You may never have thought about it, but pizza is one of the most popular foods in the world. In the United States alone, 350 slices get eaten per second. Pizza has become a staple in our culture and can be found anywhere from local grocery stores to high-end restaurants. Before you do, consider the costs that go into running this business.
Starting your own pizza restaurant costs an average of $125,000. These costs can range from $80,000 to $450,000.
- Grand Total Kitchen Costs – Small Ovens
- Grand Total Kitchen Costs – Large Ovens
- Grand Total Kitchen Costs – Conveyor Ovens
- Grand Total Kitchen Costs – Cleaning / Utilities
- Many Factors To Take Into Consideration
- Pizza Startup Costs
- Thinking About a Franchise
- Building the Perfect Kitchen
Grand Total Kitchen Costs – Small Ovens
If you have small ovens, the total kitchen cost will range from $72,000 – $161,000.
Grand Total Kitchen Costs – Large Ovens
If you have large ovens, the total kitchen cost will range between $115,500 – 252,000.
Grand Total Kitchen Costs – Conveyor Ovens
The total kitchen cost for conveyor ovens is usually around $121,500.
Grand Total Kitchen Costs – Cleaning / Utilities
The total kitchen cost for cleaning supplies should be around 7% of revenue from all sources.
Grand Total Kitchen Costs = $0 to $23,555 + oil and propane costs + health insurance costs (if any) = total restaurant startup costs range from $213,500 to over a million dollars depending on everything you included in your calculations above!
If this number seems crazy high, you may want to find other ways to cut corners–and yes, these usually include opting out of certain foods or materials that your restaurant may need.
You can also find creative ways to make those things yourself–like recycling cardboard boxes and repairing your own equipment instead of buying new ones!
Many Factors To Take Into Consideration
To begin, there are many factors to take into consideration when opening your own pizza shop. The first is whether or not you want to run an independent restaurant or franchise.
Most restaurants start as independent businesses, but there are many benefits to opening a franchised shop. The biggest bonus is that you are buying into an already established company with years of experience in the industry.
There are other pros and cons for each business model, but independent restaurants generally have lower start-up costs than franchises.
Although having an independent shop may require higher operating costs, it will give you more control over your business strategy because, after all, it is your business.
The next step is deciding the type of pizza restaurant that will fit your needs. For example, if you want to run a fast-food restaurant, consider purchasing equipment that can quickly produce pizzas, like conveyor ovens. This way, you can focus on providing customers with high-quality food without taking too much time to prepare it.
Once all of these factors have been considered, many costs go into running a pizza restaurant business.
Pizza Startup Costs
The type of equipment you buy will depend on whether or not you decide to open a fast-food, delivery, or sit-down pizzeria. Each requires a different setup.
You can expect to spend around $30,000 for equipment for an independent restaurant and $65,000-$200,000 for a franchise.
Once you have your equipment, you will need a place to set it all up. A pizza restaurant takes up a lot of space because of all the necessities of running one.
Generally, a facility will cost anywhere from $5,000 if you rent, and between $150,000 – $500,000 for sit-down pizzerias, depending on its size.
Fixtures and Fittings
These costs are pretty self-explanatory–measuring devices such as scales or measuring cups fall under this category. In addition, fixtures like tables and chairs will make any facility more comfortable for customers.
Fixtures will cost you anywhere from $3,000 to $37,000 for a delivery-based pizzeria and between $4,200 and $74,500 for sit-down pizzerias.
Other Equipment Costs
Other pieces of equipment fall into this category–refrigerators and freezers, appliances such as ovens or grills, sinks, and dishwashers.
You can expect these costs to be around $75,000 for sit-down restaurants, with the average being anywhere from $25,000-$50,000 for fast food or delivery-based businesses.
Inventory is crucial because you need all the necessary ingredients before you make your first pizza! These include flour, tomato sauce, cheese, meats, vegetables, and more.
Startup costs for inventory will range from anywhere between $5,000 to $20,000, depending on how extensive your menu is.
This category includes the cost of repairs and cleaning supplies in addition to pest control services.
Annual facility maintenance costs can be around $25,000 for pizza shops that mainly offer delivery or fast food-based businesses, but upwards of $75,000 for sit-down pizzerias.
These include items like paper cups for soda fountains, crates used to store ingredients when delivered to stores, and similar items. The average annual disposable supply costs will range between $5,000 and $30,000.
This category includes all the items required to operate your pizzeria–like utensils, soap for hands and dishes, menus, phones, ticket printers, computers to place orders online, etc.
These costs will range anywhere from $10,000 to $150,000 depending on how high-tech you need your pizzeria to be.
Salaries and Wages
These will vary widely depending on what state you are in and whether or not you offer benefits.
When it comes down to it, employers should expect to spend around a third of their revenue on staff wages, including salaried managers, hourly workers, and delivery drivers.
These include costs like social media campaigns, flyers for coupons or discounts, and local marketing materials (i.e., billboards, commercials, signs, etc.) The average annual marketing cost will range from around $5,000-65,000, depending on how big your pizzeria is and how much you plan to use paid marketing strategies.
This category includes the electricity bill you receive every month and other miscellaneous expenses that are not included in any of the other categories–like bank fees or trash removal services. These costs should be around $6,500 to $15,000 per year.
Grand Total for Startup Costs
When all is said and done, you can expect to spend anywhere between $100,00 to $500,000 to run a sit-down pizzeria and $50,000 to $250,000 for a delivery-based pizzeria.
Thinking About a Franchise
So how does this all factor into opening a franchise? Depending on what franchise you choose, you can open a location for as little as $100,000, including the unit, equipment, and signage.
And that’s just the beginning! Keep in mind it will cost you more if your facility needs renovations–and these costs will vary depending on what type of restaurant you choose.
If you choose to build from scratch with a contractor, it could run up to an estimated 1 million dollars, so be sure to do your research ahead of time!
Additional Franchise Cost
Once you have your restaurant up and running, you will need to continue with the same cost as any other pizzeria. That means around a third of your revenue should be allocated towards staff wages, marketing costs, etc.
Initial Franchise Fee
The initial franchise fee can range from $20,000-$500,000, depending on your franchise choice. This fee is non-refundable and includes training at your location throughout the duration of your operation.
Royalty Fee – Annual
This fee will range anywhere between 4% to 8% of weekly gross sales, and you can expect to pay anything upward of about $10,000 for every $1 million in revenue.
However, franchises may vary, so be sure to ask this question when talking with an operator during the initial stages of opening your business.
Cost Living Allowance (COLA) – Annual
Some franchises require payment for regular adjustments that occur each year, like the cost of living increases or general price increases associated with doing business–and these changes can vary from as little as 25 cents per gallon of milk to as much as 5% of total revenue. This is a flat fee that some franchises require you to pay as compensation for inflation.
You will need to pay employees an average of $10.00 per hour on the low end and up to $24/hour on the high end–along with offering benefits if possible, which can include health care, paid vacation time, paid sick leave, 401k plans, etc.
Grand Total Franchise Fee
The total franchise fee will range anywhere from $300,000 – $1 million depending on how many training sessions your franchise requires and whether or not they offer any COLA fees.
The more sessions you have and the more you pay in COLA fees, the higher this number will be.
Building the Perfect Kitchen
Let’s look at how much, on average, it will cost you to create the perfect slice of pizza.
First off, you will need to purchase the best ingredients out there–and this usually means starting your restaurant relationship with a well-known supplier like Sysco, US Foods, Gordon Food Service, etc.
The food cost should be around 25% of your overall sales which is why it’s so important to have quality suppliers on board who can ensure that everything tastes delicious every time!
This also helps reduce waste and increase profits for you as an operator.
An above-ground one-door pizza oven runs around $3,000 on the low end and upwards of $10,000 on the high end.
These cost around $5,500 for seven cubic feet and go up to more than $30,000 for 60 cubic feet.
Walk-in Freezers: You can expect to pay between $4,500 and $16,000, depending on the size you choose.
Ovens large in size range anywhere between $4,000 and $13,000.
Expect to pay more than $5,500 on the low end and up to about $20,000 for a large grill.
The price for conveyor ovens can range from around $7,500 to upwards of $22,000, depending on the size you choose.
You will need at least four burners that run off of natural gas–and these cost around $1,900 per unit up to just under $6,000.
You can expect to pay anywhere between one-fourth and one-third of a cent for every plate you wash in a dishwasher.
You will need one to two dishwashers to accommodate the demand in your restaurant, and these usually cost about $9,500 each when purchasing from higher-end sources like Miele or Bosch.
Cleaning / Utilities
In addition to your food costs, you should expect to pay around 7% of total revenue on cleaning supplies that include things like wax paper, boxes, oven cleaners, etc.
In addition, be sure to buy commercial-grade equipment–not household appliances because they won’t stand up against daily wear and tear!
There are many things to consider when opening a new pizza shop–and you’ll need to have an idea of all of them before making the final decision.
Even if you opt not to include certain features or materials, be sure that they are non-negotiable parts of your restaurant concept!
Remember that these are just the average costs for each item on this list. However, now that you have a good idea about how much money it will cost to open up your very first pizzeria, you can start putting together a solid plan for turning your dream into the perfect slice!
It may be a lot more than you initially thought, but it’s all worth it in the end when you’re serving delicious pies to happy customers! You may be interested in our guide on Cost to Start a Trucking Company