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What to consider when opening a restaurant.

September 27, 2021

Posted in Blog

What to consider when opening a restaurant. Being an entrepreneur can take all types of shapes and forms. Forming a restaurant is one way of being an entrepreneur, but how much money do you need to open a restaurant? And how do you get that money?

Well, that is a complex answer. The type of restaurant that you are opening will determine the amount of money that you need. So you need to evaluate how much of your own money you need to provide, not all of it. But this way, you are literally “putting your money where your mouth is.”

There are a very vast number of types of restaurants and a very vast amount of budgets. If you open a fast-food restaurant with a concept you came up with, you may require a conventional or SBA loan. Fast-casual restaurants typically cost between $250,000 and $400,000 to open the doors for business. The costs of opening a restaurant vary depending on the space’s location, size, and condition. 

Investment costs to consider: 


— Professional fees

These fees are needed to set up your business entity. It is recommendable that you hire a business lawyer.

— Security depositsWhat to consider when opening a restaurant.


This security deposit should be from one to three months of rent paid to your landlord.

— Equipment


The cost of Equipment is one of the most important ones. Your Equipment includes hoods, grills, ovens, stoves, stainless steel prep tables, shelving, hot tables, cold tables, etc. Also, you will need to invest in furniture, fixtures, countertops, workstations, tables, chairs, etc. 

— Start-up inventory


This initial order is for food, paper, drinks, and other supplies that you will need in your restaurant daily. The inventory will be replaced as you use it, but in the beginning, you need to stock your restaurant from scratch. 

— Grand opening advertising


You will need to launch your restaurant with a big splash in the neighborhood; you need the proper budget for advertising and marketing.

— Reserve capital 


This capital is required to meet shortfalls that may occur when you first open your new restaurant. 

It is essential that you understand the actual cost of opening a business. Also, you need to prepare a business plan and projections to secure the bank that will finance your project or satisfy an investor.

Suppose you project a cost of, for example, $400,000 to open your new restaurant. You will need between $80,000 and $120,000 in cash. Your cash investment demonstrates to the bank or investor that you “put your money where your mouth is.”

We are an established and growing law firm specializing in business litigation matters for businesses located in California. Call us now for a Strategy Session. We can talk about how to set up your business without worrying about the underlying legal consequences. We can be reached at (714) 415-2007 or reserve your spot by clicking here.