Starting a restaurant in Texas comes with its own set of legal issues that are unique to the restaurant business and the state. Choosing the correct company entity, receiving the necessary forms and local licenses and permits, complying with state and local health and safety standards, obtaining enough insurance, examining franchising concerns, and dealing with personnel are just a few examples.
You’ve analyzed the statistics with more care than a fresh taco shell. They’re looking delicious: restaurants tied with business services for the fastest-growing small business industry in the United States in 2018, with an 11 percent share.
It’s much more appealing to set your sights on Texas. The US Small Business Administration credited Texas for starting 18,499 new firms in the third quarter of 2016, producing roughly 81,000 employment and keeping the yearly startup rise at a solid 2%.
It’s no surprise that you want to show your customers what Texas hospitality is all about at your restaurant. But first, double-check that you have the four permissions required to open. Some are easier to procure than others. Just as an excellent tip is appreciated by a waiter, you will appreciate some advice for setting up your restaurant in Texas.
What equipment do I need to open a restaurant in Texas?
You’ve secured your restaurant’s site and are beginning to hire staff. If you haven’t already started thinking about what equipment you’ll need to run a restaurant, you’re in significant danger. And, if you haven’t thought about what equipment you’ll need to create a restaurant in Texas, you’re in for a shock!
The following is a little-known fact about Texas: It may get relatively warm and hot enough to require an extinguisher.
When evaluating conventional equipment, such as POS systems, waste management tools, or that fancy sous vide machine, don’t forget to stay calm. Literally. For Texas restaurants with popular patios, outdoor cooling systems are essential.
The patrons aren’t the only ones who require your attention. In their work environments, your staff need a lot of ventilation and cooling. Begin fantasizing about the ideal restaurant HVAC system.
“You’re looking at 100-plus degrees for weeks at a time in the summer depending on where you are in the state,” Monastero explains. “There are some restaurants that have, so I’ve taken extra efforts to manage and optimize airflow as much as possible so that it’s not hell’s kitchen for your people working on that line.”
ADA accessibility in Texas
The state’s standards and regulations for accessibility are written out clearly and in simple English, as in the other Texas manuals for restaurateurs. The Texas Accessibility Standards (TAS) Online is an excellent place to start because it includes everything you’ll need to be accessible, from parking places to bathrooms.
Like the rest of the country, Texas adheres to the Americans with Disabilities Act’s federal criteria (ADA). However, because you want to provide a terrific experience for everyone who visits your restaurant, you’ll surely contact many local groups to guarantee you’re doing the best for the most people. Begin your community outreach with the following.
Disability Rights Texas
(DRTx), a government-supported protection and advocacy organization that will give you the most excellent resources to help you open your doors to everybody.
Choosing the Business Entity
While you may run your restaurant as a single proprietorship or partnership, you should consider incorporating or forming a limited liability company to shield yourself from personal liability. Unlike certain other sorts of companies, Restaurants, such as some professional or consulting offices, have a large number of customers and, in many cases, many employees that participate in a lot of physical activity every day. This raises the chances of someone being harmed or their property being destroyed while on the premises, in which event you want the business, not you personally, to be held liable.
Licenses and Permits
The Texas Department of State Health Services (DSHS) requires all food enterprises to get a permit from the proper health authority, with very few exceptions. This will either be a municipal or county health department or the DSHS itself in circumstances where no local body is responsible for providing the permit. Fixed establishments, mobile food units, and temporary establishments are the three categories of food establishment permits available. Permits are provided for two years. Permit costs range from $250 to $750, depending on the gross yearly sales volume.
You must also get sales tax permission, a facilities permit, and have at least one qualified food manager on duty. A state application is required to receive a sales tax permit, and your local building and zoning authority is usually the place to get facilities to permit. A person must pass a DSHS-approved certified food management examination, which can be done as part of a certification training program, at a test location, or online. For five years, the certification is valid.
Additionally, if you plan to offer alcohol at your restaurant, you’ll need a liquor license. The Texas Alcoholic Beverage Commission is in charge of liquor licensing in Texas (TABC). Licensing information is provided on the TABC’s website, where you’ll discover various license types. Keep in mind that the liquor license procedure is complex, and you may need outside legal help.
If your restaurant is serving many customers, you may need to seek a license or permission from a fire or police department to deal with crowd control concerns. Similarly, you’ll almost certainly require a permit or support from a local building department for the adequacy of the restaurant’s exits and other emergency problems.
Health and Safety
Because restaurants are primarily concerned with people eating food, they are subject to stringent food health and safety standards. The DSHS’s field inspection handbook for food service outlets has over 200 pages in one version. The following are only a few of the numerous topics addressed by the DSHS food establishment rules:
- Staff hygiene difficulties, such as employee hand and arm cleansing routines,
- and employee health difficulties, such as reporting on sick employees.
- requirements for food preparation, freezing and reheating
- Construction requirements for utensils, temperature-measuring devices, and other comparable items:
- It involves washing and sanitizing surfaces, knives, and equipment that come into contact with food.
- A water supply, a plumbing system, and a waste disposal system.
- garbage collection and disposal
- of physical facilities, such as the floor, wall, and ceiling construction and
You may expect regular monitoring from your local health department if you follow the food establishment guidelines (or if there is no local inspection authority from the DSHS). Health inspectors have a lot of leeways when it comes to what they may check, and health department inspections can encompass a wide range of products in your restaurant. Assessments may contain the food itself, both raw and cooked, refrigeration systems, cooking equipment, waste disposal, and various other areas, as specified by the DSHS rules. Be aware that many municipal health departments make the findings of their inspections available on the internet.
Apart from state rules governing restaurant employees’ health and safety, the federal Occupational Safety and Health Administration (OSHA) has many standards governing, for example, eye and face protection, hand protection, and walking-working surfaces.
Running a restaurant without insurance is like visiting Texas and refusing to eat barbecue: it’s a bad idea. General liability and liquor liability insurance are two forms of insurance that each food company should have.
On the other hand, Texans drive everywhere and have a “come and grab it” attitude. Here’s how much freedom means to this state: It’s permitted to drink and drive if you’re under the legal drunkenness level of 0.08 percent BAL. Isn’t it incredible? If you’re providing booze, it’s a good idea to check into both liquor liability and assault and battery liability insurance. Most Texans are friendly, but it just takes one who isn’t.
Keep in mind where in the state you’ll be opening your restaurant, just as you did with your location. Remember to take precautions against the elements. Houston is prone to flooding and storms, West Texas is prone to tornadoes and fires, and Austin is home to a large college campus. Plan for the worst and hope for the best. Customers or staff tripping and falling on the premises, someone being injured by boiling liquid or broken glass, or someone being very ill from the meal itself are all dangers involved with running a restaurant. These hazards are in addition to more common company risks like fire, theft, or other types of property damage or personal injury.
Try to deal with an insurance agent who has written coverage for restaurants before. When it comes to property insurance, be sure that everything that matters is covered, from plates to stoves. Make sure you have good general liability coverage in case of personal injury. This should include not just a customer who slips and falls at your restaurant’s front entrance but also a customer who becomes critically ill after eating your meal. Also, if you provide outside food, be sure you have enough car insurance.
If you’re considering launching a franchised restaurant, keep in mind that you’ll be subjected to significantly more regulations than if you were to open your independent restaurant. You’ll be bound by a franchise agreement that will almost certainly benefit the franchisor and grant the franchisor privileges to:
- decide on the locations of additional competing eateries
- Block the sale of your franchise to a specific bidder.
- Select the place where any conflicts will be settled, and
- All of your goods and services must be purchased through the franchisor.
It would help if you considered the additional financial costs of a franchise and the constraints stated in the franchise contract. You will be expected to pay out a significant portion of your profit to the franchisor for being handed a pre-existing business plan, receiving specific aid as needed when running the restaurant, and benefiting from collective marketing. Aside from a significant initial franchise fee, anticipate to be obliged to pay the franchisor the following:
- as royalty, a part of your revenues
- The cost of equipment, commodities, and supplies obtained from the franchisor is above the market.
- On the duplicate purchases, there are financing costs.
- Training costs for both you and your staff, as well as
- Donations to a collective advertising fund
If you’re thinking about opening a restaurant as part of a franchise, do your homework on the company, including reading the legally mandated franchise disclosure statement.
Restaurants have workers, and there are often a lot of turnovers, especially among waitstaff, bussers, and other comparable roles. Fundamental employment law problems, such as illegal discrimination, workers’ compensation, and how to conduct the recruiting process, should be familiarized. Learn how to do the following when it comes to hiring:
- Make a good job application that is free of unlawful questions.
- Check references or do other pre-employment searches without breaking privacy regulations or obtaining illicit information, and
- During the interview, ask questions that are both relevant and lawful.
Remember that particular employment regulations apply specifically to restaurants, such as minimum salaries for tipped staff and restrictions governing different training and tests for restaurant employees.
The Texas Wide Open For Business website offers limited information regarding federal and state requirements for Texas companies in equal employment, safety, salaries, and labour posters.
The Employer’s Legal Handbook, by Fred Steingold, is a helpful reference for general employment matters (Nolo). In addition, the Department of Labor is responsible for enforcing several necessary labour regulations, and the Department of Labor’s website has several helpful web pages.
What to know about taxes in Texas
Even though Texas is recognized as a business-friendly state with no property taxes, it doesn’t imply you can keep all of the extra cash. Thankfully, the state comptroller has spelled out the terminology of what you owe: Texas charges a 6.25 percent state sales tax, with municipal taxes potentially adding another 2 per cent, for a total of 8.25 percent sales tax.
The procedure in Texas is designed to be simplified and owner-friendly, regardless of the type of restaurant you want to open. You don’t have to be the biggest to succeed here; your best is all you have to do.