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Starting a new restaurant is a bold decision. Hospitality is one of the toughest industries there is, with three out of five openings destined to fail in the first three years. Of those, the majority of restaurant startups fail because they were undercapitalized—or because they weren’t able to keep costs in check. Don’t be one of them!

The majority of restaurant startups fail because they were undercapitalized.

Plan on any given floor space costing anywhere between $100 and $800 per square foot, depending on your specific needs. The general mechanical, electrical, and plumbing (MEP) work for a commercial kitchen typically ranges between $70,000 and $100,000, and about the same for equipment. Budget approximately $150 per square foot for the rest of your space, plus furniture.

Avoid overspending on the following four areas when you become a new restaurant owner and the odds of success will be in your favor.

New Equipment Costs

More important than getting the newest equipment is getting the right equipment. Restaurants that close down will have equipment for sale at large discounts. Also search for other second-hand options, shop online and don’t buy anything you don’t need right now.  You should also consider cloud-based POS systems that have lower costs than legacy, on-premise solutions.

Thinking about opening a new restaurant? Congratulations!

Download our How to Start a Restaurant Guide to learn everything you need to get up and running, from writing your business plan to training your staff for success.

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An integrated restaurant point of sale system is probably your most important tech purchase. It takes care of receipts, payments, inventory, and much more. The best ones either include a bookkeeping system or will integrate with one, so don’t be guilty of false economy. Carefully weigh whether all your wait staff needs iPads for orders. If you decide they do, you may be able to use last year’s model or second-hand versions.


The Internet is your best friend when it comes to low-cost marketing. Social media sites such as Yelp, Facebook, Twitter, Instagram, and Pinterest all offer cheap and free ways to create and grow an engaged audience. They need active involvement on your part to work, so research where your target audience hangs out before trying to build out multiple social profiles. Email marketing isn’t as sexy—but it’s still the most effective online marketing method there is.


Don’t become transfixed by expensive restaurant decor ideas. Anyone should be able to create memorable ambiance without spending a fortune. A couple of high-impact elements can go a long way without every little detail having to be a statement. Focus on soft lighting, funky upholstery, and inviting paint colors.

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Mitchell Hall is a writer and editor living in Boston, MA. Originally from New Zealand, growing up he spent nearly ten years greedily imbibing the spirit of hospitality as a kitchenhand, waiter, and barman.
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