Is it your dream to open a restaurant? The costs may seem daunting but don’t be intimidated. Just like any big investment, good planning is key.
But how just much does it really cost to open a restaurant in Metro Manila these days? With over 260 restaurants under his belt, we talked to restaurant consultant Cyrus Cruz of The Food Agency about the expenses needed in setting up your own shop.
The startup costs to open a restaurant
“This really depends on how upscale you want your restaurant to be,” Cruz says, adding it would be safe to allot around P35,000 to P45,000 per square meter. A decent, medium-sized restaurant would be around 150 square meters, for example, and it should be enough for around 40 people, with two square meters per person indoors plus an al fresco area. It is expected that at least a third of the total space will be for the kitchen.
If you are planning to borrow for your business, familiarize yourself with the expenses and cost breakdown before deciding on a loan amount. To give a clearer picture of the figures you’ll be dealing with, here are estimated costs that could be incurred by a 150-square-meter restaurant located at the ground floor of a commercial building in Quezon City that can seat 65 people indoors and 20 people in the al fresco area.
A decent, medium-sized restaurant would be around 150 square meters, for example, and it should be enough for around 40 people, with two square meters per person indoors plus an al fresco area. It is expected that at least a third of the total space will be for the kitchen.
Like with any business, there are a number of permits needed, which can cost around P150,000. These include but are not limited to the following:
- Barangay Clearance
- DTI Business Name Certificate for sole proprietors and Certificate of SEC Registration for corporations and/or partnerships
- Community Tax Certificate or CEDULA
- Sanitary Permit
- Contract of Lease
This is one of the biggest expenses you have to invest in. “If you have the budget, go for the best location for your restaurant concept. Most likely it will be more expensive, but it will be worth the investment,” Cruz advises.
For the location of this metaphorical restaurant, he estimates around P1,300 to P1,500 per square meter. In addition, restaurants should heavily consider investing in al fresco dining areas given the pandemic.
The design of your restaurant is probably the most expensive one-time cost you will incur. This includes construction and furniture but this will also depend on how you want the customer experience to be. For the example given by Cruz, the restaurant design and construction could incur a total of P9 million, inclusive of a bar area.
Another important factor is the kitchen, which could cost around P1.5 million in this case. Cruz notes however that costs can be lowered as some equipment can be purchased secondhand.
Getting the right people to work with you is not something to scrimp on. Cruz says, “Invest in talent. A great chef will not only help you create an amazing menu and train your team but they will help manage/operate your kitchen efficiently and keep your margins tight and profitable.”
“Another is the restaurant manager, they will make sure your front of the house will be operating in harmony. A well-seasoned manager can work magic in the dining room. They can work the floor and make sure your customer experience is top-notch. In running your business, this is one of the most important elements.”
For our Quezon City restaurant, the chef consultant could charge around P300,000 for developing recipes. Rank and file employee salaries are a minimum of P550/day, plus service charge, which ranges from P3,000 to P15,000 per month.
Monthly salaries of certain team members, which still depend on experience, are as follows (exclusive of service charge):
- Chefs: P35,000 to P150,000
- Cooks: P18,000 to P25,000
- Managers: P20,000 to P35,000
- Supervisors: P15,000 to P18,000
Branding is the overall image of your restaurant. This can be translated into the signage, menu, uniforms, product photography, website, and social media pages. It is important to invest in this aspect of the business because this will determine how your customers will perceive your brand and how you can set yourself apart from competition. For our restaurant, allocate around P300,000 for brand identity.
Product and operational costs
This will vary based on the menu, but it is safe to have at least six months’ worth of salaries and operational costs.
Best doesn’t mean most expensive
The numbers may be intimidating, but Cruz assures budding entrepreneurs not to be disheartened.
The age-old advice of sticking to your budget applies here. “Don’t overspend and go beyond your limit. It’s easy to get carried away but stay focused on your vision,” he advises. “Get proper counseling and make sure your resources are allocated in the right places.”
“The best restaurants are not always the most expensive nor the most expensive to build. Just make sure the motivation is right, and have an exceptional product and a great story to tell,” says Cyrus Cruz.
“The best restaurants are not always the most expensive nor the most expensive to build. Just make sure the motivation is right, and have an exceptional product and a great story to tell,” he adds.
Cruz explains that there are a lot of hole-in-the-wall concepts that work because they do it for the right reasons, such as sharing their story through food.
But one of the main things you really need to invest in your business is time. Learn everything and invest in yourself as you should be in it for the long haul, advises Cruz. Be 100 percent into the business. Take the time to get to know your team as well as they will be your support system in making the business successful.
Lastly, do not be afraid to fail. “Be fearless and just go for it.”