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Spending by restaurants puts food on many plates

Builders, suppliers, cooks and outside services all benefit from the ripple effect.

August 11, 2008|Martin Zimmerman

Restaurants are an example of the ripple effect business spending can create.

Opening a typical 6,000-square-foot casual dining restaurant like a Chili's or Olive Garden can cost as much as $2.5 million, said Ray Villaman, a longtime restaurant executive and investor whose Truckee, Calif.-based Tahoe Restaurant Group owns four eateries.

That price tag includes $1.5 million or more to build and finish out the building, a process that can employ 30 to 40 carpenters, electricians, plumbers and finishers.

Fixtures, furniture and equipment -- stoves, refrigerators, dishwashers, etc. -- can cost $250,000 to $300,000 for a 150-seat restaurant. That includes $15,000 to $20,000 for place settings -- 2.5 settings per seat -- and kitchen utensils and cookware.

Then there's the payroll. A typical casual dining restaurant with $3 million in yearly sales may employ 100 people or more and have an annual payroll of close to $1 million, Villaman said. From 20% to 30% of sales goes to buying food -- much of it from local producers and distributors. Then there's the other outside services such as laundry, janitorial, repair and utilities. The list goes on.

"Think of all the families that don't get those paychecks, the payroll taxes that go unpaid, the other taxes that don't get collected," Villaman said. "The impact is huge."

-- Martin Zimmerman

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