How much does it cost to open a restaurant? While the median cost is around $275,000, the numbers fluctuate significantly. Some restaurant owners may be pleased to find they can open their doors for as little as $125,000, though others may be looking at a bill that exceeds a cool half million. There are a plethora of reasons for cost fluctuations, but one definitive reason is varying license and permit fees.
How much will licensing and permits cost for your restaurant? That depends. The licenses and permits, as well as the fees associated with them, are often determined at the state, county, and even local (city, municipality, etc.) level. They also can vary based on the type of restaurant you open, making it near impossible to establish a single running rate.
A good way to get the answer to that question is to check with your state and local government websites (e.g., health department, state liquor boards, etc.), which will provide information on the licenses and permits you need as well as the fees associated with each.
Regardless of where you’re planning to open your dining establishment, here are a few of the most common licenses and permits:
Business License: Typically, one of the first licenses a business owner obtains, the business license allows for legal operation in a specific jurisdiction.
Certificate of Occupancy: Proof that your establishment has been evaluated and is safe for both employees and customers. It’s typically issued by local government.
Food Service License
If you’re serving food – which you likely will be – you’ll need to apply for a food service license. The fees associated with these licenses vary greatly and are wholly dependent on not only the schedule of fees for your local health department but also, in many cases, the number of seats in your establishment.
Liquor License – Depending on the state in which you live, this could be issued by the state, county, or city in which your restaurant resides. This type of license, as well as the fee associated with it, may vary based on what type of alcohol you plan to serve (beer, wine, or spirits) as well as the amount of food you serve. In most cases, this is the single most expensive license that restaurateurs must contend with, though bakeries, coffee shops, lunch venues, etc. may be able to avoid this all together, depending on the underlying business model.
Sign Permits – For obvious reasons, you likely want to make the public aware of where your restaurant is or will be. That will require a sign; which will typically require a permit and a fee.
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5 Expensive Restaurant Locations
Though it’s pretty difficult to rate states based on restaurant licensing fees – there are simply too many state, local, and “restaurant-type” variables – if you’re planning on opening a restaurant in one of these locations, you may be looking at a pretty hefty licensing and permit budget.
Texas is a hot spot for food, and many business experts recognize it as a great place to start a restaurant, but that doesn’t mean it’s the cheapest. With a state liquor license fee that can easily exceed $6,000, it’s certainly higher than many other states. However, additional fees can also hike up costs. Austin restaurateurs, for example, will be on the hook for a variety of fees including a Certificate of Occupancy fee of $244 and operating permits that can range from $349 to $896.
Some may dream of opening a restaurant in the Big Apple, and while a single fee may not make it the most expensive location, the combined total of all necessary licenses and permits can make it one of the most expensive. In addition to a $4,552 (including $200 filing fee) on-premise liquor permit, business owners will need to obtain a Food Service Establishment permit, which typically runs between $75 to 175.00. There’s also a slew of other permits, certificates, and licenses, including a Food Protection Certificate and permits for Gas Authorization – Restaurant Equipment, Portable Fire Extinguisher Requirements, Grease Interceptor Information, Range Hoods, and Recycling and Waste Removal.
Is Chi-Town more your scene? Illinois state has a pretty low liquor license fee ($750), but restaurant owners that want to lay roots in the Windy City will need to cough up an additional $4,440 in accordance with Chicago’s Liquor Licensing policies. In addition, owners will also need to pay between $660 and $1,100 for a Retail Food License, in addition to localized permits and licenses.
If you’re planning on opening a restaurant in MA, be prepared to fork over some serious cash, depending on where exactly you want to wine and dine guests. If you’re considering Cambridge, you’ll need to pay $100 plus $1 for every seat (capacity) for a “Common Victualer” fee. Not too bad, right? However, if you plan to serve alcohol at your establishment, you may be on the hook for $7,000, though if you limit alcoholic beverages to the malt variety, you can cut costs by $4,550 ($2,450 fee).
The Golden coast may be a cornucopia of cuisine, but it can also be the home of the most expensive start-up costs when it comes to restaurant licensing. The biggest culprits? The $13,900 liquor license (including processing fee), which is the most expensive in the nation, and a health board fee that ranges between $91 (0 to 49 seats) and $1,357 (100 or more seats).
Owning a restaurant can be a rewarding and exciting business venture, but it also comes with a considerable price tag; this is particularly true when you factor in startup costs. While property rental, equipment, and staffing will always make up a sizable portion of your startup and operational costs, it’s important to factor in licensing and permits, many of which are reoccurring – though some at a fraction of the original cost. To get a firm grasp on how much you’ll spend on legalizing your foodie venture, check with your state and local governing bodies.
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