The cost of starting a fast food business can vary from $50,000 to $1 million depending on the type, location, and size. Initial investments are relatively low. Key considerations when starting a small fast food restaurant include location, food type, target market, capital required, and operational costs.
Initial Costs and Franchise Fees
Franchise fees can cost $250,000 to over $1 million to open a restaurant, varying by brand prominence. One-time startup expenses include security deposits, kitchen equipment, tableware, and linens. These may need replacing over time.
Monthly franchise fees are typically 5 percent of gross sales but can be up to 50 percent. The fast food industry has high barriers to entry and intense competition. To start a home food business, documents needed include ID and address proof.
Commercial kitchen equipment is expensive so consider secondhand items from auctions. Work out your menu first then get equipment. Less than 1 percent of Chick-fil-A franchise applicants are chosen.
It costs $342,990 to $1,982,225 to open a Chick-fil-A franchise including a $10,000 franchise fee, but Chick-fil-A covers all opening costs, meaning franchisees pay only that $10,000. McDonald’s franchisees’ gross profits average about $1.8 million per restaurant in the US.
Potential Profitability
A single fast food restaurant can generate $50,000 to $100,000 or more per year. Open additional locations and it is possible to earn millions of dollars per year. If you have a unique concept in mind for a fast food restaurant, this could be the start of the next big fast food franchise. According to LightSpeed HQ, the average profit margin for quick service restaurants or fast food restaurants is between 6% and 9%. Operating a fast food restaurant attracts some recurring costs that include: Raw materials, Salary, Rent, and bills.