Typical Restaurant Operating Expenses

Typical Restaurant Operating Expenses

The restaurant business can be lucrative. According to Statista, the global restaurant industry’s market size crossed 1 trillion dollars last year. Despite COVID-19 and its effects, the industry is set to see a double-digit growth between 2021 and 2028. Therefore, starting or scaling your restaurant business sounds like a plan. However, knowing the financial implications of owning a restaurant is a top priority. You’ll need enough money to support the quality work from chefs, servers, cleaners, and administrative staff. Here are some typical restaurant operating expenses you should know.

Restaurant Equipment Costs


Whether a mobile food truck or an online order platform, restaurants need different types of equipment to thrive. Quality restaurant equipment isn’t only reserved for huge brick-and-mortar restaurants, as even a home delivery business will need various types of small ware and furniture including major appliances like ovens, freezers, and stoves.

Sadly, these types of equipment can be capital intensive, hence why many restaurant owners rely on financing strategies to go around the cost burden of some equipment. You can get temporary access to the highest-quality restaurant equipment through equipment financing and leasing service providers.

Today, enlisting such services has become as easy as a Google search. For instance, a quick query for “Salem restaurant equipment” can bring up several options to leverage for your restaurant in Salem, like The Restaurant Warehouse. You don’t need to fixate on brand-new amenities for your restaurant. The secondhand market can get you functional appliances like BBQ grills, refrigerators, and more at good prices.

Utility Costs

Utilities are a mainstay in the restaurant business. You need the best appliances like an AC system to ensure indoor air comfort for your commercial clients. And when the AC or cooling system gets faulty, you need the best HVAC technicians to facilitate routine maintenance and ensure comfort at any given time.

In contracting an HVAC contractor for your faulty AC unit, it’s essential to consider local technicians who are familiar with your community’s climate conditions and the best services to provide. A quick Google query for “AC repair Melbourne, FL” can suffice if you’re in Florida.

Beyond repair services, it’s essential to deploy energy-conserving strategies to lower your utility costs and contribute to the world’s call for sustainability. Using smart thermostats and advanced utility devices can be a good idea. Smart heat systems give you more than the convenience of controlling your restaurant’s heating remotely, and restaurant owners can tailor heating to their specific needs.

Rental Costs

A huge part of your restaurant’s success depends on your location. Hosting your restaurant in a business district might be a better option than in a residential area. Homeowners have the convenience of their kitchen and time to prepare their food. Many business people don’t. However, renting a space in a busy area is no easy task.

Apart from the huge rent prices, you may need to obtain different business permits, which might be stressful. But it’s essential to consider the location’s traffic and its food-buying culture before making your final decision. That notwithstanding, experts advise new restaurant owners to keep rent costs between 6 and 11 percent in calculating their profit and loss.

Food & Labor Costs


Many restauranteurs overspend on food. However, it’s vital to be frugal and lean with your food budget. Note that low price doesn’t mean low quality, so try to negotiate food prices and ensure you’re getting the best deals on the market.

That being said, when it comes to staff payments, there’s no benchmark on how much to spend on your staff. Keeping the numbers between 25 and 30 percent of your total sales is a good idea to sustain your profits.

All in all, managing restaurants can be daunting. Many restaurants end up hemorrhaging cash in their early days. Knowing how to keep operational results above costs is necessary for your restaurant’s success.