Restaurant Opening Costs: What Should You Expect

How Much Does It Cost to Open a Restaurant?

Opening a new restaurant is one of the most exciting times in your life. It can allow you to become your own boss, embrace your culinary passion, and potentially provide significant income for years to come. However, many costs and risks come with opening a new restaurant, which can quickly turn away aspiring entrepreneurs. You may be asking yourself, how much does it cost to open a restaurant, and are there better alternatives?

To help you determine if this is a good option for you, we have outlined some of the details to keep in mind when considering this business opportunity. Let’s take a look!

How Much Does It Cost to Open a Restaurant?

To start, we need to understand some of a business’s largest expenses. This includes your location, marketing, employees, and materials (chairs, tables, food, cooking equipment, etc.).

Often, the more you spend on these items, the more you can expect in return. The right location, marketing tactics, and so on will drive more customers, ultimately increasing profits.

Still, these costs do add up quickly. The cost to open a restaurant can range between $175,000 and $1,000,000, depending on your location, materials, type of restaurant, and more.

Of course, you can reduce upfront costs by renting your establishment instead of buying, but buying may save you in the long run. You can also reduce upfront costs by purchasing materials in bulk, utilizing financial and business software to your advantage, and networking with other business owners in your location’s area.

However, that’s easier said than done. Affording a restaurant is a different story. Here are some ways to acquire the funding you need.

Acquiring Funding For a New Restaurant

Since this is no easy feat, you will likely need to acquire quite a bit of funding and more than you think you need. For example, if you calculate the cost and determine you will need $200,000, you want to aim for at least an extra 20% to 25%, which would be at least $240,000.

There are plenty of options for acquiring funding, each of which has advantages and disadvantages. Just remember that the more of your own money that you spend, the better it will be in the long run!

Let’s take a look at the most common options for funding your new restaurant.


To begin with, let’s talk about loans. These are arguably the best, as you will only need to pay back the loan amount with the agreed-upon interest rates. However, finding a lender may be challenging if you have a low credit score or no industry experience.


Then, there are private investments. These are great for sharing the risks of opening your business, but you’ll also have to share potential rewards, as the investors will want a return later on!

For example, if an investor gives you $100,000 for your restaurant in exchange for 25% of equity, you may need to pay them large dividends or royalties throughout the duration of ownership. On top of that, if they choose to pull out and your business is now worth $4 million, you’ll owe them $1 million dollars.

Other Possible Sources

Another option to consider is crowdfunding using websites like Kickstarter or peer-to-peer lending. Though they also require equity or higher interest rates, they can get you the funding you need, even with a lower credit score, in a pinch!

Alternatives to Opening a New Restaurant

If you don’t want to potentially lose your savings or investors, some alternatives can be lower-cost to start. However, you may not want to scrap the idea entirely if opening a restaurant is too expensive.

Starting your own restaurant is risky, so carrying on an established business is often the way to go. Here’s what you need to know.

Opening a Franchise

If you want to save money on the initial costs of opening a business, consider opening a franchise. The cost of opening a new restaurant can be staggering, and there’s no guarantee of success. If you know one thing about the industry, it’s that restaurants come and go.

Believe it or not, 60% of new restaurants fail within the first year, and 80% within the first five years. One of the best ways to prevent this fate is to benefit from a tried-and-true restaurant.

Moreover, opening a franchise comes with fewer costs on average and a higher success rate. You’ll also receive franchise training from the company and have plenty of resources available to help ensure your business succeeds. As a result, the barrier to entry is lower, profit sharing is lower, and personal risks are lower. We’ve always valued community and helping those around us at Rib & Chop House. Our goal is to make the process as simple and hassle-free as possible for our customers, employees, and franchisees. 

There are plenty of big-name franchises out there, but few with this level of potential. It can cost millions of dollars just to open a McDonald’s, and Subway is notorious for how they treat their franchise owners. It is important to find a restaurant that offers the freedom to express your passion for food, community, and service. 

Here at Rib & Chop House, our franchise owners are given the opportunity to put their skills to work, creating delicious meals daily. With an average unit volume topping $4 million, a vastly growing presence in the Midwest, and thousands of happy returning customers, owning a franchise with us is a wonderful investment. 

Start Your Entrepreneurial Journey With Rib & Chop House

Now that we’ve answered the question, “how much does it cost to open a restaurant?”, you can make an informed decision if this is the right fit for you. The restaurant industry isn’t always easy, but the potential payouts are enormous. With the right resources, you can secure your success. 

At Rib & Chop House, we provide a training team to ensure you have the necessary skill set to run your franchise location successfully. You will receive six weeks of classroom and in-restaurant training for you and your investment partners. Once complete, we’ll support you with a development team that remains at your location for three weeks. This way, you can feel confident and supported as your business opens. Rib and Chop House wants you to take that step and contact us to answer any questions you may have. Allow yourself the opportunity to explore the franchising industry.