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How much does it cost to open a restaurant?

Thinking of opening a restaurant? Whether it’s a small takeaway place or a high-end eatery, make sure you know what to expect in terms of the costs involved. Use our restaurant startup costs template to get your planning started.

16 October, 202512 min read Share

Opening a restaurant in the UK typically costs anywhere from £150,000 to well over £1 million, depending on the size, location, and type of establishment you have in mind.

That’s a wide range, and narrowing it down requires understanding the many variables at play — from one-off startup costs like property deposits, kitchen equipment, and refurbishments, to ongoing monthly expenses like rent, staff salaries, and food supplies.

In this article, we break down both the one-time and recurring costs involved in opening a restaurant, highlight the most common financial mistakes new owners make, and offer a free cost worksheet to help you build a realistic budget and plan your startup on a firm footing.

You’ve got an enterprising mind and passion for food. Perhaps you’re thinking about turning your talent into a business. But first, there are important questions to answer and numbers to crunch.

One of the biggest questions is this: How much does it cost to open a restaurant?

Of course, the answer depends on many factors. But whether you’re planning to open a small takeaway place or a high-end eatery, you’ll want to make sure you have a firm grasp of what to expect in terms of your restaurant startup costs.

Here’s what we’ll cover:

How much does it cost to start a restaurant?

The average restaurant startup cost can range from £150,000 to well more than £1m, depending on the location, the type of food business, and how you set it up.

Explore the variety of costs that go into opening a restaurant, then use our restaurant startup cost checklist to break down all the expenses you’ll need to consider to make your dream a reality.

How does the cost of opening a restaurant break down?

Opening a restaurant involves one-time costs like deposits, licenses, and equipment, plus recurring expenses such as salaries, utilities, and food.

The average restaurant startup and operating costs combined, plus associated expenses, will vary depending on size, location, and a range of other choices you make.

For instance, the cost of opening and running a sandwich shop or pop-up restaurant will be much lower than the cost of opening a fine dining 200-seater in an upscale neighbourhood.

What are the one-time startup costs of opening a restaurant?

One-time restaurant startup costs include expenses like property deposits, licenses, equipment, and furnishings, which are incurred only when you first start the business.

These fixed costs cover essential investments such as securing a location, obtaining necessary permits, setting up a commercial kitchen, and purchasing furniture and décor.

While some of these costs are truly one-time, others, like kitchen equipment, may need replacement or upgrades down the line.

Property deposit

This cost varies a lot depending on the size and location of your restaurant.

You can expect to cover a deposit of 25% to 40% of the property value if you’re buying the restaurant space or three to six times the monthly rent if you’re leasing it.

Premise licence

You’ll need a food licence, which is free to register for. But if you plan to provide entertainment, serve alcohol, or serve hot food and drinks between 11 p.m. and 5 a.m., a premise licence covers those options.

The cost to apply for this ranges from around £100 to £2,000, depending on the fee band of your venue, and there may also be an annual charge.

If you plan to serve food outdoors (on public land), you’ll may also need street trading consent, which many councils charge for.

Following the April 2026 tiered business rates reform, some venues may see adjustments in their licence fees based on business size and location.

Legal fees

There’s a lot of paperwork and even more legalities involved in a business setup. You’ll most likely need help from an experienced lawyer to make sure your operation is legal.

For a smaller law firm or solo practitioner, you can typically expect to pay £100 to £300 per hour, depending on the lawyer’s experience and the complexity of the work.

The average hourly rate for a top UK law firm is around £450.

Building refurbishments

You may need to factor in refurbishment costs to get your space set up.

As with all these figures, the costs will vary greatly depending on your venue, location, and circumstances.

Costs have risen considerably in recent years, particularly in London and other major cities.

As a rough guide, you might pay £75,000 to £150,000 for a small cafe or wine bar started from scratch with new equipment (20 to 50 seats – known in the industry as “covers”); £150,000 to £750,000 for a small restaurant with an existing kitchen (50 to 70 covers); £300,000 to around £1m for a medium-sized restaurant (70 to 150 covers) with a new rear building extension; or £500,000 to £2.5m for a large restaurant and function area (300 users).

A full design-and-build restaurant project in London typically falls within these ranges: £350,000 to £450,000 for a small takeaway or neighbourhood restaurant; £450,000 to £800,000 for a mid-size restaurant; and £800,000 to £1.5m or more for a high-end or complex hospitality concept.

In older buildings, additional surveys such as asbestos or drainage inspections may be required before work can begin, adding to the overall cost.

Note that you are also duty-bound by the Equality Act 2010 to take reasonable steps to make your venue accessible to disabled people.

Kitchen and cooking equipment

The cost of setting up a commercial kitchen will typically range from around £30,000 to around £150,000.

In addition to your cooking equipment (ovens, cooking ranges, industrial mixers, etc.), you’ll need sinks, workstations, proper refrigeration, a commercial dishwasher, etc.

One money-saving option is to look for good-quality second-hand equipment. Restaurants that have recently gone out of business may be looking to sell their wares online to recover costs.

Tables, furniture, and tableware

This cost will vary based on the quantity you need and the quality you opt for. However, on average you can expect to spend £15,000-£35,000 on tables, chairs, decorations, etc.

Point of Sale (POS) systems

You’ll need a way to be paid and keep track of orders and inventory. That’s where a POS system comes in handy.

In terms of the hardware, you can expect to pay around £20 to £200 per handheld card reader and £250 to more than £1,000 for a countertop terminal or full till system.

Signage and advertising

You’ll want to make a splash with your grand opening. You’re looking at around £2,200 at the lower end of the scale for advertising or £50,000 or more if you’re going all out.

What monthly restaurant expenses and ongoing costs should I consider?

Monthly restaurant expenses include recurring costs like lease payments, staff salaries, food and drink supplies, utilities, and insurance.

These ongoing costs can quickly add up and fluctuate based on factors like restaurant size, type, and market conditions, requiring careful monitoring and planning to ensure profitability.

There’s a lot to take in here, but the good news is it can all be managed easily using expense tracking software.

Mortgage or lease

One of the main recurring and ongoing costs of running a restaurant is your monthly lease or mortgage payment.

This will vary based on a number of factors, including location, restaurant size, deposit payment, and the mortgage or lease deal you negotiate, but it’s likely to cost you at least £2,000 to £5,000 per month.

In London and major cities, monthly rent can reach £12,000 or more.

Staff salaries

Unless you’re starting a one-person empire, you’ll need to make sure your business budget includes restaurant staff salaries.

The average base salary for restaurant workers is £12.21 per hour or £25,396 per year. You can expect to pay on average £39,500 per year for your head chef and £33,500 for line cooks.

Food and drink costs

This is quite literally your bread and butter, but food and drink costs vary drastically from restaurant to restaurant.

Your costs will depend entirely on what kind of food and drinks you’re serving as well as the size of your business.

Ways to help minimise these costs could include carrying out regular price comparisons for the items you buy regularly; building and maintaining good relationships with multiple suppliers; and negotiating better prices with new and existing suppliers.

Utilities

You have to keep the lights on and the ovens cooking.

Small restaurants can typically expect to pay around £2,400 to £3,700 per year on average for electricity, and medium-sized restaurants will pay around £3,800 to £7,250.

For gas, you’re looking at around £820 to £1,500 a year on average for a small business and about £1,500 to £2,250 for a medium-sized business.

Marketing and advertising

For success, you’ll need to have a consistent presence. If you want to go the route of print or broadcasting, ad space is at a premium.

Web advertising is typically less expensive or even free if you take to social media.

Insurance and licencing

Two essentials are:

• Public/product liability insurance – covering injury or property damage to members of the public on your premises. In this context it could also cover food poisoning.

• Employers’ liability insurance – a legal requirement for any business with staff.

For a small restaurant this basic coverage starts from around £500 per year.

But bear in mind that this is the lower end of the scale; it isn’t unusual for restaurant insurance to cost thousands of pounds per year, depending on coverage needs.

POS software subscription

In addition to the POS system, you’ll need payment management software. You can get a basic pay-as-you-go app for free or spend from £19 to £200+ per month for more sophisticated solutions.

Miscellaneous expenses

These include anything and everything you might not expect. Repairs on equipment or fixtures can get costly, so you should always work the what-ifs into your budget.

How to avoid common restaurant startup mistakes

There’s a lot to navigate when calculating restaurant startup costs and strategies, and it’s easy to get bogged down by preconceived notions of what is and isn’t necessary.

Here’s how to avoid the most common mistakes new restaurant owners make.

1. Don’t overspend on equipment. This is the number one mistake startups make. It’s incredibly easy to go overboard when outfitting your dream kitchen. We know it’s tempting to go all out and get the newest gadgets, but you have to keep your budget in mind. For the necessities, make sure you shop around—second-hand equipment from eBay or the like could save you thousands.
2. Keep your refurbishment budget in check. This goes hand in hand with equipment overspending. Refurbishing costs can add up frighteningly quickly. Be modest and resourceful with your decor, utilising the internet for design ideas. Leave space in the budget for contingencies—a solution to a problem that hasn’t happened yet may not be the most glamorous thing, but you’ll be glad to have peace of mind.
3. Don’t go overboard with food expenses. Make sure you shop around for your supplies. You certainly shouldn’t skimp on quality, but don’t be a fool for fancy marketing either. If you’re buying in bulk consistently, vendors will often work out deals to keep the steady business. Another option to consider is striking a partnership with local farmers and co-ops for fresh, locally-grown foods. Constantly reevaluate your portions, as well as what gets wasted—only buy what you need.
4. Pay attention to the contract. If you’re buying a restaurant, make sure you look over the contract closely—ideally with the help of an experienced lawyer—before signing it. There’s a ton of public record information available to you regarding the restaurant in question, and you should scour it. Often, issues the seller fails to mention will show up in public records of infestation or compliance issues.
5. Be smart about marketing. Advertising can be a pricey endeavour, so don’t drain your budget when you don’t have to. Your best bet is to find low-cost avenues to promote your restaurant. The internet is an extremely powerful tool to get your name out there. Make sure to take advantage of free social media platforms and consider web advertising at reduced rates.

Restaurant startup costs: Industry tip

Running a restaurant is hard work. Don’t get bogged down tracking expenses—consider upgrading to online accounting software with Sage Accounting to save time and money.

How to use the restaurant startup cost worksheet

To help you keep control of your finances, use our restaurant startup cost spreadsheets, which are simple and intuitive to use. Once downloaded, they’re fully customisable to fit your needs.

Plug in your numbers and enjoy the simplified breakdown of your startup and ongoing costs..

1. Download the free restaurant budget template.
2. Add or remove fields applicable to your startup.
3. Assess your needs and related costs.
4. Make a note of costs that might change or costs to be determined.

Sage lets you focus on building your business, not tracking expenses

Figuring out how much it will cost to open the restaurant of your dreams is the first step. But running your business successfully takes a lot of ongoing work.

Day in and day out you invest your time, energy and focus into creating something amazing. So why waste your valuable time and efforts tracking expenses the old-fashioned way?

Administrative tasks can now be fully automated—so upgrade your business model with Sage Accounting.

You have enough on your plate and our online accounting software can save you time and money. Outsource the busy work and get back to doing what you do best—making your business a success.

Additional startup cost templates

Is our sample restaurant startup cost calculator not what you’re looking for? Have a look at our other startup costs guides and templates.

• Beauty salon startup cost calculator
• Gym startup cost calculator
• Bar startup cost calculator
• Food truck startup cost calculator

Important information about these restaurant startup costs

The startup costs shown here by industry are merely guidelines and average estimates based on information pulled from a variety of sources. While we have attempted to present the most accurate information available, please be aware that startup costs can vary greatly according to a number of factors, including but not limited to your location, local fees, and contractor quotes. The information presented here is intended to help guide prospective business owners in the search for information on starting a business within a given industry, but should not be interpreted as an exact quote. Sage provides the information contained here as a service to the public and is not responsible for, and expressly disclaims all liability for damages of any kind arising out of use of, reference to, or reliance on any information contained on this site. While the information contained on this site is periodically updated, no guarantee is given that the information provided is correct, complete, and up-to-date. Sage is not responsible for the accuracy or content of information contained on this site.