Building a Pizzeria/Restaurant from Scratch

Pizza Shop Talk The Think Tank
1

Hey everyone, glad to join the forum! I am in the process of signing a lease in a 4,500 square foot building to build a pizzeria and restaurant from scratch! It’s alittle scary to say the least, all I am getting is what they like to call a “vanilla box”, which means four walls. I have been rounding out the numbers to see what I’d financially need, to get started. Everyone says “whatever you think you need, you always need more”, and “when you think you got everything accounted for, you wind up missing 20 things”. If anyone has started one from scratch, or in general knows what I am missing, or some figures, I would greatly appreciate it.

This is what I gathered so far…
Architect - $5,000
Lawyer - $15,000
Securit Deposit - $24,000
Equipment - $110,000
Security / Audio / Phones - $20,000
Computer System - $15,000
Construction - $100,000
Tile - $40,000
Business Cards / Menus / Flyers - $5,000
Advertising - $10,000
Food Supplies - $10,000
Electrician - ?
Plumbing (We have one bathroom given to us but going to build two more bathrooms, and all the gas lines we need done) - ?

So far we are up to $353,000

Anything else I am forgetting?

Thanks all for the help I greatly appreciate it

2

Just a few things I immediately thought of, I’m sure I’ll think of more…

Smallwares. Don’t let the “small” fool you, my last restaurant had about $5,000 worth.

China, glassware, silverware. I’m guessing at 4,500 square feet you’ll have plenty of dine-in. You will easily be around $4,000 to outfit an entire restaurant, mostly likely more.

Building permits.

Did you already get a quote for your architect? The going rate is usually $2-$4 per square foot.

Working capital. Everyone always forgets this one, but you probably won’t be profitable right out of the gate. You’re going to need a cash reserve or at least a line of credit somewhere.

You have a “?” next to electrical - My last restaurant was 2,400 square feet and electrical ran us $18,000. That did not include low voltage runs that I did myself. I personally believe that was a ripoff, but it will show you a ballpark.

Let us know what you are already including in “equipment” so we can what is missing. Also, what are you including in “construction”, since it doesn’t include plumbing and electrical. Are you already including an HVAC budget in there?

I’m guessing this place will be beautiful if you’re spending $40,000 on tile!

3

My Equipment (all new) includes all kitchenware, all pizza counterware, smallware, etc…ovens, glassware, tables, chairs, countertops, everything for the most part. My uncle owns a huge wholesale food service supplier for bars / restaurants, so I will be getting everything I need from him. The architect I know and he is charging me $5,000 like I said. And he won’t be contracting anything, I have different family members / friends doing everything for me, only thing I am lacking is the electrician and plumbing, so I know nothing about that.

I would need to ask the property owner about the HVAC, otherwise, I need to do that obviously. I am not counting low voltage runs either.

As far as Construction, I was just implying the builder, who is going to be putting up all the walls, doing the counters, the bar, the carpentry work, crown moldings, building pillars, the base for booths in the restaurant, etc…

4

I am also not adding the building permits etc…

5

Welcome!!

If you’re looking for a really complete list:

  • insurances - you’ll need to pay certain of these once construction starts / before you open.
  • pre-opening /training labour - you’ll need staff before you open
  • legal/accountancy/payroll support - not much but you may need this beforehand

I think you’ve got a good list there; what’s included in the ‘big headings’ may or may not include some items which are too much/too little or missing but it looks to me as if you’ve thought this area out quite well!

Good Luck!

6

I was going to say your equipment budget is way too low, but since you’re buying wholesale it probably isn’t.

“Vanilla Shell” is a bit of a dangerous term since there is no formal definition of it - you definitely want to check your lease for what it includes. In most cases, however, vanilla shell will include the HVAC units and have them stubbed into the premises. You will then be responsible for all runs and terminations after that. You will also incur HVAC costs to have your hood(s) installed.

As for plumbing, beyond the bathrooms you’ll need all of your sinks run, gas lines and floor sinks. If this building is already built the floor sinks will need to have concrete cut. Depending on your building type and codes you may also need to install sprinklers. Vanilla shell will usually just have the building supply line stubbed and you’ll be responsible for sprinkler installation (if required.) My last sprinkler installation was extremely costly, so do look into this.

It’s good to see that you included $10,000 for advertising. That’s one that often gets left out :frowning:

In my last post, I forgot to mention that the $18,000 I paid for electrical also included all lighting fixtures. The bid I received to do low voltage runs was $1800 :shock: I did it all myself in 6 hours with $200 worth of cable. Not bad for a half-mile of cable :slight_smile:

This is actually one of the best lists I’ve seen from a prospective owner on this board. It looks like you’re being pretty realistic.

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Wow, $40K for tile? I just had a 1000’ of ceramic laid for $925.00 total (labor & tile). Its great that you’re thinking about all this spending… are you just as detailed in your business plan? $300-400K is a huge debt load to start out with. I’m assuming this location is simply to die for… 'cuz if it isn’t, well you’ve heard the saying, ‘location, location, location.’ You can build the most expensive pizza restaurant with the best equipment and highest paid staff, but if you can’t make money, you’re done for. Where is all this capital coming from? I’d sure like to know the bank that’s willing to throw away that kind of dough on a new pizzeria. If its your cash, I can think of 100 better investments than a pizzeria.

I’m still a newbie in this business, but I’m learning. You want $1000s in capital reserve to ‘float’ the store while you execute your business plan and build business, and that could take awhile, a long while, like a year, or 2, or 3+. All those $1000s in initial building/plans/equipment/paint/expensive tile/attorney($15K???)/phones-security($20K???) will get you nothing, when you need a cash injection 12 months down the road to offset sluggish growth. Money is tight, and you should be just as frugal spending it in the beginning as you will be 18 months down the road.

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Pizza2007 - I have 200k cash, and I took a loan out for 300k. Yes I am just as detailed as my business plan. Some areas are alittle less detailed, but for the most part I am working on them to become just as detailed. I built business models, profit structuring, etc… I used to do portfolio management and financial advisor work, so I am pretty good with numbers. Anyway, its funny your saying that this location must be to die for, because it is. I’ve thought of many other business investments as well, and am always loooking for an opportunity to make money. There is a similar pizzeria and restaurant about 5 miles from my location, in a less trafficked area, and the surrounding community has the same median household income as the communities bordering mine. With my location and a consistency of food/service, it would be a homerun. Of course I need to count for the variables but through the information I have gathered, and surrounding myself by people in the industry I feel that it will be an extreme success.

Piper - Your 100% right, this whole Vanilla Shell phrase has no formal definition so there are more questions I need to ask. My uncle is a pretty big time contractor so I am taking him with me to the location to ask the real estate rep some more questions about what will be included and to see what exactly I would need. And thank you for your kind words.

Wizzle Wassell - I have everything you mentioned accounted for, there may be a few things here and there that are too much or too little, but for the most part I “rounded-up” on all of my expenses. Thank you also for your kind words.

9

Congratulations and good luck!

The standard industry terms are “white shell” and “warm white shell”. Warm means it has HVAC. However, even if it does, it is likely not enough for a restaurant. If they called it a vanilla shell, I would presume it does not include HVAC. The shell has less value to you than you might think because you end up cutting drywall to get all your mechanicals installed. I recommend you get money from the landlord yourself and let your contractor do the shell.

I can tell you that I am a week away from finishing my 2700 square foot pizza & pub. I had a warm shell. My total construction cost was about $155,000 (that includes electrical, plumbing, carpentry, trim, hood/ansel installation -basically all I have to do is supply and set the equipment but excludes the bathrooms which were already there). It is on a somewhat higher end for a buildout (radiused soffits, some unique carpentry, etc.)

Of course it is always good to overestimate how much you need. BUT, if you have the time, you can do yourself a real favor by visiting auctions and buying used equipment. I don’t have anywhere near 100,000 in equipment. Probably closer to $30,000. I’m sure I’ll have to replace one or more pieces at some point, but as someone pointed out, cash flow is the name of the game early on. Examples of some deals I got:

  1. Blodgett double stack in good working order with stones - $325.00
  2. An 11’ hood with supply $1200.00
  3. An 8x10 Norlake walk-in with the capsulepak - $2200.00.
  4. Hobart H-600 - $2800.00.

In this economy, there’s TONS of stuff out there. I don’t know what your rent is, but a 24,000 security deposit is crazy. I’d give them one month’s rent and be done. Did you get any TI dollars?

Also, as an attorney, there is no way you need to spend $15k on an attorney. Unless you have partners, you can set up your LLC by yourself in 1/2 hour. Your liquor license will be the trickiest part, but if you’re halfway intelligent (sounds like you are :slight_smile: ) you will only invest 8 or 10 man hours in that.

I’m probably more of a do-it-yourselfer than most. But the lessons you can learn by rolling up your sleeves are invaluable.

I hope this helps in some way!

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Hi dont forget about HVAC and you may need to install a large grease trap outside and pay a large sewer tap fee I know in the atlanta area it can cost up to $45,000.00 :roll:

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the mechanicals (plumbing, electrical, HVAC, including hoods) should be at the top of our list…it can exceed 100K alone depending on the details…just looking quickly equipment looks low unless you go used, lawyer (seems high…what does your lawyer do for you besides set up a corp/lease), tile seems high as well…if you are buying that much you can get some great deals…I ended up tiling my walls in the kitchen and I highly recommend it (just make sure to provide backing for heavyweight shelving/equipment…also what about furnishings & millwork (booths tables chairs counters)…this can be very expensive as well

good luck!

12

One more thing. If your healthcode allows it, you may happier with concrete floors in the kitchen. The quarry tile most kitchens use end up cracking, coming up, and having disintegrating grout lines.

As for equipment, if this helps, kitchen designers in Kansas City tell you to figure on $1500/foot installed for a new complete type-1 hood system (exhaust, makeup, fire suppression, wrapped duct, etc).

One more thing - there is a lot of inexpensive business plan software out there. I’m sure you already have one. But most of them come with great lists of startup costs and MRC’s. It really helped me to come up with things I haven’t thought of. The one I used was called Quickplan. For $150.00 I got several spreadsheets and a bunch of forms. That was some of the best $150.00 I spent. I’m sure there are others that are better, its just what I happened to use.

13

Hi Chicago:

You have given a lot of fore thought to your project.

I have just a couple of comments. Many architects have not drawn the plans for a lot of restaurants and even fewer have planed many pizza oriented shops.

Many Restaurant equipment dealers have not equipped a large number of pizza shops.

We Have planed and equipped hundreds of pizza shops.

If you would like our opinion of your layout and equipment selections I would be happy to critique both for you, no charge, no obligations. I would expect to find both superbly done. If there should be any suggestions we can make, you might find them valuable.

George mills