Yehuda Berg advises in this Q & A about what needs to be in place before you start your business.
I have been working for a catering service for the last few years, and I have learned a lot about the food establishment. BH my family is growing and I need to find employment that will be able to support my growing family. I have been thinking about opening up my own small café/restaurant. Since I have been working in this type of business, I feel I have enough experience to put out a good product. My issue is that friends have told me though that there is a lot of red tape involved while operating a food establishment and this is something I have no experience in. Can you please advise me on what I will need to have in place before I even get started?
Thanks, Sholom A
Dear Sholom A,
Thank you for your question. From zoning laws to negotiating a commercial lease and deciding how to legally structure your business, there are a number of legal decisions and steps you need to follow before you open your own food establishment.
Zoning Laws –If you plan to build a new restaurant, check local zoning laws to see if there are any restrictions. The answer may be in a simple 311 call.
Negotiating a Commercial Lease – Be sure you get the best terms out of your lease. Speak to an attorney before you sign any legal papers.
Legal Structure: You have a number of options, but most restaurants end up forming an LLC. (Limited Liability Corporation) It protects your personal assets from any liability that the business incurs. If you plan to open in more than one location, set up a separate LLC for each location (only an individual restaurant’s assets will be at risk in the event of a lawsuit). Structuring as a Corporation also provides liability protection, but corporations are more complex to run because they require a board of directors, shareholder meetings, and other administrative extras. An LLC also affords tax benefits. Always talk to a lawyer about the best option for your business.
Licenses and Permits–Restaurants typically need a food service establishment permit, an alcohol beverage license, a general business license, and a food safety permit.
Food Safety –While health codes vary depending on location, all codes require restaurants to safely handle, store, and prepare food. You will need to obtain a permit from your local environmental health department certifying that your restaurant has met county, state, and federal requirements. Plan ahead by submitting your application a month or so before opening. Restaurants are usually inspected once every two years after opening. Be sure to get a copy of your local health codes and refer to it frequently to ensure compliance.
Insurance– Restaurants are exposed on many fronts and can be vulnerable to injuries, medical expenses, and lawsuits. Without it, you are responsible for any wrongdoing that results from food poisoning, or alcohol consumption at your establishment, including drunk driving accidents. Most states require that any establishments holding a liquor license must carry liquor liability as part of their insurance.
Good luck with your endeavor!