How Much Does it Cost to Start a Chicken Restaurant | SkillsAndTech

Opening a restaurant isn’t cheap, but some options are cheaper than others. Opening a fried chicken restaurant or franchise can prove to be quite lucrative, but fried chicken business profits are often offset with a ton of expenses. When it comes down to it, opening a chicken shop from scratch has the potential to rake in massive profits, but it also has a lot of risk. A franchise, which has lower startup costs and less risk, might be a better option for budding entrepreneurs.

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Starting From Scratch

If you want to start a fried chicken shack or a larger fried chicken restaurant, you need to consider whether or not you want to franchise or start from scratch. The cost varies greatly depending on which option you choose.

According to a recent survey, the median cost to open a restaurant is around $275,000. That’s no small chunk of change. Even on the low end of the spectrum, you could spend as much as $125,000. On the high end, you’re looking at half a million dollars, which means you better be absolutely sure about your fried chicken business profit because the stakes are pretty high.

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On average, a hopeful restaurateur can expect to spend $425,000 opening a new restaurant, and most restaurant owners report spending 15 percent more than their projected budget.

Budget and Other Considerations

If you are starting from scratch, your fried chicken business plan should outline a budget for:

• Rent or mortgage
• Food costs
• Labor costs
• Equipment costs (new or used equipment)
• Marketing costs
• Other costs (furnishing, cleaning services and even exterminators)

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After cost, you have to also look at the fact that 55 to 60 percent of new restaurants fail within the first three years. That’s a huge investment when you’re essentially flipping a coin to determine whether or not your business will go under. On the positive side, if you start a restaurant from scratch, you not only get to live out your creative dreams for your restaurant, but you also stand to make a lot more money than a franchise. There’s a higher risk but a bigger reward.

Opening a Fried Chicken Franchise

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Instead of opening a restaurant from scratch, you can start a fried chicken shack or fast-food franchise. This costs a fraction of the amount it takes to launch a brand-new restaurant. It also helps lessen the risk because franchises have a recognizable brand name and a built-in customer base. You don’t have to create your own fried chicken business plan because everything about a franchise is already calculated to maximize your success.

Franchise owners can expect to pay for:

• Franchise fees
• Rent or mortgage
• Food costs
• Labor costs
• Equipment costs (new or used equipment)
• Other costs (furnishing, cleaning services and even exterminators)

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Fees for Franchising

Keep in mind that the cost of a fried chicken franchise varies, even if it might be cheaper to launch than an independent restaurant. A KFC franchise might require $750,000 in liquid assets, whereas a Popeyes has a mandatory $35,000 franchise fee and a $12,500 development fee. With Popeyes, your fried chicken business profit is also shared. They expect a 5 percent royalty fee and a 4 percent marketing fee.

Overall, franchise fees do offset your own marketing costs because you get to reap the benefits of their national and international ad campaigns. Let’s be real: Is your startup fried chicken restaurant really going to have multi-million-dollar ad campaigns on TV off the bat?

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Fried Chicken Business Profit Depends on Size

You can skate by with a much smaller investment if you opt to open a kiosk or start a fried chicken shack takeout business. It really depends on your fried chicken business plan. Will you operate in a food truck, a small storefront or a full-on restaurant with lots of seating?

Costs vary based on whether you’re carrying a mortgage or renting. Renting has a cheaper upfront cost, but you’re not investing in the future of your business or owning an actual asset unless you buy.

Entrepreneur estimates that costs can be as low as $10,000 to $40,000 to open a small take-out chicken business. Restaurants generally cost around $450 to $700 per square foot of space. The less space you have, the more money you save. You also save on labor costs with a smaller restaurant. There’s less mouths to feed, so less staff is required. The less you have on your menu, the cheaper the food costs.