financing or leases for the kitchen (the equipment is the collateral, which can reduce the down payment you need), landlord tenant-improvement allowances, and used equipment auctions. Each changes the Sources and Uses page, not the total cost.
How startup costs flow into a 5-year projection
Each startup line lands in a different place in the model:
- Equipment, build-out and fixtures ($250,000 in the template) are capitalized and depreciated over their useful lives (7 to 10 years in the template). That is roughly $30,600 a year of depreciation on a straight-line basis, which lowers taxable income without using cash.
- Deposits, inventory, permits and pre-opening costs are cash uses at opening. Some of them (like pre-opening marketing) are expensed in year 1, which makes year 1 profit look worse than the cash picture.
- The working capital reserve is not an expense. It stays in the bank, and year 1 losses draw it down. This is why the lowest monthly cash balance matters more than year-1 net income.
- The loan adds interest to your expenses and principal to your cash outflows each year. In the template, year 1 interest is about $35,800 and principal about $20,900.
The five-year view then shows whether sales, after food cost, labor and rent, cover that debt service. Lenders usually express that as a debt service coverage ratio. If year 1 or 2 fall short, the fix is usually a larger reserve or a smaller loan, not a rosier sales line.
Next step
Enter your own rent quote, menu prices and staffing plan into the restaurant financial projection template, then read the lowest cash line on the Annual tab. If it dips below zero, raise the working capital reserve before you take the plan to a lender. This guide is general information; check the numbers with your lender and accountant.