Commissary vs Private Kitchen ROI Calculator

How this calculator works

This is a build-or-rent screening tool for the food-truck commissary kitchen decision. Most U.S. jurisdictions require licensed mobile food vendors to operate from a commissioned commercial kitchen — the FDA Food Code embeds the requirement, and municipal health departments enforce it via the mobile-food-unit permit. The operator's structural choice is to rent space at an existing commissary (typical monthly cost $400 to $1,200 plus utility and supply markups) or to build out a private commercial kitchen (typical capital cost $40,000 to $250,000 depending on jurisdiction and scope).

The calculator runs both options on an all-in monthly cost basis: rent-side cost is base rent plus utility/supply markup plus the opportunity cost of operator hours spent at the commissary; build-side cost is monthly debt service on the build-out financing plus ongoing utilities plus the opportunity cost of operator hours NET of hours gained back by skipping the commissary trip. Monthly savings is the difference between the two. The breakeven build-out cost is the capital outlay that the 5-year monthly savings stream exactly recovers — a simple payback estimate over the operator's planning horizon. The approximate 5-year IRR is computed by bisection on the NPV equation against the initial build-out capital outlay.

The recommendation logic uses a 10 percent buffer over all-in rent: build wins when monthly savings exceed the buffer; rent wins when the build cost exceeds rent by the same buffer; borderline when savings fall within the buffer band. The borderline label is a deliberate signal that the financial screen alone does not justify the decision and non-financial factors should dominate.

The framework — when to build, when to rent

On a pure financial-screening basis, building makes sense when the 5-year IRR on the build-out capital clears the operator's cost of capital. For a small food-truck operation financing through an SBA 7(a) loan at roughly 9 percent in 2026, an IRR above 12 percent leaves a healthy spread; an IRR between 9 and 12 percent is borderline; an IRR below 9 percent does not justify the build on a cost-of-capital basis alone.

Beyond the financial screen, several non-financial drivers commonly dominate the decision. The operator's commissary may be geographically inconvenient — a 45-minute drive each way burns 15 hours per month in commute time alone on a 10-events-per-month schedule, and the opportunity cost of that time at $50 per hour is $750 per month. Commissary access hours can be a binding constraint on production — a 24-hour private kitchen allows overnight prep that a 6am-to-9pm commissary cannot. A private commercial kitchen unlocks adjacent revenue streams the truck alone cannot serve: catering, packaged goods, ghost-kitchen delivery, and rental to other small operators. The operator may anticipate lease assignment risk on the commissary side — the existing commissary is closing, raising rates aggressively, or restricting access to certain hours.

The conservative discipline is to model multiple commissary-rent scenarios: a base case at the current contract rate, an escalation case at a 10 percent annual rent bump, and a worst case where the commissary closes and the operator is forced into a more-expensive alternative. An event passes the build screen when the base case clears the cost of capital and the escalation case meaningfully improves the return.

Inputs explained

The rent-side inputs cover the all-in cost of operating out of a leased commissary. Base rent is the dollar amount paid to the commissary operator each month for the assigned slot; utility and supply markup is the additional billing on top of base rent (water, gas, waste, ice, refrigeration overage). Hours required is the operator time per month spent at the commissary — drive time plus prep time plus cleanup plus the water-fill/grey-water-dump cycle. The hourly value of operator time monetizes those hours; for owner-operators a common convention is the operator's blended hourly rate when running events ($40 to $100 per hour in 2026).

The build-side inputs cover the capital and ongoing cost of a private commercial kitchen. Build-out cost is the turnkey capital outlay — architect plans, building department permits, contractor general conditions, equipment, refrigeration, and the hood-and-grease-trap install required by virtually every jurisdiction's plumbing code. Monthly debt service is the principal-plus-interest payment on the build-out financing; private utilities is the ongoing electric/gas/water/sewer/garbage cost. Hours gained back is the operator time per month reclaimed by skipping the commissary trip — typically 60 to 80 percent of commissary hours, because some prep work happens regardless of location.

Set hourly value of time to zero to suppress the opportunity-cost adjustment and compare on pure cash-cost basis. Operators who prefer to keep time-cost outside the screening number should do this and judge the time-savings separately.

Industry benchmarks — typical 2026 ranges

Commissary monthly rates in 2026 commonly run $400 to $1,200 per month in mid-cost U.S. markets, $1,500 to $2,500 in premium urban markets (New York City, Los Angeles, San Francisco, Boston), and as low as $250 to $400 in rural counties where commissaries are scarce. Utility and supply markups add $100 to $400 per month in most cases. Hourly-use commissaries with no committed slot are typically billed at $20 to $40 per hour with a monthly minimum.

Build-out cost depends on jurisdiction, scope, and starting condition. Conversion of an existing food-service space (replacing equipment, adding refrigeration, updating the hood) commonly runs $40,000 to $80,000 in moderate-cost markets. Ground-up commercial-kitchen build with Type 1 hood, grease trap, three-compartment sink, hand-wash station, walk-in refrigeration, and a full prep line typically runs $100,000 to $200,000 in 2026. High-cost jurisdictions and code-heavy markets routinely exceed $250,000.

Monthly utility cost on a small private commercial kitchen runs $400 to $900 per month in most U.S. markets, with refrigeration the largest single line. SBA 7(a) financing on a $120,000 build-out at 8 percent over 10 years yields a monthly payment around $1,456; the same principal at 9 percent over 7 years (equipment loan) yields around $1,930. The 5-year IRR on a typical mid-volume operator (50 commissary hours per month, $700 commissary rent, $200 markup, $50 hourly time value, $120,000 build at $1,500 debt service, $600 utilities, 35 hours gained back) lands in the 15 to 25 percent range — comfortably above the SBA loan cost of capital, supporting a build recommendation in many cases.

Operator-time hourly value is the most subjective input. Owner-operators commonly set it at $40 to $80 per hour; multi-truck operators with employed labor often set it at $100 to $150 per hour because the marginal opportunity cost of the operator's hours is higher when fleet management is the alternative use. The screening convention is to model two scenarios: a conservative $25 to $40 per hour and an aggressive $75 to $100 per hour, and require that the build decision clear at both ends.

What this calculator does NOT model

This is a build-or-rent screening tool. It does not model:

The financing structure in detail. The monthly debt service input captures the cash cost of financing, but the calculator does not distinguish between SBA 7(a), CDC/504, equipment lease, conventional commercial loan, or cash. Each has different covenants, prepayment terms, and tax treatment. Operators should engage a lender and a CPA to compare financing structures.

The jurisdictional approval timeline. Building a private commercial kitchen typically requires architect plans, health-department plan review, building-department permits, and a certificate of occupancy. The full approval cycle can stretch 12 to 24 months in code-heavy markets — the operator carries the commissary cost during the build, which is real working capital and is not captured by the calculator.

The lease assignment risk on the commissary side. The existing commissary may close, raise rates aggressively, restrict hours, or refuse to renew. These risks tilt the decision toward build but are not quantified in the current model. Operators worried about commissary-side risk should run the calculator at an elevated commissary rent (e.g., the rate at the next-best alternative commissary) to see how the recommendation shifts.

The real-estate cost of the kitchen underneath the build-out. The debt-service input captures the financing on the build-out (equipment, fit-out, permits) but not the lease or mortgage on the real estate itself. In expensive markets, real-estate cost dominates total cost. Operators should either add the real-estate cost to the debt-service input for a fully-loaded comparison, or treat real estate as constant across both scenarios (because most operators lease the real estate either way).

The strategic value of an owned commercial kitchen. A private kitchen unlocks adjacent revenue (catering, packaged goods, ghost-kitchen delivery, kitchen rental to other operators) that the truck alone cannot serve. These revenue streams can dominate the build case but are not modeled — they sit outside the rent-replacement analysis.

Federal, state, and local tax treatment. Section 179 expensing, bonus depreciation, real-estate depreciation, and state-level investment credits can materially shift the after-tax IRR. The calculator outputs a pre-tax screening number; tax planning sits with the operator and the operator's CPA.

Workforce considerations. A private kitchen often requires hiring a kitchen manager (typically $40,000 to $70,000 in fully-loaded annual cost) and may trigger workers' compensation insurance, payroll tax, and HR overhead the commissary-renter avoids. These costs should be added to the build-side monthly cost for an apples-to-apples comparison.

Sources

The methodology in this calculator draws on standard capital-budgeting frameworks (NPV, IRR, simple payback) from managerial accounting, and on the following references for the regulatory and benchmark inputs:

FDA Food Code (current edition). The model code most U.S. state and local jurisdictions adopt for retail food establishments, including mobile food units. Section 4-301.13 and adjacent sections govern commissary requirements. The municipal health department is the enforcement authority via the mobile-food-unit permit.

U.S. Small Business Administration loan programs. SBA 7(a) covers working capital and equipment up to $5 million; CDC/504 covers owner-occupied real estate at fixed-rate terms. SBA reference rates and program eligibility published at sba.gov.

National Restaurant Association and Restaurant Owner. Build-out cost benchmarks for small commercial kitchens; equipment-leasing benchmarks; restaurant industry operating-cost references.

National Food Truck Association. Directory of state and local food-truck associations; model commissary contracts; best-practice references on the build-or-rent decision and the typical commissary access cycle.

Equipment leasing and SBA lender rate sheets. Current monthly debt-service estimates for typical build-out principal amounts at prevailing interest rates and amortization schedules.

This calculator is a planning tool. It is not licensed tax, legal, accounting, or financial advice. Build-or-rent decisions involving capital outlay should be reviewed with a CPA, a commercial real-estate advisor, and a contractor experienced in food-service builds. The operator is responsible for compliance with all applicable federal, state, and local code and licensing requirements.

Last reviewed: 2026-05-16 against the FDA Food Code (current edition), the U.S. Small Business Administration 7(a) and CDC/504 program references, standard managerial-accounting capital-budgeting frameworks (NPV, IRR, simple payback), and 2026 commissary and build-out benchmarks from the National Restaurant Association and the National Food Truck Association.