If you are opening a restaurant, whether it is going to be a fast food restaurant, café, or food truck, you will need to obtain the required licenses and permits to sell food legally, ensuring compliance with health and safety regulations.
In this article, we will focus on what is necessary to serve food in your restaurant opened in California. Let’s dive into the details!
The steps required to open a restaurant are similar across different states. Below, we describe them briefly, focusing on opening a restaurant in California.
We pay special attention to the food licenses and permits necessary to operate a food business in California, but the general steps are similar to opening a restaurant in any state.
Step 1. Choose your restaurant concept
Decide on the type of restaurant you want to open, considering cuisine, ambiance, and target audience.
Think of the kind of food you want to serve, food preparation methods, customers you want to attract, the number of employees you will need to hire, ways of serving food (a full-service dining experience or opting for a takeout counter with limited seating?), etc.
- Fine Dining: A high-end restaurant offering gourmet cuisine, elegant ambiance, and exceptional service. Learn more about what is fine dining here.
- Fast Food restaurants offer quick-service meals, typically through a drive-thru or counter service, and focus on efficiency and convenience. Learn about how to open a fast food restaurant.
- Fast Casual: Combines the speed of fast food with the quality of casual dining, often featuring customizable meals and healthier options. Learn more about what is a fast casual restaurant.
- Ethnic cuisine: This specialty specializes in authentic dishes from a specific region or country, such as Italian, Mexican, Thai, or Indian cuisine.
- Food Truck: Mobile kitchens offering a variety of street foods, ranging from tacos and burgers to gourmet sandwiches and desserts. Learn about how to start a food truck business .
- Bistro: Offers light meals, sandwiches, salads, and beverages in a cozy, casual setting, often emphasizing coffee or tea. Learn more about what is a bistro restaurant.
- Vegetarian or Vegan: Specializes in plant-based dishes, catering to vegetarians and vegans seeking meat-free options.
Step 2. Write a restaurant business plan
The next step in starting a restaurant in California is creating a restaurant business plan. Begin with the executive summary of a restaurant and then outline your restaurant’s mission, vision, target market, financial projections, and operational strategy.
Before writing a thorough restaurant business plan, remember to select a business entity type.
For a restaurant, several business entity types are suitable, including:
- Sole Proprietorship: Owned and operated by one individual, offering simplicity but without separate legal status from the owner.
- Partnership: Owned and operated by two or more individuals, sharing profits, responsibilities, and liabilities.
- Limited Liability Company (LLC): Combines a partnership’s simplicity with a corporation’s limited liability protection, suitable for small to medium-sized restaurants.
- Corporation: Provides separate legal status from its owners (shareholders), offering strong liability protection but with more formalities and potential double taxation for C corporations.
- S Corporation: This is similar to a regular corporation but with pass-through taxation. It is ideal for restaurants looking to avoid double taxation while still maintaining liability protection.
Step 3. Research restaurant software
While writing your business plan, consider the restaurant technology you plan to use in your dining establishment. Research the restaurant management software necessary to run your business smoothly. What could it be?
A starting point is a POS system that manages transactions, tracks sales and monitors inventory levels.
Another important solution for restaurants is an online ordering system that allows customers to place orders remotely for pickup or delivery, expanding revenue streams and enhancing convenience.
You can choose from different restaurant ordering systems available on the market. Here you can read more about how to set up an online ordering system in your restaurant.
Another restaurant software example worth considering is building your own restaurant mobile app.
It can enhance customer engagement by offering convenient access to menus, promotions, discounts, and a restaurant loyalty program directly on their mobile devices, fostering repeat business and brand loyalty.
Step 4. Secure financing
Securing financing for a restaurant involves addressing significant startup costs such as lease or purchase of space, equipment purchases, renovations, initial inventory, and staffing. These costs can vary widely but typically require substantial capital investment.
Common sources of financing include
- traditional bank loans,
- Small Business Administration (SBA) loans,
- investors,
- personal savings,
- crowdfunding,
- partnerships with restaurant industry-specific lenders.
Here you can check more information about restaurant financing.
Step 5. Select a restaurant location
When selecting a location, it’s important to consider how well it aligns with your restaurant’s target market. Factors like foot traffic, local competition, demographics, and parking availability significantly influence the nimber of customers visiting your restaurant.
Conduct market research to understand local preferences and choose a location that supports your restaurant’s growth and customer satisfaction.
Step 6. Apply for licenses and permits
Opening a restaurant in California requires several licenses and permits to ensure compliance with state and local regulations. These permits can be issued federally, by the state of California, or locally by city and county authorities.
Below you can check the key licenses and permits you’ll need to start your restaurant business in California.
1. Registering your restaurant
Before you start applying for licenses and permits necessary to run your business, you need to register your business with the California Department of Tax and Fee Administration (CDTFA).
What’s more, certain types of business entities are required to register with the Secretary of State. Check out the California Secretary of State if you need to register your business entity type there.
2. EIN (Employer Identification Number)
EIN stands for Employer Identification Number. The IRS assigns businesses and entities a unique nine-digit number for tax reporting purposes.
You can apply for EIN at the Internal Revenue Service (IRS).
3. Business License
You need a general business license (also known as a Business Tax Certificate) from the city or county where your restaurant will operate. This license allows you to operate a business legally within that jurisdiction.
If you run a restaurant with multiple locations in various cities and counties, you must obtain a separate business license for each location in its respective jurisdiction.
How much does a business license cost in California?
The cost of a business license in California varies significantly depending on several factors, including the location of your business and the type of business you operate.
Generally, business license fees can range from $50 to several hundred dollars or more per year. Some cities and counties may impose additional fees or taxes based on gross receipts or other criteria.
4. Food Handler’s License, also known as Food Service License
In California, a Food Handler’s Card or Food Handler’s Permit is a certificate issued to individuals who have completed a food safety training course approved by the California Department of Public Health (CDPH).
This certification is required for individuals who handle food, such as restaurant workers, chefs, kitchen staff, and food servers within 30 days of being hired. However, managers who have already obtained their Food Protection Manager Certification are exempt from needing a California Food Handler card.
To obtain certification, employees seeking their food handler’s card must pass a food safety and preparation test with a minimum score of 70% (or higher in certain jurisdictions).
The California Food Handler Card aims to ensure that food service employees have the necessary knowledge to maintain safe food handling practices, promoting public health and safety in food establishments across the state.
Here are examples of approved providers where you can obtain food handler training in California:
5. Food Facility Health Permit
To operate a restaurant in California, obtaining a Food Facility Health Permit from the local health department is mandatory. This permit ensures the restaurant complies with health and safety regulations regarding food storage, handling, preparation, and sanitation.
Health permits in California fall under the jurisdiction of city and county authorities, so it’s important to contact your local health department for guidance on the application process.
Health permits cannot be transferred. A new health permit must be obtained when opening a new restaurant, including in a location previously occupied by another restaurant.
What is the cost of a food facility health permit?
The cost of a food facility health permit in California varies depending on the city or county where the restaurant is located. Fees can range widely, typically from several hundred to over a thousand dollars annually.
You can check permit fees on the Los Angeles County Department of Public Health.
6. Certificate of Occupancy
A Certificate of Occupancy (CO) is required to operate a restaurant legally in California. It is issued by the local building or zoning department after confirming that the building complies with all local codes, including health and safety regulations. This certificate ensures that the restaurant space is safe and suitable for its intended use before opening to the public.
To determine whether your project requires a Certificate of Occupancy, contact your local authorities.
In California, besides needing a Certificate of Occupancy to legally open a restaurant, compliance with ADA regulations is essential. These regulations ensure the restaurant is accessible to individuals with disabilities, covering areas like entrances, parking, seating, and restrooms.
As BackOfHouse states, in contrast to federal ADA lawsuits where damages are capped, California state law permits plaintiffs to sue for up to $4,000 per instance of encountering an accessibility barrier.
7. Seller’s Permit (Sales Tax Permit)
If you plan to sell food and beverages (and for sure you are, if you are opening a restaurant), you must obtain a seller’s permit from the California Department of Tax and Fee Administration (CDTFA). This permit authorizes you to charge sales tax on items purchased by customers.Applying for a seller’s permit in California is free of charge, though you might be required to provide a security deposit to cover potential unpaid taxes in the event of business closure
Apply for the Seller’s Permit on the California Department of Tax and Fee Administration (CDTFA).
8. Liquor License Permit
A Liquor License in California grants businesses the legal authority to sell alcoholic beverages for consumption on or off the premises. It is issued by the California Department of Alcoholic Beverage Control (ABC), and applicants must possess a seller’s permit before applying.
Check out California’s current liquor license fees on the California Department of Alcoholic Beverage Control.
Remember that licenses must be renewed annually, requiring timely payment of the renewal fee to prevent expiration.
Step 7. Create your menu
Creating a restaurant menu involves selecting a diverse range of dishes that reflect the restaurant’s concept and appeal to its target audience.
While crafting your restaurant menu apply the menu engineering principles to maximize profitability and customer satisfaction.
Step 8. Build your team
Your key resource in running a restaurant is your people, so devote the appropriate amount of time and effort to finding, hiring, training, and retaining the best employees for your restaurant.
Provide comprehensive training, competitive compensation, and additional benefits such as health insurance to minimize employee turnover. This approach will help reduce the likelihood of high turnover rates.
Step 9. Purchase equipment
When purchasing equipment in California, consider the diverse climate conditions across the state, ranging from coastal humidity to inland desert heat. Depending on your restaurant’s location, kitchen equipment needs may vary.
Ensure that the equipment is suitable for your restaurant’s specific location to maintain optimal performance and longevity.
Additionally, prioritize energy-efficient models to comply with California’s stringent environmental regulations and to reduce restaurant costs over time.
Step 10. Prepare a marketing plan
Creating a comprehensive restaurant marketing plan for opening in California should prominently feature restaurant social media marketing.
Use platforms like Instagram, Facebook, and Twitter to engage with your local community and showcase your unique offer. This will build a loyal customer base.
Step 11. Host soft and grand openings
Hosting both soft and grand openings is crucial for generating buzz and excitement around your restaurant’s launch.
Incorporating creative grand opening ideas for restaurants, such as themed events, exclusive tastings, or partnerships with local influencers, can help maximize visibility and attract a diverse audience eager to experience your new dining concept.
Step 12. Create a restaurant website
Nowadays, it’s crucial for a restaurant to establish its online presence. A restaurant website functions like a business card so make sure you take care of your online presence too.
You can use the UpMenu restaurant website builder to easily create your restaurant website, even without technical expertise, thanks to its ready-to-use restaurant website templates.
To help you get started, we’ve prepared a step-by-step guide on how to create a restaurant website.
Once your restaurant website is set up, you can begin selling online.
Key Takeaways
- Opening a restaurant in California requires obtaining various licenses and permits, including a Food Facility Health Permit, Seller’s Permit for sales tax collection, and a Business License.
- Ensure compliance with local, state, and federal regulations governing food safety, health standards, and alcohol service if applicable.
- Always start with choosing a restaurant concept and writing a detailed restaurant business plan to ensure that you have a clear roadmap for operations, marketing, and financial success before proceeding with California’s licensing and permit application process.
- Include in your financial projections the usage of restaurant technology (like an online ordering system and POS system) to optimize operations, enhance customer experience, and streamline processes.
- Prepare a detailed marketing plan and consider different restaurant promotions ideas focusing particularly on restaurant social media marketing, to succeed in running a restaurant.
Frequently Asked Questions (FAQ)
How much does it cost to start a restaurant in California?
The cost to start a restaurant in California can vary widely depending on several factors such as location, size, concept, and amenities. Generally, entrepreneurs should budget between $200,000 to $1 million or even more to cover expenses like leasing or purchasing a space, renovations, equipment, permits and licenses, initial inventory, marketing, and staffing.
What permits do I need to sell food in California?
To sell food in California, you typically need the following permits and licenses:
- Business License
- Food Facility Health Permit
- Seller’s Permit
- EIN (Employer Identification Number)
- Food Handler’s License
- Certificate of Occupancy
- Liquor License Permit
How much money should you have to open a small restaurant?
The initial investment required to open a small restaurant can vary significantly depending on factors such as location, concept, size, and amenities. As a rough estimate, expect to invest anywhere from $50,000 to $500,000 or more to launch your small restaurant successfully. Read more about how much does it cost to open a small restaurant here.
How profitable is owning a restaurant?
According to BinWise, restaurant profits can vary, but on average, restaurants typically earn between 2% to 6% more than their expenditures. Restaurants with lower overhead expenses or initial startup costs may achieve higher profitability, though numerous factors contribute to these outcomes. Here you can read more about the average restaurant profit margin.
