The average start-up cost of a restaurant is between $100,000 and $300,000, according to "Forbes." While starting a neighborhood sandwich shop is going to cost significantly less than opening a new five-star restaurant, you will still have to contend with expenses fundamental to the food service business.
Unless you plan on operating your sandwich shop out of a van, you’ll need to pay for a location. Location is a prime reason why restaurants succeed or fail, and where your shop is located will have a huge effect on your business and your costs. For a prime spot for lunch-goers, whether you are located in an urban center or a suburban strip mall, rent can be pricey. "Forbes" recommends limiting the cost of rent to 8 percent of your revenue.
From grills to counter stools, you’ll need to outfit your sandwich shop with the right equipment. What type of food you plan on serving will determine what you need to purchase. If you plan on selling only cold sandwiches, you won’t need any industrial ovens, fans or grills. But, if you want to serve hot sandwiches such as cheese steaks or other grilled hoagies, you’ll need the works. You’ll also need refrigeration systems, an area for cooking and preparation and seating for your customers. In addition, consider adding a point-of-sale system to better track and automate your sales. All of that will be wrapped into your startup costs in some form or another.
Before your doors are opened to the public, you’ll have to stock your kitchen with food. According to "Forbes," the cost of goods sold should be between 25 percent and 40 percent of revenue. That is a large range; however, your menu will dictate your profit margin. Expensive food such as filet mignon or salmon will cost more per pound so, for your sandwich shop, your costs can be much lower. Don’t skimp on the menu items that will be your specialties, and consider what store-bought items you will make from scratch such as sauces and breads. At the beginning, you’ll want to maintain a tight cap on your food costs to maintain cash flow while you are determining your demand.
Unless you plan on being a one-man gang or recruiting your family for volunteer work in the kitchen, you’ll need to budget for payroll. "Forbes" says payroll should comprise 20 to 25 percent of revenue so put aside enough to meet payroll for the first few months you are open. Consider the type of employee working in your sandwich shop. Whether you will be hiring wait staff, cooks or cashiers, you’ll need to budget for a pay scale that fits your needs and attracts a solid staff.
John Zaphyr is a marketing and sales manager with the Oncology Nursing Society. He has written professionally since1999 and also has editing credits with Friedlander Publishing Group. His articles have appeared in the "Pittsburgh Tribune Review." John earned a master's degree in English education from the University of Pittsburgh.