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Running a Restaurant/Approx. cost of bringing site to code / building kitchen


QUESTION: hi Larry
I need to estimate Insurance costs for the financial plan of a small cafe (600-800 sq. feet), two full time employees (including myself) and one or two additional part-time employees. Planning on offering Workers comp and medical / dental benefits for the two full timers. Projected sales for Year1 is 350K. State is Massachusetts.
Thank you

ANSWER: Helen;

There are a number of variables that can affect the cost for insurance. However, for budgeting purposes you can use 5% of payroll for workman's compensation and in Massachusetts you have a healthcare system that will be about $700 per full time employee per month.

There are many aspects to insurance coverages that are too detailed to describe here, but casualty/liability insurance for your operation may be $2500 per year if no alcohol is served.

Remember, these are estimates for budgeting purposes.

---------- FOLLOW-UP ----------

QUESTION: hi Larry
I am looking at a 2,300 sq. foot site near Boston to open a cafe. The site is vacant and used to be a pottery studio open to the public.
1. Do I hire a structural architect in order to assess the cost of building a kitchen and bringing the business up to code? how much can I expect this consulting service to cost me?
2. According to the Health dept, all the site really needs to be up to code is a 1,000 gallon external and internal grease trap, which I believe can cost anywhere between $5,000 and $10,000. The owners are willing to take care of the sewage code issues to ensure 50 seats on the site, and this will cost them about $50,000. They will not pay for any other internal renovation costs however.
Assuming that all I need is the cost of "building" a kitchen, counters, shelves (office is already built, bathroom stalls are built, equipment will be leased), would you be able to give me a ballpark of what can be expected as a start up cost? Is $20,000 - $30,000 a realistic figure?
Thank you

Yes, you can hire an architect or restaurant planner to give you direction. A general contractor who has experience may also do some planning if he gets the final job. Fees can range from $2500 to $5000 for this small size.

As far as the estimated start up costs, you don't give me enough information to help with an estimate. You will have;
- Inventory
- Payroll
- Deposits (lease, utilities, etc.#
- Equipment #dependent on type and style of food)
- operating expenses for 30 days
- advertising and promotion costs
- Tables, chairs, decorations
- Sign

All of this depends on the type and style of cafe you are trying to create. Without more detail, I can't be more specific.

Running a Restaurant

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Larry Edger


Multi concept restaurant owner. Just finished fourth restaurant. Can answer questions on all aspects of running, owning and starting a restaurant, cafe or hospitality operation. Enjoy helping other restaurant owners. Most "consultants" have no idea what a restaurant operator needs to be successful. Let me know if I can assist you finding answers to your operating and marketing questions. Accomplished chef and menu development a particular talent for upscale casual restaurants.


Owner and operator of several multi-concept restaurants. Successful entrepreneur, started businesses from scratch on many occasions. Know the problems with planning and running a restaurant. Always independent operations and not the product of chain restaurants.

As an author of The Restaurant Ebook, A Guide to Keeping Your Dream Off the Chopping Block, I have helped hundreds of restaurateurs to market and run a better restaurant.For more information visit or

Attended Ohio State University and have gone through many extended classes relating to marketing and management. Written many courses and training manuals.
Currently building fourth restaurant and created a blog to keep track of daily activities. Readers can see the various steps from leasing to opening. Visit

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