How much does it cost to set up a restaurant?

The accelerated growth of eating out and the demand for home delivery makes the restaurant business one of the most profitable; this is the reason why many entrepreneurs venture into the idea of investing in the sector, the question is how much does it cost to set up a restaurant nowadays? Find out the answer below.

How profitable is it to open a restaurant in Spain?

To find out how much it costs to open a restaurant nowadays, it is advisable to first define the type of establishment you want to open, as this will determine the costs involved in the process and what you will have to spend, after all, without capital there is no business

The reason for emphasising the need to crunch the numbers is that, prior to choosing the design, furnishings and menu, you need to “crunch the numbers” the numbers are basic, especially considering the current level of competition, the less you want to see a “for sale” or “for lease” sign in a matter of a couple of months.

First step: clarify ideas

The catering segment is one of the most competitive in the Spanish market, making it imperative to base the project on a differentiating element that not only attracts customers, but also builds customer loyalty.

When it comes to opening the doors of a new restaurant, the premise has to be to offer unequalled experiences to diners. How is this achieved? By combining a good atmosphere, with gastronomic excellence and first class customer service, to achieve an innovative concept. All this will be possible if you take enough time to study the market, defining the exact proposal and the type of public you want to attract.

Step two: determine how much money you need

Although the most important point about opening a food outlet is to answer how much it costs to set up a restaurant, the truth is that the amount will depend on the kind of business you intend to invest in, so before talking about numbers, you will have to define two elementary aspects: sector and business model.

The reason for the advice is based on the modification that the business model of the hotel and catering business has undergone, leaving the classic scheme – based on premises consisting of a kitchen and a dining room, whose set-up and management costs were limited to these spaces – for those focused on the growth of additional services, such as home delivery, take away and grab & go.

And what about business models such as ghost restaurants? Promoters of kitchen spaces shared by several businesses or, as they are better known, dark kitchens. From all this, one can understand the need to soak up the new trends before making a final decision.

Choosing the right business model is the key to success:

From all that has been said, it is clear that answering how much it costs to set up a restaurant in Spain is conditional on first defining the business model you intend to follow; according to specialists, there are 5 trends that are sweeping the sector:

1. The emergence of outlets that meet the demand for healthier food
2. The need for specialisation.
3. The incorporation of gastronomy in additional sectors
4. Catering to the new urban lifestyle
5. Meeting the requirements of gastronomic leisure.

These 5 concepts represent the pillars that support large urban markets; after choosing the most suitable business model, the next step is to consider a good concept design before moving on to devising the much-needed business plan.

Step three: the business plan

Quantifying the investment required to set up a restaurant varies depending on the type of business to be set up; however, the general parameters come down to two main types of costs, opening and running costs.

What is included in start-up costs?

The heading is made up of those costs that are to be paid only once, so it brings together:

• Registration as a self-employed person, i.e. with the Tax Office and Social Security in RETA.
• Requirements demanded by law with regard to the performance of catering activities, in general, we are talking about the Opening Licence and the Building Work for the fitting out of the premises.
• Rental and adaptation of the establishment.
• Necessary equipment and material, from furniture to computer management programmes.

What are the operating costs?

This category covers costs that need to be paid on a monthly basis, so they are included:

• Payroll of workers
• General rental expenses – if applicable – taxes, services and marketing; likewise, costs derived from loan interest, contingencies and inflation must be estimated.

Bottom line..

Calculating how much it costs to set up a restaurant requires first of all choosing the type of business, for which it is advisable to review the different models that are setting trends in the restaurant niche, including the new Sala typology.

With this data available, continue with the analysis of the most important expenses; in the case of choosing the traditional restaurant model with a dining room, the main ones will be:

• Premises, if owned, the adequacy to comply with current regulations and possible renovations, if not, possible security deposit or rental costs.
• Services, including payment for supply contracts, from electricity, water and gas to telephone and internet.
• Activity licences.
• Furniture, machinery and kitchen set-up, not only tables, chairs and tablecloths, but also everything from air conditioning to coffee machines.
• Operating material, consisting of everything necessary to be able to work, glasses, cutlery, crockery and even the staff uniform.
• Initial stock, which coincides with the initial investment in food and beverages.

Finally, a bank balance should be included in the expenses so that from the first day of operations, both fixed and variable expenses are covered.