The Hidden Costs of Starting a Restaurant

The Hidden Costs of Starting a Restaurant

There’s no denying it: Restaurants are expensive to start, and expensive to run.

However, this business venture is always popular because of its promise of local fame and seemingly never-ending profits. While most restaurant investors know their venture will be a costly one, there are hidden fees and expenses that go unnoticed until they’re deep within the process.

You might have considered leasing costs, furniture purchases, and staff expenses, but there are a bevy of hidden costs that are inherent with a restaurant venture.

Read on to find out what you might have missed in your preparations and revise that business plan to reflect the full cost of your business aims.

The Possibility of Previous Liens

If you’re purchasing a restaurant from a former owner, do your research, and don’t take everything at face value.

Did the previous owner have outstanding bills that were never settled?

Remember that any liens placed on a property are attached to the title, not the owner of the property. This means, without disclosure form the seller, you might be purchasing yourself some debt.

Always have legal advisors look over contracts with you before signing, and make sure you run checks on the financial situation of an establishment before investing your money.

Insurance Issues

Insurance is essential when opening, and it goes far beyond property insurance.

You’ll also want to ensure your business and your personal assets are protected in case of legal action. You’d be amazed at the lawsuits that have been waged against restaurants in the past, including common slipups like sprouts missing from a sandwich and coffee being simply too hot.

Make sure you have a comprehensive restaurant insurance plan that covers injuries and accidents that might happen to patrons and staff alike.


Your restaurant could be serving the greatest dish known to man, but if potential customers don’t know about it, it’s guaranteed they won’t be coming in.

While personal recommendations and word-of-mouth advertising are integral to a successful restaurant, you can’t compete with the hundreds of other restaurants in your city without the proper advertising means.

Running your own social media channels is a great step, but it’s usually not enough to make you a standout in your area and market your restaurant.

Hiring professional marketing advertisers is often an essential step of the startup process, and it can cost a pretty penny. But more often than not, the investment is more than worth the payoff.

Alcohol Permits

Do you plan on serving alcohol in your restaurant? Prepare to pay big time to make this a reality, especially if you plan on serving a full range of alcohol—that means liquors and spirits on top of beer and wine.

You’ll find that liquor licenses vary in price depending on your location and the current competition and market.

Alcohol permits are limited, and while varied state laws have different regulations and procedures for the procurement of such a permit, one thing that’s comparable across the board is the great expense that comes along with a license to sell alcohol.

When state issuers run out of licenses, restaurateurs must purchase existing licenses, which can find prices fluctuating up and down on a regular basis.

Music Licensing

Music sets an ambiance, and if you’re looking to play some great tracks over the speakers while your patrons dine, you’ll have to shell out some money.

As your restaurant is qualified as a commercial business, you have to pay for the rights to music. While these fees aren’t astronomical, the extra $1,000 you’ll shell out each year can be an unpleasant surprise when you first get started.

Should you choose to forgo paying for music licensing, you can expect fines and lawsuits that will cost you a whole lot more.

Before fully investing yourself (and your capital) into a restaurant venture, make sure you have a comprehensive understanding of all the last-minute costs that might go into setup and maintenance of the business.

Knowing about all of these facets will help you budget and prepare more wholly, and decrease your chances of running into surprise, business-ruining costs.

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