Restaurant & QSR
Restaurant & QSR Cost Segregation
Restaurants and quick-service properties have the highest reclassification rates of any asset class. Kitchen equipment, specialty electrical and plumbing, hood systems, drive-through infrastructure, and interior decor commonly move 35–50% of the depreciable basis out of 39-year property into 5- and 15-year accelerated schedules.
An IRS-compliant study captures every qualifying component — producing a large first-year deduction you can take immediately or carry forward.
See if your restaurant qualifies
$4,000–$14,000
About 80% less than the $40K–$70K a traditional engineering firm charges for the same IRS-compliant, audit-defensible result.
Delivered in days
AI-assisted engineering returns your study in days — not the multi-week turnaround of a legacy firm — so you can amend or file on schedule.
Audit-defensible
Built to the IRS Cost Segregation Audit Techniques Guide with full asset detail, cost documentation, and engineering-based classifications.
Why restaurants reclassify more than any other property type
A standard commercial building defaults to a 39-year recovery period. Restaurants and QSRs are different because a disproportionate share of their construction budget goes into components the IRS categorizes as personal property or land improvements — not structural building shell.
The IRS Cost Segregation Audit Techniques Guide (ATG) identifies commercial cooking equipment, specialty electrical, hood and suppression systems, and drive-through canopies as routinely qualifying for 5-year treatment. With bonus depreciation under IRC §168(k), that acceleration is available in Year 1. A properly prepared study also captures the 15-year land improvement category for drive-through paving, exterior signage, and site work — a secondary acceleration layer most operators miss.
| Restaurant / QSR asset | Reclassified to |
|---|---|
| Commercial cooking equipment (ranges, fryers, ovens) | 5-year |
| Refrigeration and walk-in cooler/freezer boxes | 5-year |
| Hood, exhaust, and suppression systems | 5-year |
| Specialty electrical (dedicated cooking circuits) | 5-year |
| Grease trap and specialty plumbing | 5-year |
| Interior decor, millwork, and themed finishes | 5-year |
| Drive-through canopies and menu board structures | 15-year |
| Drive-through and parking lot paving | 15-year |
| Exterior signage and pole signs | 15-year |
| Landscaping and site improvements | 15-year |
IRS-compliant and audit-defensible — not a rule-of-thumb estimate
The IRS scrutinizes restaurant cost seg studies because the reclass percentages are high. Studies that rely on industry averages or unsupported allocations are exactly what triggers examination findings. Our studies are built to the IRS Cost Segregation Audit Techniques Guide standard:
- Asset-level detail for every reclassified component
- Cost source documentation tied to construction contracts and AIA schedules
- Engineering-based classifications — not rule-of-thumb percentages
- Recovery period citations to IRS ATG and relevant Tax Court precedent
- Qualified improvement property (QIP) treatment for tenant build-outs
Typical reclass range — restaurant / QSR
Ranges based on IRS ATG benchmarks for food-service properties. Actual results depend on construction scope, tenant build-out vs. fee-simple, and document quality.
Built for franchise operators and multi-unit QSR owners
Multi-unit QSR operators often have a portfolio of similarly constructed locations — the same prototype building, the same equipment package, the same drive-through layout. That consistency is a cost seg advantage: once the asset breakdown is established for one location, the study framework transfers across the portfolio with minimal incremental work.
Whether you own a single pad-site restaurant, a ground-up QSR prototype, or a portfolio of franchise locations, each property qualifies for its own study — and lookback studies can capture missed deductions on properties placed in service in prior years without amending returns (via a Form 3115 change in accounting method).
Start an express studyRestaurant cost segregation FAQ
How much of a restaurant or QSR can be reclassified?
Restaurants and QSRs consistently achieve the highest reclassification rates of any property type. It is common to move 35–50% of the depreciable basis out of 39-year property — kitchen equipment, specialty electrical and plumbing, hood systems, drive-through canopies, and interior decor all qualify for accelerated 5- or 15-year treatment under the IRS Cost Segregation Audit Techniques Guide.
What restaurant assets qualify for accelerated depreciation?
Commercial kitchen equipment (ranges, fryers, refrigeration, prep tables), hood and suppression systems, specialty electrical for cooking equipment, grease trap plumbing, walk-in cooler/freezer boxes, drive-through canopies and menu boards, interior millwork and décor, and site improvements such as drive-through paving and outdoor signage all commonly reclassify to 5- or 15-year property.
How much does a restaurant cost segregation study cost?
Our restaurant and QSR studies run $4,000–$14,000 depending on property size and document quality — roughly 80% less than the $40,000–$70,000 a traditional engineering firm charges — and are returned in days, not weeks.
Does cost segregation work on a leased restaurant build-out?
Yes. A tenant who builds out a leased restaurant space depreciates qualified improvement property (QIP) over 15 years by default, but a cost segregation study can identify personal property components within that build-out — equipment, specialty systems, and removable fixtures — and accelerate them further, often into 5-year property with bonus depreciation.
Is a restaurant cost segregation study audit-defensible?
Yes, when prepared to the IRS Cost Segregation Audit Techniques Guide standard. Our studies include full asset-level detail, cost source documentation, and engineering-based classifications — the same standard that survives IRS examination. We do not produce summary-only or "rule of thumb" studies.
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