Restaurateurs know how competitive the restaurant industry is. In 2018, there were 13,251 new restaurants in the U.S. alone, an increase of 2 percent from the previous years. Add to that the fact that 17 percent of restaurants fail within their first year of business, and ask for any restaurant to give a menu with price and the average lifespan is only 4.5 years; you’ll quickly see why restaurant owners need to do everything they can to stay ahead of the game. Not to mention that the pandemic made survival even more difficult.
With all of this in mind, a successful restaurant requires regular investment. It’s why the National Restaurant Association recommends that business owners renovate their restaurants at least every five to seven years. The question is, how much should you budget for your restaurant remodel?
Restaurant Renovation Costs To Consider
The average cost of restaurant renovations is going to vary widely based on the following factors:
- Location: If your restaurant is located in New York City, the cost estimate is going to be much higher than if your restaurant is located in a small town in rural Oklahoma. Construction costs are simply going to be higher because labor is going to cost more.
- The extent of the renovations: What are your restaurant needs? Does your existing restaurant require a complete overhaul? Or do you simply need some minor renovations to the dining room’s interior design to help improve the ambiance and the dining experience? For instance, adding digital signage isn’t going to cost nearly as much as replacing your entire HVAC system and upgrading all of your commercial kitchen equipment (such as upgrading your ovens).
- Permits required: Depending on the municipality in which your restaurant is located, you may need to obtain permits for your renovations. The cost of these permits will vary depending on the type of work being done as well as the location of your restaurant.
- Insurances: Some general contractors will require that you purchase insurance in order to cover any accidents or injuries that occur during the construction process. The cost of this insurance will be factored into your overall renovation costs.
- Square footage: Depending on the extent of your remodel, the larger the space, the more it’s going to cost to renovate. For instance, if you’re replacing the floor, then the size of your restaurant will definitely affect the cost of your renovations.
- Labor costs: Labor costs will also add to your overall restaurant remodel budget. However, you can offset some of these costs by engaging a general contractor who does many different types of commercial renovations. Additionally, the more time-consuming the remodel is, the more your labor costs will be.
Additional Factors to Consider
In addition to the actual costs of the renovation, there are a few other costs to consider as well. For instance, the longer it takes to remodel your restaurant, the longer your business will be shut down. Unless you’re doing minor renovations, odds are you won’t be able to keep your restaurant open during the remodel.
As such, you may want to plan your renovations during your slowest time of the year. Additionally, customers who show up to your restaurant only to find that it’s closed may assume that you’ve gone out of business. Because of this, it’s crucial that you promote your restaurant and advertise your renovations so that everyone knows that your restaurant is shut down temporarily. Reach out to your audience on social media. Let everyone know what dates you’ll be closed and what date you’ll be opening back up.
Additionally, because you’ll be closed for a period of time, you’ll need to make sure that you’ll be able to survive without consistent cash flow. If you run out of money in the middle of renovations, you could find yourself in deep financial trouble.
Average Costs of a Restaurant Renovation
To give you a very general idea of how much a restaurant remodel costs, a survey by Restaurant Owner revealed that the average cost of a 3,2000 square foot restaurant build-out is $50 per square foot. With that in mind, the following should give you a rough idea of how much a restaurant renovation will set you back:
- Kitchen equipment: It’s estimated that the average cost of a complete kitchen and bar build-out is around $115,655. Of course, you can save some money by selling old equipment as well.
- Updating furniture: If you want to completely redo your interior design, replacing all of your furniture (such as the chairs and tables in your dining area) can cost upwards of $40,000.
- Permits and licenses: Depending on what permits you need and any additional licenses you want (for example, if you’re adding a bar and need a liquor license), expect to pay between $5,000 and $6,000.
Overall, there are many factors that will affect the costs of remodeling your restaurant. Some of these include the size and type of renovation, as well as the labor and materials involved. However, by doing a bit of research and planning ahead, you can create a practical budget for your upcoming renovation project.