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  • Writer's pictureSarah Barker

What you need to know before buying a restaurant

Buying a restaurant is a major investment. When I have clients inquire about franchising, restaurants are among the most popular categories they are interested in. Once we start discussing the costs and time investment, for many, their interests change. If you are considering this industry here are some things you should know.



According to a recent survey revealed the overall cost estimates to start a restaurant.

  • The lowest quartile -$175,000

  • Median $375,500

  • Upper quartile $750,500

Food Cost - Your food costs should run you between 25-40% of your revenue, depending on your restaurant type. Understanding and controlling this is critical for success.

Labor- Restaurants need to shoot for 20-30% in labor costs ( Potential owners will also want to consider their ability to hire, fire, train, and retain employees.

Location - Location is crucial for any business but for restaurants its crucial. There is also a fine balance between your cost per square foot and making a profit.

Equipment, POS, Technology, Decor - Equipment can be a large portion of expense averaging $95,000, Restaurant tables and furniture ($40,000), Point of Sale systems are very crucial in today's restaurant world. Many can be bought with a monthly cloud based subscription plan, they are also getting so sophisticated you can monitor labor and food cost from another location as well as running payroll.

Permits and Licensing- I'm always surprised by how many owners say they wish they would have known how many permits and licensing they were going to have to deal with- prior to buying a restaurant. Along with knowing your state’s regulations, it is always a good idea to check with the transportation department for possible road work that has the potential to stop traffic to your location.

Marketing, Accounting, legal recommends spending 25-35% of gross revenue on marketing for a start up depending on how tight your competition is. The SBA recommends calculating Accounting and legal fees at $1,000 to $5,000 per year.

Average Restaurant Owner Salary (According to The average salary for a Restaurant Owner is $65,889

Average Hours Worked 40+

This is a good start to understanding the costs that go into a restaurant, there are some more things to consider if you are wanting to do a startup, consider reaching out to your local Small Business Association for more on this topic.

If you're looking for a structured and proven restaurant, consider franchising. To see more on restaurant franchise opportunities go to

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