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

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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
Helen

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

Answer
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

Expertise

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.

Experience

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.

Publications
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 http://www.therestaurantebook.com or http://www.onawait.com

Education/Credentials
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 http://www.startingarestaurantblog.com

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