How much money do you need to open a restaurant?

Successfully opening a restaurant requires tight organization and good control of your budget. The aim: to make your project last as long as possible. Avoid the pitfalls, estimate your budget and do your sums in this article. 

Did you know? AI (artificial intelligence) is an excellent tool for boosting your sales! We explain how👇

What is the average budget for opening a restaurant in France?

In France, the land of gastronomy, the average budget for opening a restaurant is between €150,000 and €400,000. 

In the United States, a restaurant-owner study estimates it at between €175,000 and €2M.

How do you explain this huge discrepancy?

It's simple: it all depends on the restaurant.

Criteria such as size, location and type of establishment have a strong impact on restaurant costs.

In terms of location, for example, Paris is one of the most expensive cities, with rents as high as €569/m², while rents in Bourges can be as low as €150/m². 

On the type of establishment, a foodtruck that sells only takeaway does not require the same expenditure as a gourmet restaurant with a large dining room. 

Another criterion: are you going to rent or buy your premises?

So, to protect your future sales, let's start by estimating the costs of opening a restaurant.

Costs to consider when opening a restaurant 

The rent

First thing to know: the larger the surface, the higher the cost .

Ditto: the more exclusive the location, the higher the price per m2.

This doesn't mean you should go for the cheapest location! Don't forget that an excellent location (close to potential customers) guarantees your future profitability.

When it comes to renting, you have two options: rent or buy. 

According to a Sage Accounting study, the average monthly rent for a restaurant is between €2,000 and €12,000.

In all cases, don't forget to include : 

• The commercial lease ;
• The business ;
• Security deposit ;
• Insurance.

💸 Allow 5 to 10% of your budget each month for rent.

Renovation

Have you found your space? Now it's time to arrange it to welcome the public.

If it's new and already has a fitted kitchen, that's an excellent point.

Otherwise :

• For simple renovations such as painting, flooring or window treatments, you can expect to pay €5,000;
• To install or build a fitted kitchen, expect to pay between €20 and €300,000 ;
• ‍For major works, these costs can double or even triple.

The right thing to do if you have a lot of renovations to plan: plan your budget carefully and stick to it!

💸 Renovating a restaurant can range from €5,000 (paintwork, decoration) to €400,000 (major works), i.e. 20 to 40% of the total budget.

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The equipment

In ascending order, budget for :

• Basic equipment: lighting, bar, seating and tables;
• Essential professional equipment: a professional coffee machine, a piano, a pizza oven, food processors, refrigerators... All tailored to the unique needs of your concept and the ambitions of your restaurant;
• Tableware and decoration. Good news: second-hand is in!

💸 Count on €50 to €150,000 (a one-time investment) or 15% to 25% of the total budget to equip your restaurant.

Payroll costs

These costs start when you open your restaurant and become monthly thereafter.

Personnel costs are often your biggest expense.

Problem: if they're too low, you risk losing service quality. If they're too high, you jeopardize your profitability. 

Be smart: when recruiting in the foodservice sectorcarefully determine your needs, and don't hesitate to use more flexible contracts (extra, freelance).

💸 Generally speaking, salaries in France are : 

• 28 to 50 k € for a salaried manager ;
• 25 to 45 k € for a chef ;
• 21 to 30 k € for front-of-house staff and clerks. 

The cost of food and beverages

Here, it's impossible to give a precise monthly budget. Food and beverage costs vary considerably from restaurant to restaurant. 

The right reflex: estimate all ratios and margins as soon as you draw up your business plan. Average ticket, gross margin, etc.

On the food cost side, expect to pay 25-30% of the price of the dish.

Other potential costs 

Don't forget to budget for the following expenses:

• Energy

Water or electricity bills, utilities... From €80 to €400 per month.

• Technological equipment (monthly costs)

Reservation, payment (POS) and HR software. From €50 to €300 per month.

• Compulsory licenses, permits and training

‍Froma small takeaway license to a license IV, including HACCP training, costs vary! For the (compulsory) business license, expect to pay between €200 and €800 . For license III, €190 to €450, and for license IV, €7,500 to €8,000.

• Communication and digital marketing

‍Indispensablefor promote your restaurantattract customers, generate more revenue and grow your reputation.

💸 It's a good idea to devote 5-15% of your budget to marketing, right from the opening of your restaurant.

Sponsor Instagram posts, arrange press relations, invite influencers to your opening... 

Average budget by restaurant type 

Traditional restaurant

Brasserie, Japanese restaurant... Imagine a restaurant with around 50 seats.

A traditional restaurant generally requires more investment, as it needs a fully equipped kitchen and seating facilities. 

Count on €200,000 to €400,000.

Fast food, takeaways

Fast-food outlets often require less investment.

Often small in size because they don't require a seating area, the emphasis is on speed and efficiency.

Count on €80,000 to €200,000.

Franchise

Thinking ofopening a restaurant franchise?

An excellent idea: franchisees are among the most profitable restaurants in France. 

There are additional costs involved:

• Network entry fees ;
• Royalties ;
• Training costs. 

Of course, it all depends on the franchise, but the budget is often higher than for an independent restaurant.

💸 Count on €150,000 to over €500,000.

How can you finance the opening of your restaurant?

As an entrepreneur, there are a number of ways to help finance your project and mandatory training courses. Public or private funds, grants, subsidies: here we go!

• The bank loan. This is the classic solution. For this, you'll need a solid business plan and a small personal contribution. Or, turn to specific schemes for zero-interest loans;‍
• Assistance for opening a restaurant. There are many: exemptions (ACRE), allowances (ARCE), regional and local aid...‍
• Investors. There are a lot of them in the food world! ‍
• Participatory financing. It is widespread in the world of entrepreneurship: online "crowdfunding", fund-raising...

And don't forget the free training and support available for young restaurateurs.

3 tips to control your budget when opening a restaurant 

Tip 1: Keep 5-10% for hidden costs 

It's not uncommon to underestimate the costs that a large-scale project can entail. Breakdowns, unforeseen events, delays in work or delivery, purchase of additional licenses, the need for reinforcements...

‍Always begenerous with your forecasts.

Tip no. 2: Control your expenses 

Raw materials and payroll (personnel costs) are the two items that can quickly weigh down your projected budget if you have estimated your expenses incorrectly. 

Keep a close eye on your inventory management, and don't hesitate to do some menu engineeringetc.

Tip #3: Think digital marketing

Before investing heavily in your communications, start with the most cost-effective and efficient : digital marketing. Use search engine optimization and social media to attract free customers!

Investing in a digital strategy (local SEO, social media, reviews management) can earn you an average of €3,500 more per month!

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To find out more about what digital marketing brings to restaurants every month, download our infographic below!

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Simply put: opening a restaurant requires meticulous preparation and a well-planned budget. Follow these tips to give yourself the best chance of success!

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