Identifying Restaurant Tenant Improvement Costs

One of the most important parts of planning your next restaurant location is identifying tenant improvement costs. Studies show that the choice, style, design and quality of tenant improvements greatly impact sales and repeat business. However, calculating the average cost of tenant improvement work for restaurants can vary drastically based on the project as every restaurant’s needs are quite different. This means that the city you are in will also impact the cost as will the quality of the finishes and the professionals you hire for your team. When thinking of how much you can spend on TI work, consider financial factors such as:

  • Your current sales & expenses
  • How much you can afford out of pocket
  • Whether you are eligible for financing
  • How the remodel with affect your revenue long-term and short-term

Keep in mind that because of contingencies, most TI work will go over budget so your realistic restaurant TI cost estimate should land at a number that’s less than what you can afford to spend. More so, the amount of money your restaurant will cost in unclear until you sit down and develop a budget. Below are top elements to identify for your next restaurant location that pertain to TI costs.      

1. Design Costs

Whether you are budgeting for TI work for the first time, or fifth time, a designer’s expertise will increase the number of seats in the establishment, thus increasing income long-term. A restaurant designer won’t just help with the look and feel of the place, but also the all-important layout, which will greatly impact the flow of service from kitchen to patron and the staff’s ability to do their job during busy moments. However, a designer may design a beautiful layout and finishes, but may not take into consideration the cost. To control this variable, it is imperative to bring in a contractor early in the process will provide cost-effective expertise from start to finish. This is why we advocate the design-build approach so much- efficiency, time and cost savings.

2. Equipment & General Construction Costs

The restaurant TI cost of fitting out a bar and kitchen, including all the equipment like burners and espresso machines, can be a big budget line item. According to The Restaurant Owner’s Survey put the average cost of a 1,000 SF bar and kitchen at about $75,000 or $80 a square foot. However, there is also the option to lease equipment, which means a reduced upfront payment, but possibly more in the long run. Therefore, you will want to allocate $300-500 per square foot for your new kitchen. However, working with an existing kitchen space dramatically reduces your construction costs. Even for the dining room area, you want to allocate around $150-300 per square foot. Depending on the desired aesthetic, it is possible to bring these figures down a bit. This may include re-purposing or exposing existing features such as cement flooring, rustic brickwork or ceiling beams can reduce costs while lending a unique design quality.

Inside of Texas Sun Winery

In Summary:

Identifying tenant improvement costs is seemingly just as crucial as running a restaurant. As any restaurateur knows, refitting a space to suit a specific culinary vision is no minor undertaking- especially when it comes to estimating cost. No matter what your restaurant TI’s cost, there is a professional who can help you execute them to perfection. SCGWest is here to guide you through our well-defined building program and design process to execute a successful restaurant renovation while budgeting efficiently.

Construction Project Management
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