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Starting a restaurant can cost anywhere from £200,000 to £1 million on average, depending on your concept, location, size and whether you’re building from scratch or taking over an existing space.
Smaller quick-service restaurants or food trucks may open for between £150,000 and £300,000, while full-service restaurants in major cities like London can quickly exceed £500,000 when you factor in buildout, equipment, staffing and operating reserves.
This guide covers restaurant startup costs by restaurant type, key expense categories, ongoing monthly costs, and how to create a practical restaurant startup plan.
Startup costs by restaurant type
Restaurant startup costs vary significantly depending on your concept, service model and location. Below is a breakdown of common restaurant types and their estimated startup costs in the UK, along with what those costs typically include.
Quick-service restaurant costs (£200,000–£300,000)
Quick-service restaurants (QSRs), such as sandwich shops, burger counters or doughnut stands, typically have lower startup costs because of smaller footprints, streamlined menus and limited table service.
Expenses usually include lease deposits, basic kitchen equipment, limited dining furniture, POS setup, initial inventory and staff hiring and training. QSRs often operate in high-traffic retail areas, food courts, or near schools and offices, which can influence rent but may reduce marketing costs due to built-in foot traffic.
Fast casual restaurant costs (£200,000—£500,000)
Fast casual restaurants – for example, a coffee shop – combine counter service with higher-quality ingredients and more thoughtful design. Startup costs are higher due to larger kitchens, custom interior branding, expanded seating areas and more sophisticated online ordering systems.
While labour costs may still be lower than full-service restaurants, fast casual concepts often invest more up front in brand experience and technology.
Full-service restaurant costs (£500,000+)
Full-service restaurants require a larger footprint, a full dining room buildout, extensive kitchen infrastructure, and higher staffing levels. Startup costs often include bar construction, ventilation systems, decor, getting an alcohol licence, and significant working capital. In major cities, these concepts can exceed £500,000 depending on location and design complexity.
Food truck costs (£150,000—£300,000)
Food trucks offer a lower-cost entry into the restaurant industry but still require investment in a commercial vehicle, kitchen installation, street trading licence, branding and mobile POS systems. While rent is typically lower, operators must budget for commissary kitchen fees, fuel, maintenance and event-based variability in revenue.
Franchise restaurant costs (£45,000–£100,000+)
Franchise restaurants come with established branding and operational systems; the trade-off is often lower concept risk but reduced flexibility. Costs typically include an initial franchise fee – on average £14,000, according to the Federation of Small Businesses – required buildout specifications, approved equipment purchases, royalty payments, marketing fund contributions and mandated technology systems. So while the initial franchise fee might be low, it can often represent a fraction of the overall total cost of investment.
Restaurant startup cost breakdown
When you open a restaurant, you’ll face several upfront and ongoing expenses. These restaurant startup costs generally fall into two categories:
- One-time startup costs, such as licences and registrations, kitchen equipment, renovations and furniture.
- Monthly operating costs, including rent, payroll, ingredients, utilities and marketing.
Considering the elements in each of these categories makes it easier to build an accurate budget and understand the cost to open a restaurant.
One-time startup costs
One-time startup costs are the expenses you incur before your restaurant opens its doors. These typically represent the largest upfront investment and can vary widely depending on your location and concept. One-time restaurant startup costs usually include several major expense categories.
Building costs
Securing a suitable property is often the largest restaurant startup cost and typically includes a rental deposit, advance rent or mortgage payments, if you are purchasing the property. In some cases, landlords may also require a lease premium or business rates deposit.
Building costs can vary significantly depending on location. Prime locations, such as in major cities or high-footfall neighbourhoods, often come with higher rents and deposits compared to suburban or rural locations.
Typical building-related costs may include:
- Security deposit (usually 3-6 months’ rent upfront)
- Advance rent payments (often 1-3 months)
- Mortgage deposit, if purchasing the property
- Lease premiums for high-demand locations
- Initial utility connections and building compliance checks
- Agent or broker fee, in some cases
Estimated startup cost:
- Small premises in lower-cost areas: £10,000-£40,000
- Medium to large restaurants in major cities: £50,000-£150,000+
Renovations and furniture
Once the property is secured, most restaurant spaces require refurbishment to suit the concept, layout and branding of the business. Renovations may include structural changes, décor upgrades, seating installations and lighting improvements.
The cost will depend heavily on the scale of renovations. A space that was previously a restaurant may require minimal changes, while converting a non-food retail space into a restaurant can involve extensive construction and compliance work. Typical renovation and furnishing costs include:
- Plumbing upgrades
- Electrical work
- HVAC systems
- Fire suppression systems
- Compliance modifications in accordance with the Equality Act 2010
- Bar installations or service counters
- Interior refurbishments (flooring, paint, walls and lighting)
- Dining furniture such as tables, chairs and bar seating
- Toilet upgrades to meet accessibility and hygiene requirements
- Branding elements, including signage, artwork and menus
Renovation costs typically range from £1,000 to £10,000 per square metre, depending on the condition of the space and the complexity of your design. The more infrastructure that already exists in the space, the lower your buildout cost is likely to be.
Kitchen and cooking equipment
Commercial kitchen equipment represents a major upfront investment. Typical costs include:
- Ovens, grills, fryers and ranges
- Refrigerators and freezers
- Prep tables and stainless steel workstations
- Dishwashers
- Smallwares and utensils
A full commercial kitchen setup can cost between £11,000 and £150,000. Leasing equipment instead can reduce upfront cash requirements. Operators often try to balance buying new equipment with purchasing certified pre-owned items to manage costs.
Permits and licences
Before serving your first customer, you’ll need to make sure you have the required licences and registrations in place. Requirements vary depending on your local council and the type of business you run, but common costs and requirements in the UK include:
- Business registration with Companies House: £100 for digital applications; postal applications are more expensive
- Food business registration with your local council: free in most areas
- Food hygiene inspections carried out by your local authority under the Food Standards Agency rating system
- Food hygiene training or food safety certificates for staff
- Premises licence and personal licence for alcohol sales (if applicable), issued by your local council under the Licensing Act 2003
- Planning permission or change-of-use approval if the premises were not previously used as a restaurant
- Music licence if you play background music for customers
- Restaurant insurance, such as public liability insurance and employers’ liability insurance
- Fire safety risk assessment and compliance with regulations enforced by the Health and Safety Executive
Restaurant owners often use lawyers or solicitors to assist with licence applications and ensure regulatory compliance. These legal services can add to startup costs but may help avoid delays or legal issues later. The estimated startup cost for licences, registrations and legal fees varies greatly depending on the licences required and whether professional legal support is used.
For example, alcohol licences can be one of the higher variable costs when opening a hospitality business in the UK. While a personal licence typically costs around £37, the premises licence fee depends on the property’s rateable value and can range from around £100 to several thousand pounds, with additional annual fees. Costs may increase if you need extended hours, late-night refreshment permissions or legal support during the application process.
Restaurant technology
Restaurant operations increasingly depend on software to manage sales, inventory, staff and customer engagement.
Recurring software costs may include:
- POS system subscription fees
- Online ordering platforms
- Shift scheduling software
- Accounting tools
- Loyalty and marketing systems
Many restaurant POS systems operate on a monthly subscription model. Payment processing fees vary based on transaction volume and payment type, such as in-person or online payments.
A multichannel POS system like Square for Restaurants can centralise payments, reporting, inventory tracking and online ordering into one platform, with no required monthly software fee.
Monthly operating costs for restaurants
When looking at restaurant startup costs and recurring costs, obvious expenses will come to mind, like food and alcohol. But owners must consider operating costs as well. Operating costs encompass everything that keeps your restaurant running and span a broad spectrum, from the cost of employees to the actual cost of the building. These costs repeat monthly and must be carefully managed to maintain healthy margins.
Below are the core operating costs most restaurant owners regularly manage.
Ingredients
Ingredient costs directly affect your margins every single day. Even small fluctuations in supplier pricing or portion control can impact profitability over time. On average, food and beverage costs represent 28% to 35% of revenue, though this varies by concept.
Ongoing ingredient expenses include:
- Raw food inventory
- Beverages and alcohol
- Alcohol taxes
- Speciality or seasonal ingredients
- Spoilage and waste
Tracking inventory levels and monitoring usage patterns can help reduce waste and identify pricing issues early. Restaurant inventory management software can simplify this process. For example, Square Restaurant Inventory by Marketman allows you to track ingredients in real-time, automating repetitive inventory tasks and reducing food costs.
Tableware
Tableware is easy to overlook, but it requires ongoing replacement. In high-volume environments, breakage and wear are unavoidable.
Recurring tableware costs may include:
- Plates and bowls
- Glassware
- Utensils
- Napkins and disposables
- Takeaway containers
Planning for regular replacements helps avoid shortages during peak hours, which can lead to other operational problems.
Advertising and marketing
Marketing helps drive both new customer acquisition and repeat visits. While some tactics are seasonal, most restaurants invest consistently in outreach.
Ongoing marketing expenses may include:
- Social media advertising
- Email campaigns
- SMS promotions
- Loyalty programmes
- Local sponsorships or partnerships
Tools like Square Marketing that combine promotions, messaging and loyalty in one system can simplify campaign management.
Building costs
Your building cost becomes a fixed monthly obligation from day one. Unlike food or labour, which can fluctuate with sales volume, rent or mortgage payments are due regardless of how busy the week was.
Ongoing building costs typically include:
- Rent or mortgage payments
- Property taxes (if owned)
- Service charges or maintenance) fees
- Property insurance
Because rent or mortgage is a fixed expense, it has an outsized impact on profitability, especially during slower months.
Employee costs
Staffing is essential to the guest experience, but it is also one of the largest recurring expenses in a restaurant. From front-of-house labour like servers, floor managers, hosts and bartenders to back-of-house employees including all kitchen staff, you are responsible for hiring, training, and paying all employees at your restaurant. Employee costs also go beyond wages. They include the full cost of employing and supporting your team.
These expenses may include:
- Hourly wages and salaries
- Payroll taxes
- Employers’ liability insurance
- Employee benefits and pension contributions if employees meet specific criteria
- Overtime
Labour often accounts for 25% to 35% of revenue, depending on service style and staffing model. Careful scheduling and clear performance expectations help keep labour aligned with sales. Using a staff management system can make it easier to manage employees and stay on top of shift management and payroll prep.
Utilities
Restaurants consume more utilities than most small businesses. Refrigeration runs continuously, cooking equipment draws significant energy and dishwashing increases water usage. Monthly utility costs may range from £1,000 to £3,200, depending on the size of the space and equipment demands.
Utilities generally include:
- Electricity
- Gas
- Water
- Waste and recycling
- Internet and phone services
Monitoring energy usage and maintaining equipment can help keep these costs predictable.
Payment processing
Your payment processor charges you a transaction fee each time your customer pays. Payment processing fees may vary based on monthly transaction volume and payment method used, such as in-person (debit/credit card or mobile wallet) or online (QR code ordering or website takeaway/delivery orders).
Generally, payment processing fees are:
- Card and contactless payments: 0.8%–1.75% per transaction
- Online payments: 1.4%–2.9% per transaction
A small fixed fee per transaction (e.g. ~20p) may also apply, especially for online payments. It’s important to check for additional or hidden fees, such as surcharges for certain card types or monthly minimums. Some payment providers don’t require a lock-in contract and only charge when you take payment. Comparing providers and reviewing the fine print helps ensure your fees don’t cut into your profits.
Training
Training is not a one-time event. New hires, menu updates and system changes all require continued onboarding and oversight. Your restaurant point-of-sale software and other administrative systems should be easy to learn and execute, to cut down on training time.
Training costs may include:
- Paid onboarding hours
- Manager time spent training
- Training materials
- System and POS instruction
Clear processes and intuitive systems can reduce training time and improve consistency across locations.
Chefs
Kitchen leadership plays a central role in food quality, consistency, and staff management. Chef compensation is an ongoing investment in the performance of your back-of-house operations.
Chef-related costs may include:
- Executive chef salary
- Line cooks and prep cooks
- Benefits or bonuses
Executive chef salaries often range between £40,000 and £100,000+ per year, depending on market and experience.
Creating a restaurant startup plan without overspending
Understanding restaurant startup costs is one thing. Planning for them is another. A startup plan helps you prioritise spending, protect cash flow and avoid overspending in areas that don’t directly support revenue. It also helps you make the right tradeoffs early, before costs become fixed. Below are key areas where thoughtful planning can reduce financial strain.
Where do restaurant owners overspend and how can you prevent it?
Equipment
Focus on the right equipment, not necessarily the newest on the market. The equipment you purchase should reflect what you plan to serve and the volume you expect to handle.
Talk with your staff to gauge the tools they need and assess the menu to determine the essential equipment for food handling.
Technology
Just as with equipment, you want to find the best technology for your specific business. Start with an integrated restaurant POS system, which can handle your restaurant’s payments, receipts, inventory and much more. Essentially, a POS system should make your life easier as a restaurant owner and promote growth for your business.
3rd-party delivery app commissions
Many restaurants rely on third-party delivery platforms to reach more customers, especially during the early stages of opening. While these apps can increase visibility and order volume, they typically charge commission fees on every order, which can significantly reduce profit margins. Common delivery-related costs may include:
- Commission fees are charged per order
- Marketing or promotional fees within the delivery app
- Delivery service charges or tablet hardware fees
To avoid overspending, restaurant owners may choose to combine third-party delivery platforms with their own direct ordering system through a restaurant POS platform like Square. By offering customers the option to order directly from the restaurant’s website or POS system, businesses can reduce reliance on high-commission platforms and keep more of their revenue.
Decorations
It’s easy to become attached to high-end finishes or statement pieces during the planning phase. Instead, focus on durability, layout efficiency and a cohesive look. Strategic design choices can create a strong atmosphere without overspending on unnecessary embellishments.
Creating awareness
Marketing is an essential component of your restaurant’s success, but many owners tend to overspend on unnecessary strategies.
Choose marketing techniques that have a high return on investment (ROI) for your business. Rather than relying on one-time promotions, think about how you will build repeat visits over time. Loyalty programmes, email marketing and consistent digital presence, especially on social media, can support long-term growth more effectively than a single launch campaign.
When starting a restaurant, the risk of failure is a top concern for all owners. Planning restaurant startup costs can help you greatly mitigate restaurant risks and better strategise for success.
Restaurant opening cost FAQs
How much should I save before opening a restaurant in the UK?
The amount you should save depends on the size, location and concept of your restaurant. Many restaurant owners also set aside 3-6 months of operating costs to cover expenses like rent, staff wages and ingredients while the business builds a steady customer base.
What licenses do I need to open a restaurant in the UK?
To legally operate a restaurant in the UK, you’ll need several registrations and licences. Requirements may vary depending on your local council and the type of restaurant you operate. Common licences and registrations include: business registration, food business registration, food hygiene inspections, food hygiene or food safety training for staff, premises licence and personal licence for alcohol sales, restaurant insurance and fire safety compliance. Your local council can provide specific guidance on licences required in your area.
How can I reduce start-up costs when opening a restaurant?
Restaurant startup costs can add up quickly, but there are several ways to reduce expenses while launching your business. Taking steps to control the cost to open a restaurant early on can make a big difference to long-term profitability. Some common ways to lower costs include: buying used or refurbished kitchen equipment and furniture; negotiating supplier contracts and buying ingredients in bulk; using technology to manage inventory and reduce food waste; and starting with a smaller team and scaling staff as demand grows
How does Square help reduce restaurant startup and operating costs?
Square helps restaurants manage payments, inventory, staffing and customer engagement within one system. By consolidating tools like POS, online ordering, reporting and loyalty, restaurants can simplify operations and reduce the need for multiple software subscriptions.
