Trying to figure out how to open a restaurant in California – can be a daunting task, setting up a restaurant requires compliance with licensing procedures and food service laws. California cities and counties have varying regulations and permit requirements, so it is important to check your local laws. This guide will lay out the steps necessary to open a restaurant.
Tips for successfully opening a restaurant in California the right way.
1. Create a business plan
Just like starting any business, you will need a specific and thought out business plan before opening a new restaurant. This can include the general concept of the restaurant, its target market, a solid financial plan, start-up costs, advertising strategies, menus, prices, and a name. It would be prudent to also build an exit strategy. Researching the area where you want to open your restaurant can give you an idea of how much you can expect to pay for rent, utilities and supplies, as well as anticipated sales volume based on foot traffic.
2. Create an economic unit
The type of business entity you choose for your restaurant will affect your tax obligations and the amount of personal liability. There are four basic types of business formations: sole proprietorship, partnership, corporation, and limited liability company. Each type has different requirements, costs, tax implications, and levels of liability.
New entrepreneurs and small business owners often choose to form a limited liability company, better known as an LLC. Owning a restaurant opens the door to a wide range of liabilities, so setting up your new restaurant as an LLC will protect the owner. In the event of a lawsuit, only the restaurant’s assets are at risk, not your own personal assets. Unlike corporations, LLCs do not require a board of directors and shareholder meetings and profits can be divided in any manner.
Do some research and/or talk to an attorney or accountant to decide what type of business structure would work best for you.
3. Get funds for your restaurant
Once you have a business plan, you can work on obtaining the funds to invest. The amount of money required depends on the type of restaurant, the facility you may or may not have insurance, whether or not you have equipment or inventory, and other related costs.
Funding for your restaurant can be obtained through a bank loan, a line of credit, investments from family or friends, securing a partner with financial resources, or even government programs that can help small businesses. If you seek funds from someone other than a bank, you will need a loan or promissory notes.
4. Secure a location
Zoning ordinances may limit where you can open a restaurant, so check with the relevant government agency in your area, typically the Department of City Planning , to see if your desired neighborhood is zoned to allow restaurants. After you’ve secured a location, double check with that agency to confirm that your specific location is zoned for your type of restaurant.
Negotiating a lease is complicated and it would be wise to work with an attorney and/or real estate agent who can review the documents and present you with options and advice. For example, you will probably want a transferable lease with options to extend and permitting contingencies, not just a regular fixed-term lease. They can help you secure that type of lease and walk you and your contractor through a final walkthrough of the leased property.
5. Obtain all permits, licenses, registrations, etc. necessary
California law requires a restaurant owner to obtain the following:
- IRS Identification Number: Restaurant owners must register with the state of California and the federal government to obtain a Federal Employer Identification Number.
- Seller’s Permit: A seller’s permit is required for all restaurants in California. Online registration for a seller’s permit can be found on the California Board of Equalization website.
- Health Operational Permit: This permit is for the sale of groceries, and the costs and rules vary by county. You will need to apply at your local health department. Contact information for each county can be found on the CalGOLD website: California Government On-line to Desktop. With this permit, you are subject to regular inspections by your city’s health inspector.
- Workers’ Compensation Insurance: California law requires employers to carry workers’ compensation insurance even if you only have one other employee. This can be purchased from any broker or agent licensed to write policies in California.
You can find a list of licensed insurers on the California Department of Insurance website . After obtaining insurance, you must post a “Notice to Employees” in a conspicuous place in your restaurant that informs them of your workers’ compensation coverage and where to obtain medical care for work-related injuries. Failure to post this notice is a misdemeanor with a civil penalty of up to $7,000.
Food Safety Certification: California law requires each food facility to have at least one employee/owner who has passed a state-approved Food Safety Certification exam. A certification is only applicable to one facility and is valid for five years. Some examiners include the National Restaurant Association Educational Foundation , Experior Assessments aka Thompson Prometrics, and the National Registry of Food Safety Professionals.
Food Handler Permit: All employees who handle food must have a permit to do so. A “food handler” is someone who works in a food facility and is involved in the preparation, storage, or service of food. You will find instructions and frequently asked questions about obtaining this permit on the Foodhandler USA website . California law requires employers to maintain records documenting that each food handler has a valid food handler’s permit. New employees have thirty days to obtain the permit.
The CalGOLD: California Government : On-Line to Desktops website allows you to search your county and city to see exactly what business permits are required to operate a restaurant and the contact information for each agency.
Optional licenses:
Sign License: Your city may restrict the type of sign you display outside your restaurant. Before displaying a sign, check with the owner and local government.
Music License: If you plan to play recorded music in your restaurant, you will need to obtain a music license. Recorded songs are copyrighted, so royalties must be paid, usually to music licensing companies such as Broadcast Music, Inc. (BMI) and the American Society of Composers, Authors and Publishers (ASCAP). The annual fees due to these companies can be quite expensive, but without a license you may be held liable. In 2011, a restaurant was ordered to pay more than $30,000 plus $10,000 in legal fees to BMI for failing to obtain a music license.
Alcohol License: You will need a license if you plan to serve alcohol to your customers. The California Department of Alcoholic Beverage Control regulates these permits.
If you are renovating your location, you must submit those plans to the building inspection department and fire department in your area to ensure that those plans comply with public safety and accessibility laws.
6. Recruitment and training of employees
Selecting the right employees will help your restaurant succeed. In addition to servers, bartenders, hosts, and cooks, you may want to consider hiring an accountant and manager. If you can afford it, offer positions with compensation above the minimum wage to attract more experienced candidates. Then make sure you properly train your staff to prevent mishaps. You’ll want your trade to run as smooth as possible from the start.
You can find more information about hiring employees and complying with labor laws on the California Governor’s Office of Business and Economic Development website .
7. Pass your County Health Inspection
Before opening your restaurant, you will need to pass inspections with your local health department.
8. Prepare to open your doors to the public
Once all the formalities have been resolved, you can prepare for the opening of your restaurant. Don’t forget to advertise in local publications, create a website, and prepare your inventory.
Opening a restaurant requires a lot of research, planning, and effort. You may want to consult an attorney to help you obtain a lease and form your business entity.
Summary: Permits to sell food in California
The act of selling food has always been a very difficult step to do anywhere, when dealing with something that the human being is going to ingest, it is of vital importance that the established parameters are always considered or have to be able in a way or of another to control everything related to human health and even the very way in which food is handled that will later be sold to the public, since it is a delicate task for the seller and for the consumer himself.
What permits do I need to sell food in California United States
The permits that must be obtained in order to sell food in California are the basics of being able to sell or have a business in California plus a couple of other details that must be obtained because it is food as such.
- You must complete all the requirements needed to operate in the state, depending on the type of food you want to sell within the business, more than one license will be needed, that is why you must register the name that your place will have , complete all the paperwork and pay the fees that will allow you to obtain the required license.
- You must be very aware of the name of your business because it can be denied, it cannot be repeated or have inappropriate words, in this registration you must give your name and the name of your company that is considered as a fictitious name to obtain the approval of the DBA which is a simple permit where the person is given the power to operate under the name of their corresponding company.
- If what is sold is prepared food, you must obtain permission to sell and be able to collect the sales tax, paying a special fee. However, if you sell regular food you may be exempt from such expenses as such.
- In case you require a professional, they must have their professional license from the state of California to be able to practice, depending on the career you must see the requirements since they can vary from passing an exam and paying a commission or just presenting the title of the profession would suffice.
- Local licenses already depending on the county and the city in which the premises are going to open as such, since each location may have different requirements.
- Fill out the application for the license to sell food from the specific department, it is obtained within the health department as such. In it, the address of the kitchen will be required permanently, as well as all the information that belongs to the owner as such.
- The submitted application must be accompanied by a special fee that will vary depending on each area in which it is carried out, this must be sent to the department that is assigned within the application.
- After all, a health inspection will be carried out at the kitchen place in order to inspect all areas before all the corresponding paperwork is approved, taking into account that if you are renting a restaurant, you can work under the license that he already owns.
- In turn, this inspection will be conducted throughout the facility to assess what tools are being used, how clean the utensils are, whether storage is adequate, and whether all health and safety codes are being followed.
What good is a permit to sell food in California?
The state of California is characterized by what is the mixture of many cultures that come together in the same place in order to execute the same purpose, this mixture of people has allowed that over time a culture has been created at the gastronomy that is positive for each of the inhabitants because it is a mixture of all the foods of the world, so that every day you can be trying different dishes.
They are inhabitants who are used to risking trying something new and therefore if someone sells food in this place they would be talking about a business that in general would be destined for success no matter what is offered, since people will be intrigued to eat something new or something that is different from what they already know and in this way it is possible that both you and people begin to develop a relationship of trust.
The permit is what will lead you to be able to have that business of your dreams and they are vital if you have already decided to open it in any of the cities or counties of the United States.
Why are there so many steps when it comes to getting food permits?
Each permit has its special purpose, that is, since it is something as delicate as food, it is necessary at all times to speak, always be aware of the nature of the food, the utensils that are used, the cleaning that is carried out within the place in which it is cooked, the way in which each dish is cooked, the way in which the employees dress and endless details that simply make each place a place suitable for the sale of meal.
Permits are a very effective way of assuring the client that the site in which they are located complies with all the regulations that are necessary to be able to maintain a prepared meal in optimal condition and always being completely clean, in turn, it serves the government to exercise control throughout the place as such to prevent a place from going unnoticed because it does not have the certificates and does not comply with what is required as such.