Two numbers, and most budgets only have one
Opening a restaurant has two costs.
Setup capital — what it takes to get the doors open. Almost every budget covers this.
Working capital — what it takes to keep trading until you break even. This is the number that gets left out, and it is the one that closes restaurants. A room with a beautiful fit-out and no reserve has to be profitable in month two, and very few are.
This guide covers both, with realistic ranges for three formats.
The setup budget, line by line
For a 30–50 seat casual dining restaurant in an Indian metro:
| Line | Typical range | Share |
|---|---|---|
| Fit-out and interiors | ₹6,00,000 – ₹18,00,000 | 30–40% |
| Kitchen equipment | ₹4,00,000 – ₹12,00,000 | 20–30% |
| Security deposit (6–10 months' rent) | ₹3,00,000 – ₹10,00,000 | 10–20% |
| Licences and approvals | ₹60,000 – ₹2,50,000 | 3–8% |
| Furniture and front-of-house | ₹1,50,000 – ₹4,00,000 | 8–12% |
| Initial stock (food, beverage, consumables) | ₹80,000 – ₹2,00,000 | 3–5% |
| Branding, signage, menus, launch | ₹80,000 – ₹3,00,000 | 3–8% |
| Technology (POS or software, devices) | ₹20,000 – ₹1,50,000 | 1–3% |
| Contingency | 10% of the above | — |
| Total | ₹15,00,000 – ₹50,00,000 |
By format:
| Format | Realistic opening cost |
|---|---|
| Café / coffee shop | ₹8 – ₹15 lakh |
| Casual / family dining, 30–50 seats | ₹15 – ₹50 lakh |
| Fine dining | ₹50 lakh+ |
| Bar / pub | ₹30 lakh+ (licence cost is the swing factor) |
| QSR with seating | ₹10 – ₹25 lakh |
Location moves these ranges more than format does. The same restaurant in a high-street unit and a side-street unit two hundred metres away can differ by ₹10 lakh in deposit alone.
The lines people get wrong
The security deposit. Often six to ten months' rent, and it is dead money for the length of the lease. It is capital, not an expense — you will not see it again until you leave, and possibly not then. Budget it as such.
Contingency. Ten percent, and it will be used. Fit-outs run over. Something in the kitchen arrives wrong. An approval needs a modification you did not plan for.
Licences. Modest individually, meaningful together, and slow. The full list is in restaurant licences in India, and FSSAI — the one that gates several others — is walked through in FSSAI registration. The cost that hurts is not the fee; it is rent paid on a room you cannot yet trade from.
Technology. This line is small and easy to overspend. A traditional POS terminal, KOT printer and cash drawer bundle runs ₹40,000–₹1,50,000, and much of it is optional if your software runs on devices your staff already carry. Before you accept a hardware quote, read what a small restaurant should actually pay for.
Depreciation. Not a cash cost at opening, but a ₹40 lakh interior does not last forever. Every margin calculation that treats the fit-out as free makes every year look better than it was.
Working capital — the number that matters
Hold at least six months of fixed costs, untouched, separate from the setup budget.
For a mid-sized restaurant:
| Fixed cost | Monthly |
|---|---|
| Rent | ₹85,000 |
| Salaries | ₹2,50,000 |
| Utilities | ₹50,000 |
| Other fixed (insurance, software, accountant, maintenance) | ₹35,000 |
| Total | ₹4,20,000 |
Six months = ₹25,20,000.
That is often larger than the fit-out, and it is the single most common reason a restaurant with good food closes in year one. If including it makes the project impossible, the project was already impossible — you have just found out before spending the money rather than after.
A restaurant typically takes six to eighteen months to reach consistent profitability. The reserve is what funds the gap between opening and that point.
Where to save, and where not to
Save here:
- Second-hand stainless steel — worktops, shelving, storage racks. Condition is visible and failure is not catastrophic. Typically 40–60% cheaper.
- Front-of-house furniture. Second-hand or locally made rather than imported.
- Fit-out restraint. Lighting and a good layout change how a room feels more than expensive materials do.
- Technology hardware. Covered above.
- Signage. One good sign beats three mediocre ones.
Do not save here:
- Refrigeration and cooking equipment. Buy new or professionally refurbished with a warranty. A chiller failing on a Saturday costs you the stock, the service and the reviews all at once.
- Exhaust and ventilation. Retrofitting is disproportionately expensive and it is a common reason a fire NOC is refused.
- Electrical work and load sanction. Under-specifying it means shutting down mid-service later.
- Working capital. Every rupee moved from the reserve into the fit-out shortens your runway.
The general rule: buy the kitchen new and the front-of-house second-hand. Most owners instinctively do the reverse, because the front-of-house is what guests see.
A worked example
A 36-seat casual dining restaurant in a tier-1 city, ₹85,000 monthly rent:
| Amount | |
|---|---|
| Security deposit (8 months) | ₹6,80,000 |
| Fit-out and interiors | ₹9,50,000 |
| Kitchen equipment | ₹6,20,000 |
| Furniture and FOH | ₹2,40,000 |
| Licences and approvals | ₹1,30,000 |
| Initial stock | ₹1,10,000 |
| Branding, signage, launch | ₹1,40,000 |
| Technology | ₹35,000 |
| Contingency (10%) | ₹2,90,000 |
| Setup total | ₹31,95,000 |
| Working capital (6 months) | ₹25,20,000 |
| Total required | ₹57,15,000 |
The setup figure is what most people quote. The real number is nearly double it.
Model it at 60%, not at full
The most common modelling error is assuming full capacity from month one.
Take the same restaurant: 36 seats, two sittings, ₹850 average order value, six days a week.
- At 100%: 36 × 2 × ₹850 × 26 = ₹15,91,200 a month
- At 60%: ₹9,54,720 a month
With ₹4,20,000 of fixed costs and a 58% prime cost, the 60% case still works — roughly ₹1,33,000 a month of contribution after fixed costs. The 100% case looks spectacular and will not happen in month two.
If the plan only works at full capacity, it is not a plan. Build it at 60% and treat everything above that as upside. The full margin arithmetic is in restaurant profit margins.
Common mistakes
Budgeting the opening and not the year. The single biggest one.
Treating the deposit as an expense. It is capital, and you may not get it back.
No contingency. It will be used, so plan for it rather than raiding the reserve.
Overspending on what guests see. Guests notice a warm room and consistent food. They do not notice imported tiles.
Under-specifying ventilation or power. Both are expensive to fix afterwards and one can block your fire NOC.
Modelling at full capacity. Produces a business plan that is true only on your best night.
What to do before you commit
- Build both budgets separately. Setup and six months of working capital. Two columns.
- Get the deposit terms in writing — amount, refund conditions, notice period.
- Run the rent test. Under 10% of realistic projected revenue, modelled at 60% capacity.
- Split the equipment list into buy-new and buy-used before you request quotes.
- Price the technology line separately from the hardware quote.
- Add 10% contingency, then check the total is still fundable.
The short version
- ₹15–₹50 lakh opens a mid-sized casual dining restaurant in an Indian metro; ₹8–₹15 lakh opens a small café.
- Fit-out and kitchen equipment are 50–70% of setup between them.
- The deposit is six to ten months' rent and it is capital, not expense.
- Hold six months of fixed costs as working capital. This is what closes restaurants, not the food.
- Buy the kitchen new, the front-of-house second-hand. Most owners do the opposite.
- Model at 60% capacity. A plan that only works when full is not a plan.
