Many times, new restauranteurs jump into the construction process too quickly – without a budget. Without a well-thought-out budget, it’s easy to underestimate the amount of cash needed, upfront, to get your new restaurant open.
Here are some of the costs associated with a restaurant design and build:
- Design of the space
When it comes to the design and construction, it’s important to work with an experienced contractor when considering the space needed to store food, prepare food, serve food, and perhaps have an area for take-out or delivery.
Those activities don’t take into consideration what’s needed in the front-of-house, where people will dine (if you plan to have seating). Do you know how much space is needed per table? Or per regulations with various departments?
- Cooking/food preparation
While it may be possible to get an idea of how much space is needed for seating, the needs in the kitchen and storage areas, where food is prepared, is critical.
Too often, new restaurant owners think about the cooking process from the perspective of their own kitchen. They don’t think about how the process will change when cooking or preparing food for larger groups. So, they’re not aware of the differences in space and equipment needed.
If you’ve not mapped out the food preparation process – where it will take place, how many people will be involved, and how it will go from start to finish – you can’t come up with an adequate budget for what will be needed.
- Equipment needs
If you know what your menu will be and the process to make each dish – what equipment will you need? Often, new restaurant owners don’t budget for the more expensive equipment they need in a commercial kitchen, especially equipment required under building codes.
Budget is needed not just to buy the equipment, but it needs to be installed in the right place, with the right square footage, and even with the right ventilation, cooling, electrical, etc. And there are infrastructure costs – such as utilities – associated with each piece of equipment and the overall space.
- The space to be leased
When it comes to budgeting for a new restaurant, the space being considered is also key. If it was previously a restaurant, it may be up to code. Or it may not.
If there’s a new build for the restaurant – everything will need to be upgraded to commercial restaurant standards. This will most likely require a larger budget. And it may involve upgrades to the HVAC system, as well as the utilities, and installation of new infrastructure to meet building codes.
- Will you need to secure financing?
Let’s say you have an excellent idea about exactly what design you’ll need – for the back area and the front-of house. And you know exactly what your menu will be, the commercial equipment you’ll need, and you’ve blocked out where all the equipment will go, including your refrigeration and your food prep areas.
Do you have enough cash on hand to do the build-out? Or will you need financing?
If you’ll need financing, you’ll need to be sure to add on the other costs associated with starting a new restaurant. These include food procurement, staffing, marketing, cleaning, and many more details. You’ll need to have a good sense of all these costs to secure the financing you need to make your dream a reality.
Don’t start – only to lose everything because you didn’t have the money to finish
Clients often think they have enough money to open a restaurant and learn too late that they totally underestimated the costs and actually do not have enough. Then they need to stop everything and try to secure financing.
A budget for design and construction must be well thought out. Professionals with experience in the design and build of restaurants need to be involved from the beginning.
Experienced contractors can walk through a space and understand the basics of what must be done and also understand the final goals. An expert will be able to provide costs that are accurate and dependable. Note: There are design build elements unique to restaurants that inexperienced restaurant builders may not know.
Initial budgets aren’t final – or complete – without drawings and bids
Keep in mind that a budget can be generated for a restaurant build-out – but it is not truly an accurate estimate of your costs until you have a full set of construction documents. These documents include the drawings for:
And the estimate is backed by subcontractor bids for all the work that needs to be done.
These construction documents are what are considered “soft costs” and many times are overlooked by an eager restaurant owner. Finally, new restaurant owners usually don’t factor in building department costs and requirements for permit fees, surveys, and reports.
Are you thinking of opening a new restaurant? Let’s talk so we can walk you through the process so you can achieve your dream.