Why do per-square-foot estimates vary so much?
Per-square-foot estimates vary because two restaurants of the same size can need completely different work. One inherits a working hood, grease interceptor and restrooms; the other starts with bare concrete and no utilities. Region, building age, kitchen size, menu complexity and finish level all multiply those differences.
Published averages blend very different projects, which is why they're only a starting point. The main factors:
- Starting condition: cold shell, warm or vanilla shell, or second-generation restaurant space.
- Kitchen share: kitchens are the most expensive square footage in the building.
- Menu: a fry-and-grill menu needs heavier ventilation than a cold sandwich concept.
- Region: labor rates, permit fees and inspection practices.
- Finishes: counter-service basics versus a full-service design.
- Building constraints: roof access for ducts, slab depth for plumbing, historic rules.
How much of the budget goes to the kitchen?
The kitchen typically carries a disproportionate share of build-out cost per square foot, because it concentrates ventilation, fire suppression, plumbing, floor drains, grease handling, gas, heavy electrical, durable finishes and equipment. A concept with a large kitchen relative to its dining room will usually price higher per square foot.
Ask your contractor to break the bid into front-of-house and back-of-house areas. That shows where money is going and lets you test changes, such as a smaller kitchen with a combi oven doing the work of several pieces, or a menu that avoids a second hood. The kitchen remodel cost guide lists back-of-house drivers in detail.
Should equipment be counted in build-out cost?
Track equipment separately. Some per-square-foot figures include kitchen equipment and some don't, which is one reason comparisons get confusing. Equipment is also usually funded differently from construction, so separating it keeps both the budget and the funding request clear.
Build your budget in separate buckets:
- Construction: contractor bid for structure, utilities, ventilation, finishes.
- Equipment: dealer quote for cooking, refrigeration, dish, prep.
- Soft costs: design, engineering, permits, inspections.
- Pre-opening: hiring, training, inventory, marketing.
- Contingency: held back for surprises.
How do you calculate your own cost per square foot?
Calculate it from your own bids: divide the total construction bid, excluding equipment, by the space's square footage, then do the same for front-of-house and kitchen areas separately. Comparing that figure across bids for the same space is more useful than comparing it with published averages.
Use it as a check, not a target. If one bid's per-square-foot cost is far below the others, look for excluded items like hood work, restroom upgrades or permits. If all bids run higher than you expected, ask each contractor which scope items drive the cost and which could be phased or simplified. Current regional construction cost data from established publishers can help during early planning, before you have bids.
How are restaurant build-outs funded?
Restaurant build-outs are typically funded with a combination of a landlord improvement allowance where available, a term loan for construction, equipment financing for the kitchen and working capital for pre-opening costs. Many funders prefer operators with existing locations, since sales history supports the request.
- TI allowance: eligible improvements, often reimbursed after completion.
- Build-out and renovation loan: construction and soft costs.
- Equipment financing: the kitchen package.
- SBA loans: worth comparing for larger projects with flexible timing.
When bids are in, apply online to compare structures.
Frequently asked questions
Does a second-generation space lower cost per square foot?
Usually, because existing hoods, grease interceptors, restrooms and utilities can often be reused. The savings shrink if those systems are worn out or don't fit your menu, so inspect them before counting on lower costs.
What's the difference between cold shell and vanilla shell?
Terms vary by market, but a cold shell generally has little more than walls, roof and a slab, while a warm or vanilla shell adds basics like HVAC, restrooms, electrical service or finished walls. The lease should define exactly what's delivered.
What do funders review for a build-out?
Requirements vary by product and funder; many look at time in business, monthly revenue and credit. Funders also review contractor bids, equipment quotes, the lease and, for existing operators, sales at current locations.
Where can I find current regional construction cost data?
Established construction cost data publishers and local general contractors with restaurant experience are the most reliable sources. Use published data for early planning only, and set your funding amount from written bids.
How much contingency should a build-out include?
Many owners hold back a contingency, since build-outs often uncover hidden conditions and inspection requirements. The right level depends on the space's condition and the project's complexity; ask your contractor for a recommendation.
Comparing build-out bids?
Apply online and match your construction, equipment and opening costs to the right funding.
Updated September 14, 2026 · Prime Kitchen Capital Funding Team