Feasibility Study for a Restaurant or Cafe in Egypt

How a restaurant or cafe makes money, and where it loses it

A restaurant or cafe sells a seat for an hour or two together with what is served on it. Rent, salaries and electricity are paid every month whether the dining room is full or not, while ingredients are paid for with every plate. So a restaurant or cafe feasibility study starts from two numbers: the food cost percentage, meaning ingredient cost as a share of the selling price, for each item and for the menu mix as a whole, and the number of covers a day, split by daypart, with the average ticket per cover. What is left of sales after ingredients is what pays the rent and the team.

After those come four numbers that decide whether the place survives: rent as a share of sales, staff cost, the delivery-app commission on whatever is sold through apps, and waste. Then the question that tends to be forgotten: when does the fit-out you paid for before opening come back?

Licensing: the Public Shops Law and the Food Safety Authority

Law No. 154 of 2019, published in the Official Gazette on 1 October 2019, governs the licensing of public shops, and its definition excludes "tourist, hotel and industrial establishments"¹, so a tourist restaurant falls outside its scope. What matters most for your numbers¹:

• No public shop may be operated, have its purpose changed or be moved without a licence from the competent centre (Article 2), and the licence has no fixed term except in cases set by the Supreme Licensing Committee (Article 3).
• An inspection fee of no more than EGP 1,000, and a licence fee between EGP 1,000 and EGP 100,000 in categories set by the committee (Article 10).
• A shop serving food or drinks may not charge a minimum for its service without a licence, for a fee of no more than EGP 20,000 (Article 21), and may not serve shisha without a licence, for a fee of no more than EGP 10,000 (Article 22).
• Operating a shop without a licence carries a fine of EGP 20,000 to EGP 50,000; for a repeat offence, six months to a year in prison and the fine, or either of them, plus closure of the shop at the offender's expense (Article 30).

The National Food Safety Authority sits on each licensing centre (Article 6)¹, and under Law No. 1 of 2017 the Authority is responsible for licensing, inspecting and controlling food handling and the people working in it². Since 1 January 2026, according to a letter from the Ministry of Health and Population to the health directorates reported by Masrawy, the Authority "has become the body responsible for food control at all stages of its handling", while preventive health duties stay with the health directorates³; the Chamber of Tourist Establishments and Restaurants told its members that the Authority is now "the sole body responsible for control, inspection and follow-up"⁴. So budget a kitchen fit-out that meets its requirements before you open, not after the first inspection. Maher Consulting Firm can handle company formation.

VAT: when does a restaurant or cafe have to charge it?

The VAT exemption list exempts food prepared and sold directly to the end consumer by non-tourist restaurants and shops that meet requirements set by a decree of the Minister of Finance (item 16)⁵. On 18 May 2025 the Egyptian Tax Authority explained that tourist restaurants licensed by the Ministry of Tourism are subject to the general 14% rate, and that non-tourist restaurants become subject to it on reaching the registration threshold if they are in malls, residential compounds, tourist sites or airports, belong to chains or use a well-known brand, sell through apps or websites, or offer tourist-standard meals or services or charge a service fee, and that all other restaurants and cafes are exempt, under Minister of Finance Decrees 82 of 2017 and 285 of 2021⁶. The threshold is EGP 500,000⁷, and registration must be applied for within 30 days of reaching it⁵.

The statement does not say whether all of the place's sales then become taxable or only its app sales, so settle that with your accountant before you set prices. In practice: if you will sell through delivery apps or charge a service fee, price net of VAT. A cappuccino you want to net EGP 95 goes on the menu at EGP 108.30; if you print EGP 95 including VAT, you net EGP 83.33 and its food cost rises from 27.4% to 31.2%. Minister of Finance Decision No. 230 of 2022 requires registered taxpayers to issue electronic receipts to final consumers, applied in phases; the latest phase published on the Authority's page is phase nine, Decision No. 361 of 2025⁸, so check your status.

Watch the rent: Law No. 149 of 2026, published on 28 July 2026, removed from the exemption the rental of units used as an independent seat for running an activity, excepting premises of religious, charitable, social, educational and health activities and others set by ministerial decree⁹; restaurants are not among them. If your restaurant is exempt, VAT on rent and equipment is a final cost, because input VAT used only in exempt sales is not deductible¹⁰.

Illustrative example: a 60-seat cafe-restaurant

This is an illustrative example. Its figures are assumptions to explain the method, except the wage and social insurance. The place is in Cairo, has 60 seats, opens 30 days a month, and sells through apps, so it falls in a taxable category; prices and costs are therefore net of VAT. We start with five items that represent the menu:

The food cost weighted by the sales mix is 33.87%. But part of what you buy is wasted or eaten as staff meals; we assume 6%, so the actual food cost is 33.87% ÷ 0.94 = 36.03%. The mix moves the percentage: the main dish leaves EGP 156 but at the highest percentage, while the cappuccino leaves EGP 69 out of 95, so any shift of sales from drinks to plates raises the overall figure.

That is 115 covers at an average ticket of EGP 206.09, or EGP 23,700 a day, plus 18 app orders at an average of EGP 270 (EGP 4,860). Sales are EGP 28,560 a day and EGP 856,800 a month, 17% of them through apps. We assume an app commission of 25% of the order value and packaging at 5%, since we found no commission published on any app's official page; get yours in writing in your contract. Card fees are 1% of dining-room sales.

The team (17 people): a head chef at EGP 18,000, two cooks at 10,000, two baristas at 9,000, a supervisor at 15,000, a cashier at 7,500, and 6 waiters, two kitchen helpers and two cleaners at the private-sector minimum wage of EGP 7,000 in force from 1 March 2025¹¹. The employer's social-insurance share is 18.75%¹², calculated for the chef on the maximum insurable wage of EGP 16,700 from 1 January 2026¹³. In total EGP 148,500 in wages and EGP 27,600 in social insurance.

Profit is before profit tax and depreciation, and the owner draws no salary. Every pound of sales leaves 58 piastres after variable costs, so break-even = 367,100 ÷ 58.04% = about EGP 632,520 a month, or EGP 21,084 a day, which is 85 dining-room covers a day with apps still at 17% of sales. The plan is 115, so the safety margin is only 30 covers. The method is explained in our article on break-even and working capital.

Cash: from fit-out to payback

Fit-out (assumptions): kitchen equipment and extraction EGP 700,000, coffee machine and bar 300,000, finishing, air-conditioning and furniture 1,000,000, point of sale and cameras 50,000, incorporation and licences 60,000, so EGP 2,110,000. Add a three-month rent deposit of 255,000, two months' rent during fit-out 170,000, one month of salaries for training 176,100, opening ingredient stock 80,000 and launch marketing 60,000. The total is EGP 2,851,100; see our article on start-up costs in Egypt. Covers reach the plan gradually: 55% in month one, then 65%, 75%, 85% and 95%, and apps pay out half of a month's sales in that month and half the next.

(Months 7 to 12 are the same as month 12; amounts rounded.) The place loses money in its first two months and reaches operating break-even in the third, and its deepest cash need is EGP 3,037,405 in month three. At full operation the fit-out alone takes 2,110,000 ÷ 130,167 = 16.2 months to pay back, but the cumulative balance, counting everything paid before opening, does not turn positive until month 28, or month 26 if you leave out the refundable rent deposit. The difference between profit and cash is explained in our article on cash flow for small businesses.

What if covers fall, ingredients cost more or apps take a bigger share?

Covers 20% lower wipe out 76% of the profit, because rent and salaries do not fall with them. A food cost 5 points higher means your ingredient prices rose about 13.9% and you did not reprice the menu. For comparison, food and beverage prices rose 7.9% in September 2026 against September 2025, and vegetables 30.9%, according to CAPMAS data as reported by Al Mal¹⁴. So recalculate the cost of each item every month and reprice in time, as explained in our article on how to price your product. Moving the same sales to apps costs EGP 57,107 a month in profit.

The two levers: empty dayparts and own delivery

In the example a seat turns only a quarter of a time in the morning, while 62% of dining-room sales come in the evening. Fifteen more morning covers at a EGP 150 ticket add EGP 42,506 a month to profit after ingredients and card fees, with no extra rent or salaries, 33% of the base-case profit. A breakfast offer or morning work sessions may earn more than any expansion.

The second is delivery. At 40% through apps, app sales are EGP 342,720 a month and the commission is EGP 85,680. Three riders at a EGP 8,000 wage plus EGP 1,500 social insurance and EGP 3,500 fuel and maintenance each (assumptions) cost EGP 39,000, so own delivery is cheaper once the orders you move to it exceed EGP 156,000 a month; in the base case (EGP 145,800 through apps) the app is cheaper. Apps also bring customers who do not know you yet, so move repeat customers to your own channel, not every order.

Common mistakes in a restaurant or cafe feasibility study

1. Taking food cost from the recipe alone, without waste and staff meals, and without the real sales mix.
2. Calculating revenue on a full dining room all day instead of covers in each daypart.
3. Choosing the location on looks rather than sales: divide the rent by the sales you expect there before you sign.
4. Treating app sales like dining-room sales, when commission and packaging take 30% of them in our example.
5. Printing menu prices including VAT and costing them as if they were net.
6. Forgetting the slow first months and the rent and salaries before opening.
7. Serving shisha or collecting a minimum charge without the specific licence for each.

Frequently asked questions about a restaurant or cafe feasibility study

Sources

1. Mohamah.net (law text from the Official Gazette, issue 39 bis B). القانون رقم 154 لسنة 2019 بإصدار قانون المحال العامة (المواد 1 و2 و3 و6 و10 و21 و22 و30) (in Arabic) (2019-10-01) — secondary source; Manshurat (scan of the Official Gazette, issue 39 bis B). قانون المحال العامة رقم 154 لسنة 2019 (نص الجريدة الرسمية) (in Arabic) (2019-10-01). Checked 22 October 2026.
2. Parlmany (Youm7). 16 اختصاصًا لهيئة سلامة الغذاء أهمها التفتيش والرقابة على تداول الأغذية (المادة 3 من القانون رقم 1 لسنة 2017) (in Arabic) (2023-07-21) — secondary source. Checked 22 October 2026.
3. Masrawy. بعد نقل رقابة الغذاء.. "الصحة" تحدد مهام العاملين بالمديريات (مستند) (in Arabic) (2026-01-01) — secondary source. Checked 22 October 2026.
4. Al-Ahram Gate. قائمة بيضاء وزيارات دورية.. نظام رقابي جديد وملزم للمطاعم والمنشآت السياحية 2026 (in Arabic) (2026-01-13) — secondary source. Checked 22 October 2026.
5. Egyptian Tax Authority. Value Added Tax Law No. (67) of 2016 (ETA English translation, updated 15 January 2023): Articles 3 and 16 and item 16 of the List of Goods and Services Exempted from VAT (2023-01-15). Checked 22 October 2026.
6. Masrawy. الضرائب تحدد المطاعم والكافيهات المعفاة من القيمة المضافة.. وتحذر 5 فئات من عدم تطبيقها (in Arabic) (2025-05-18) — secondary source; Banker News. الضرائب: المطاعم والكافيهات المحددة بقرارات وزير المالية خاضعة لضريبة القيمة المضافة (in Arabic) (2025-05-18) — secondary source. Checked 22 October 2026.
7. Egyptian Tax Authority. ما هو حد التسجيل الإلزامي لضريبة القيمة المضافة، وما هي الأنشطة المعفاة منها؟ (in Arabic). Checked 22 October 2026.
8. Egyptian Tax Authority. قرارات الإلزام بالتعامل بالإيصال الإلكتروني (in Arabic). Checked 22 October 2026.
9. Egyptian Tax Authority (Official Gazette, issue 30 bis A). قانون رقم 149 لسنة 2026 بتعديل بعض أحكام قانون الضريبة على القيمة المضافة (in Arabic) (2026-07-28). Checked 22 October 2026.
10. Financial Regulatory Authority. اللائحة التنفيذية لقانون الضريبة على القيمة المضافة الصادر بالقانون رقم 67 لسنة 2016 (المادة 27) (in Arabic). Checked 22 October 2026.
11. Ministry of Planning and Economic Development. الاجتماع الأول للمجلس القومي للأجور: رفع الحد الأدنى لأجور القطاع الخاص إلى 7000 جنيه (in Arabic) (2025-02-09). Checked 22 October 2026.
12. Andersen Egypt. Social insurance in Egypt (contribution rates under Law 148/2019) (2026-06-30) — secondary source. Checked 22 October 2026.
13. National Organization for Social Insurance (NOSI). التأمينات: رفع الحدين الأدنى والأقصى لأجر الاشتراك التأميني بدءًا من أول يناير 2026 (in Arabic) (2025-11-30). Checked 22 October 2026.
14. Al Mal News. الإحصاء: التضخم في مصر يرتفع 1.5% خلال سبتمبر 2026 بدعم من قفزة أسعار الخضروات (in Arabic) (2026-10-10) — secondary source. Checked 22 October 2026.