Many dream of opening a restaurant — a bustling hub of culinary delights and warm hospitality — but alongside the excitement lies the crucial aspect of financial planning. Before diving headfirst into your restaurant venture, understanding the true cost of opening and operating a restaurant in the UK should be a first priority.
This guide dives into the various components impacting the overall cost of opening a restaurant in the UK, empowering you to plan ahead for long-term success. So, let's explore the breakdown of costs to start a restaurant, how much does it cost to open a bar and all their ongoing operational expenses.
How Much Does a Restaurant Startup Cost: A One-Time Investment
The costs of opening a restaurant in the UK in 2024 can be anywhere from £71,100 to well over £200,000 thanks to an array of factors affecting the overall costs.
Legal Fees, Licenses and Permits
Even though the initial costs to open a restaurant in the UK can be quite high, the registration process itself will not be too costly for the owner. The good news is that it is free for the restaurant owner to register their restaurant business within UK territory.
The whole registration process is done online on the local council’s website and must be completed at least twenty-eight days prior to the opening. However, acquiring business licenses for different services, such as serving food and drink, will require you to acquire separate licences, with each one varying in cost.
- Food Licence: The total price varies from £100 to £1,000, depending on your location's rateable value. Local authorities measure rateable value to define a business's property tax. The higher the value, the more the owner has to pay for their licence.
- Liquor Licence: The price of obtaining a licence for serving alcohol at the premises can vary anywhere between £100 and several thousand pounds, depending on your location and the type of licence you require.
- Outdoor Seating Licence: The fees for an outdoor seating facility are determined by the local authorities. The price for the first application varies from £500 to £1000, and for renewals, it is from £350 to £700.
Location & Construction
Choosing the perfect location is one of the biggest factors when it comes to the total cost of setting up a restaurant in the UK. As of mid-2024, renting in a high-traffic spot in London could cost as much as £2,000 to £5,000 pcm, or £25,000 to £70,000 annually. This, of course, excludes other costs related to leasing, such as upfront payments for deposits, insurance, and agent fees, along with costs associated with renovation and maintenance.
In contrast, suburban locations might offer more affordable options ranging from £1,000 to £2,000 pcm, but they will lack the foot traffic that you might want to see coming into your restaurant. Also, leasing by square foot in suburban areas can bring forth additional charges in the long run, such as transportation costs for bringing in ingredients and higher customer acquisition costs.
Kitchen Equipment
Your kitchen is undoubtedly the heart of your restaurant. To keep it beating effectively, you’ll need various equipment, such as ovens, refrigerators, grills, fryers, and prep surfaces.
The demands of your menu will have a significant impact here; a pizzeria will require different equipment compared with a gastro restaurant, for example.
For a small restaurant kitchen, expect to outlay anywhere between £25,000 and £40,000. High-end restaurant kitchens, serving highly elaborate and varied menus, could, on the other hand, cost you in excess of £100,000 to install.
Buying used equipment will give you significant cost savings but will likely need more maintenance. Besides, there's also safety concerns that need to be addressed when it comes to buying used kitchen equipment.
Furniture & Décor
The atmosphere and appearance of your restaurant also play a crucial role in the customer experience. The selection of furniture and other decor is largely based on the type and theme you choose for your establishment.
A luxurious design with expensive aesthetic pieces is a suitable way to go if you want an upscale venue. On the other hand, casual cafes aiming to provide a comfortable experience with soft corners and quick dining options can go with simple asthmatics.
So, the overall cost of restaurant furniture and interiors in the UK in 2024 will depend on several factors. These include, the choice of your furniture — for instance, plush booths versus basic chairs — and the materials you choose — solid wood or laminate — will heavily influence the price tag.
Moreover, custom-made furniture will naturally be more expensive than ready-made options. To be more specific, a small cafe might have to spend around £5,000 to £7,000 on basic tables and chairs, whereas a high-end restaurant featuring luxurious seating could spend £20,000 and upwards.
Marketing & Branding
Establishing a brand identity is critical for building a customer base and solidifying your place in the crowded restaurant industry. You will have to invest in creating a logo that is reflective of your theme and audience. Building a high-quality website with an online ordering system is also crucial for making your restaurant accessible to a wider audience. If you go with a website, you will also have to spend heavily on SEO.
As well as a website, building a strong social media presence is also a great way to build the hype and establish your brand before opening the doors to customers. Then comes getting your printables ready, such as flyers, menus, and lintwear.
To develop and implement a solid overall marketing strategy, you will need to hire a marketing manager. So, the overall initial costs of marketing will be anywhere from £2,000 to £6,000.
Silverware
The silverware costs vary significantly based on the style, material, and quantity. Basic cutlery sets made from stainless steel start at just under £1 per piece. In contrast, more premium options for forged cutlery or silver-plated collections can cost double-digit per-piece.
Overall, a small restaurant can spend less than £200 on silvare. On the flip side, a fine dining establishment can invest a few thousand pounds in luxury silverware.
Restaurant Technology
The costs of restaurant technology can vary greatly depending on your choice and the complexity of the tools. For instance, a basic sale POS system is essential for processing orders, managing inventory, and accepting payments.
The most effective restaurant POS (Point of Sales) systems, can be subscribed to for up to £30–£100 per month. However, if you want to integrate features such as online ordering, table management, etc., the price increases to £200 and more per month. Secondly, the monthly costs of inventory management software may range from £50 to £200, usually subject to the list of features.
Although the initial costs might be quite significant, the investment is worthwhile since you have the opportunity to enhance your restaurant’s efficiency and operations. Both of which will save your staff time in the long run. And in the restaurant business, time is money.
Initial Inventory
Your initial inventory cost will depend on the diversity of your menu and the number of customers you expect in the first week of the grand opening. If you work with seasonal food products, the cost of initial inventory will vary depending on the season. Also, the type of restaurant will significantly impact the overall cost of inventory. For example, the initial investment in a pizzeria will likely be lower than for a high-end restaurant offering a wide selection of premium foods.
In any case, you should expect to spend from £2,000 to £5,000 to cover all the essential beverage and food costs to accommodate your first visitors. To prevent waste and calculate your future purchases, you will need an inventory management system.
Staff Onboarding & Training
Staff recruitment in the UK typically doesn’t require upfront costs, although training might require a small initial investment. The cost would depend on the size and complexity of your restaurant.
Basic skill training and building familiarity with your specific menu and service standards for your new hires can be done in-house by your senior staff and will hardly result in any expenses. A complex role or a need for specialised training may require hiring an external consultant, which will cost you between £500 and £2,000 per training session.
Monthly Restaurant Expenses & Ongoing Costs
While the initial cost to open a restaurant is significant, don't forget about the ongoing costs crucial for day-to-day operations. Here's a breakdown of some key monthly expenses you'll face, along with estimated ranges to help you plan your budget:
- Rent and Utilities - £1,000–£10,000+ per month.
- Payroll - £5,000-£20,000+
- Food & Beverages - £2,000-£10,000+
- Inventory Management - £50-£200
- Marketing Costs - £10-£2,000+
- Loan Payments - £500 to several thousand pounds.
- Waste Disposal - £100-£500+
- Maintenance & Repairs - £200–£1,000+
- Technology Subscriptions - £50-£200+
- Liability Insurance & Others - £100 - £500+
- Professional Fees - £100 - £1,000+
Tips to Save Costs
There are several ways to control monthly expenses:
- Renegotiate contracts with vendors and utility providers regularly to secure the best deals.
- Track your expenses closely to notice areas for savings. Embrace technology to streamline operations, from inventory management to scheduling and marketing, and potentially lower costs.
- Implement waste reduction strategies, such as minimising food waste through portion control.
- Invest in staff training to reduce waste and food preparation time, work more efficiently, and provide better customer service, increasing sales and customer satisfaction.
By creating a business plan and carefully planning your budget to manage expenses effectively, you can ensure your restaurant thrives in the long run.
For almost 20 years, 3S POS has offered one of the most flexible EPOS systems to international brands such as Caffe Concerto, Maroush, Comptoir Libanais, Pepe’s Piri Piri, GDK and thousands more delighted customers.
If you are looking for an EPOS system for restaurants that will not just help you accept payments but includes inventory management, loyalty programs, and much more, speak to our sales for a free demo.