How Much Does It Cost to Open a Small Restaurant? (2026 Breakdown)

How much does it cost to open a small restaurant? Most small restaurants land somewhere between $175,000 and $750,000 to open, according to Square’s restaurant cost guide. Smaller concepts can come in under $150,000, while a full-service spot in a big city can pass $1 million. Where you land depends on three things: how much build-out your space needs, whether you serve alcohol, and how many months of cash you keep in the bank before you open.

This guide breaks the number into the pieces you actually pay for, shows you how to build your own estimate in an afternoon, and gives you a few ways to bring it down. Every figure below links to the source it came from. Costs vary a lot by city and state, so treat these as ranges to plan around, then get real quotes.

Small restaurant startup costs at a glance

Your concept decides your price tag more than anything else. Here’s how Square breaks it down by restaurant type:

Source: Square, How Much Does It Cost To Open a Restaurant in the US?

Toast’s guide to small restaurant costs lands in the same place: from about $175,000 to well over $700,000. So if you’re thinking “small” means “cheap,” it helps to reset that early. Small means fewer seats and a tighter menu. It doesn’t mean the walk-in cooler or the hood system costs less.

The 8 costs that make up your number

Almost every small restaurant budget comes down to the same eight buckets. Here’s what each one typically runs, with sources.

1. Lease, deposit and rent

Square puts monthly rent for a restaurant anywhere from $2,000 to $12,000+, and suggests keeping rent between 6% and 10% of your projected revenue. Before you open, you’ll usually pay a security deposit and first month’s rent, and you may pay rent during build-out too. Ask the landlord for a few months of free rent while you build. It’s a common ask and it protects your cash.

2. Build-out and renovation

This is the line that swings your total the most. Square puts build-out at $100 to $800 per square foot. A former restaurant with a working hood, grease trap and plumbing sits at the low end. A raw shell or a retail space that’s never had a kitchen sits at the high end.

3. Kitchen equipment

A full kitchen setup runs about $50,000 to $150,000 per Square. Ranges, fryers, refrigeration, prep tables, smallwares and dish. Used equipment and leasing can both bring the upfront number down.

4. Furniture and decor

Tables, chairs, lighting and the look of the room run $10,000 to $50,000+ according to Square. Toast lists exterior design (signage, patio, facade) separately at $1,000 to $40,000.

5. Licenses, permits and insurance

Square lists a general business license at $50 to $500 and a food service license at $100 to $1,000. The big wild card is alcohol: a liquor license runs from $50 to over $300,000 depending on your state and whether licenses are capped where you are. Toast, citing Sage, puts licenses, permits and insurance together at $2,500 to $200,000.

The exact list depends on your city, county and state. The SBA’s licenses and permits guide puts it plainly: what you need “will depend on your business activities and business location.” Start with your Secretary of State and your local health department.

6. Opening food inventory

Your first full stock of food and supplies typically runs $5,000 to $25,000 (Toast, citing Sage). After opening, Square says food and beverage costs usually run 28% to 35% of revenue.

7. Pre-opening expenses

Hiring, training, menu testing, a soft opening, your POS setup and early marketing. Toast puts pre-opening costs at $20,000 to $120,000, and professional services (lawyer, accountant, architect, designer) at up to $50,000.

8. Working capital (the one people skip)

This is the cash you keep in the bank to cover payroll, rent and food while sales ramp up. Toast suggests planning for about six months of operating costs, which it puts at $20,000 to $250,000. Square says most restaurants take one to three years to reach consistent profit. Running out of cash in month four is a planning problem, not a food problem, and it’s the easiest one to fix on paper before you sign anything.

How to estimate your own restaurant startup cost

National ranges are a starting point. Your real number comes from your space, your menu and your city. The SBA’s startup cost guide splits it into two lists: one-time costs (equipment, permits, build-out) and monthly costs (rent, payroll, utilities). Then you add them up “to get a good picture of how much capital you’ll need and when you’ll need it.” Here’s how to do that for a restaurant. Want a fast first pass? Plug your numbers into our free restaurant startup cost calculator.

Step 1: Pick your format and size

Counter service or table service? Beer and wine, full bar or no alcohol? How many seats? Write these down first. Every other number depends on them.

Step 2: Price the space

Multiply your square footage by a realistic build-out rate. Here’s how wide that gets for a hypothetical 1,500 square foot space using Square’s $100 to $800 range:

• Light refresh of a former restaurant at $100/sq ft: 1,500 x $100 = $150,000
• Heavy build-out of a raw space at $800/sq ft: 1,500 x $800 = $1,200,000

That gap is why a second-generation restaurant space (one that already has a kitchen) is the single biggest lever on your budget.

Step 3: List your one-time costs

Go bucket by bucket: deposit, build-out, equipment, furniture, licenses and permits, opening inventory, POS, signage, professional fees, pre-opening payroll and marketing. Get at least two quotes for anything over a few thousand dollars.

Step 4: Add your monthly costs

Rent, utilities, payroll, food, insurance, software and loan payments. Square puts utilities at $2,000 to $5,000+ a month and labor at 25% to 35% of revenue. The SBA suggests mapping at least one year of monthly expenses.

Step 5: Add working capital and a cushion

Multiply your monthly costs by the number of months you want covered (Toast suggests six), then add a contingency line for surprises. Build-outs almost always find something: old wiring, a grease trap that needs replacing, an inspection that needs a second visit.

Step 6: Check break-even

The SBA calls break-even analysis “an important calculation in your business plan.” Divide your monthly fixed costs by your contribution margin per cover to see how many guests you need each month to cover the bills. If that number looks unrealistic for your seat count and hours, change the plan now, while it’s still a spreadsheet.

Small restaurant startup cost checklist

Use this as your line-item list when you build your budget:

• Security deposit and first month’s rent
• Architect or designer fees and drawings
• Build-out: plumbing, electrical, hood and fire suppression, grease trap, restrooms
• Kitchen equipment and smallwares
• Furniture, lighting and decor
• Exterior signage
• Business registration and general business license
• Food service / health permit and plan review fees
• Liquor license (if serving alcohol)
• Insurance deposits (general liability, property, workers’ comp)
• POS hardware and software
• Opening food and beverage inventory
• Paper goods, cleaning supplies and uniforms
• Pre-opening payroll and training
• Soft opening and launch marketing
• Legal and accounting setup
• Working capital (months of operating costs)
• Contingency

Want it in a fill-in format? Grab the free starter kit below. It’s built for exactly this stage.

7 ways to lower the cost of opening a small restaurant

1. Take over a second-generation space. A former restaurant with a working hood and grease trap can save you the most expensive part of the build-out.
2. Start without a full liquor license. Since a liquor license can range from $50 to over $300,000 (Square), opening with beer and wine, or no alcohol, can keep your first budget smaller. Check what your state offers.
3. Buy or lease used equipment. Commercial kitchen gear is built to last. Have a tech inspect anything with a compressor or gas line.
4. Shrink the menu. Fewer dishes means less equipment, less inventory and tighter food cost. Cost every plate before you print the menu.
5. Negotiate the lease. Ask for free rent during build-out and a tenant improvement allowance.
6. Do the paperwork yourself. Business registration, permit applications and your business plan don’t need to cost thousands if you follow a clear roadmap.
7. Test first. Pop-ups, a food truck or catering can prove your menu before you sign a long lease. See what a food truck costs to start or a catering business costs to start as a lower-cost first step.

How to pay for it

Most owners use a mix: personal savings, friends and family, an SBA-backed loan through a bank, equipment financing, and sometimes investors. Whatever you choose, lenders will want a written business plan with your startup costs, your monthly costs and your break-even point. The SBA says a clear startup cost report that shows how “expected costs” line up with “projected revenue” is what makes that conversation work.

That’s why the budget comes first. A clean number makes every other conversation easier: with the landlord, the bank and yourself.

4 budget mistakes to avoid

• Budgeting only to opening day. The build-out is the part you can see, so it gets all the attention. The months after opening are where cash gets tight. Put working capital on the same sheet as your equipment.
• Signing the lease before the numbers work. Run your rent against your projected sales first. If rent lands well above Square’s 6% to 10% guide, that space may be asking too much of your menu.
• Skipping plate costing. If food runs 28% to 35% of revenue (Square), a few points of drift on your best sellers adds up fast. Cost every dish before you set prices.
• Guessing at permits. Permits often depend on each other, so the order matters. Talk to your local health department and building office early. A missed step can push your opening date, and every week of delay is another week of rent with no sales.

Frequently asked questions

How much does it cost to open a small restaurant?

Most small restaurants cost between $175,000 and $750,000 to open, per Square and Toast. Smaller concepts can come in under $150,000. Your space, your build-out and whether you serve alcohol move the number the most.

Can you open a small restaurant for $100,000?

It’s at the very low end. Square says smaller concepts can open for under $150,000, usually by taking over a space that already has a kitchen, buying used equipment and keeping the menu tight. Costs vary a lot by city, so get local quotes before you commit.

What is the most expensive part of opening a restaurant?

Usually build-out. Square puts it at $100 to $800 per square foot, so the condition of your space matters more than almost any other choice. A liquor license can also be a big line in states where licenses are limited.

How much working capital does a new restaurant need?

Toast suggests planning for about six months of operating costs, which it puts at $20,000 to $250,000. Square notes most restaurants take one to three years to reach consistent profit, so plan your cash runway with that in mind.

How much should rent be for a small restaurant?

Square suggests keeping rent between 6% and 10% of projected revenue, with monthly rents ranging from about $2,000 to $12,000+ depending on the market.