How to Open a Restaurant in Texas (Successfully)

Back of House Staff | October 4, 2021, 02:58 PM CDT

How to Open a Restaurant in Texas (Successfully)

If you know anything about restaurants in Texas, you know everything’s … interesting, promising, and diverse. And not always bigger! Yes, Texas does have some big numbers. The state’s restaurant and food service industry is a $66 billion sector employing approximately a tenth (1.3 million) of the state’s workforce. Looking at numbers like that, not to mention the state’s 43,000 restaurant locations, it can be daunting to stake (or steak) your claim.

But if they did it, you can do it. For better and for worse, Texas is a very friendly state for businesses of all sizes, a definite plus when you’re launching a new venture.

“The general list of boxes to tick are going to be the same here as a place like in Chicago,“ says ​​Joe Monastero, Chief Strategist and Operations Officer of the Texas Restaurant Association. The difference lies in Texas’s bureaucracy, which has a reputation for being less cumbersome than other states’. “Everything is really thought out and laid out in such a way that is certainly easier to navigate,” he says.

How much does it cost to open a restaurant in Texas?

Never mind what Leo Tolstoy says about happy families and unhappy families — unhappy restaurants are alike. One of the main things they share is that they didn’t plan well financially. Depending on what you’re looking to do, the costs of starting a restaurant in the Lone Star State can vary, but the medium cost of simply opening a restaurant is about $225,000.

How to pick a location and what to know about zoning rules

You could probably throw a dart at a Texas map and set up a decent restaurant. The state has the country’s second-largest economy and it’s constantly ranked at or near the top of lists for most business-friendly states. But that age-old rule still applies.

“As with all things: location, location, location,” says Monastero. “I don’t know if you’d open a Tex-Mex restaurant directly across the street from a Pappasito’s or Chuy’s. That might not be the smartest thing to do. Do the market research before you take it to the next step.”

Some of that market research includes knowing that Pappasito’s and Chuy’s are some of the biggest Tex-Mex brands in the state. And that not attempting to start a Tex-Mex restaurant is probably a good idea, too. In fact, says Monastero, “There’s definitely a desire to see a variety.”

So once you’ve settled on serving Bavarian-Mongolian fusion, what should you know about zoning? As with location, Texas isn’t one-size-fits-all. Contrary to popular belief, Texas (and Houston in particular) does have zoning laws (sort of). Each city, of course, has its own way of doing things just as they do with certain licenses and permits.

If you decided to set up a restaurant in Fort Worth, for instance, you’ll be amid up-and-coming American eateries and distilleries. But if you still want to be in the traditional heart of the Texas Metroplex — maybe some place like the upper pizza crust of Highland Park, or the elevated street food and bar eats of Deep Ellum — be sure to look over the city of Dallascompliance page.

Greater Houston is a wildly eclectic land of food opportunities. Nearly half the population is Latino or Hispanic, and the city is home to America’s second-largest Vietnamese population. The borderland bayou metropolis offers plenty for the ambitious, experimental, and/or simple. Start at Houston’s main regulation hub here, the business portal, which will lead you through the winding path of requirements, including the city’s ordinance codes for food purveyors. Come prepared, because Houston has every kind of neighborhood imaginable. Thinking your restaurant might suit a fancier suburban vibe? Scope out the Woodlands. Want to set up where the young and hungry are? Montrose may be your hang. There’s of course, Rice Village (home to the elite private university of the same name), and the party central of Midtown, just to name some areas ripe for novel food options. 

To get a piece of Texas’s quietly up-and-coming “it” city, look to San Antonio. The city’s resource for food permitting and zoning is straightforward and relatively simple. The food culture is another story. If you haven’t looked beyond the Riverwalk area, you’re missing out on an opportunity to join the ranks of a truly blossoming restaurant scene. Consider Southtown, the center of a vibrant foodie and art scene, or the walkable Pearl district, home to a bustling weekend market and a food hall. Further from the city center you’ll find the fast-growing Far Northwest, home to dynamite restaurants taking advantage of cheap rent in the corners of shopping centers surrounded by big box stores. 

Then there’s Austin, aka San Antonio’s chief rival for Texas’ best breakfast tacos. The state capital is ready with a straightforward portal that anticipates you’ll be interested in a brick-and-mortar location, the ever-popular food truck, or both! Any local will tell you (or bemoan) that Austin changes constantly. But whether you decide to sling your wares on the Drag, in the University of Texas campus area, or amid the playground that is North Lamar/North Loop, you best come ready. Some areas, like “Dirty Sixth” and East Sixth are well established party zones where late-night food is king. South Congress (or SoCo if you want to sound like an out-of-towner) is home to the midday tourists, perfect for slinging quick dishes. Just bring your A-game. Anywhere in Austin you land, expect high standards from discerning customers.

What licenses and permits do you need to open a restaurant in Texas?

You’ll find out early on that, unlike other states, you don’t need a business license to operate in Texas. But that doesn’t mean you can just start slinging drinks and dishes.

As you start planning your new restaurant, you’ll quickly become familiar with the acronyms of the Texas Department of State Health (DSHS) and the Texas Alcohol Beverage Commission (TABC).

The DSHS is the go-to source and, not inconsequentially, the ruling authority over your kitchen at large. And if you’re looking to serve any kind of alcohol, the TABC is going to be a familiar, frequent face. Seeing the list of requirements from both organizations may seem intimidating at first. But the sites and directions are user-friendly and straightforward. In fact, says Monastero, "if you are serving alcohol there are different licenses, many of which already include the food license built into it."

For its part, the DSHS also lays out exactly what you need for your establishment in plain English: The food permit (and its structured fees), a sales tax permit (tax ID), a facilities permit, food establishment permit, and certified food manager’s permit. In addition, every employee needs to have a food handler’s license and those employees handling alcohol need a TABC-approved license, both available online.

While the sales tax ID is fairly obvious — and we’ll get to things a food establishment in Texas needs besides the standard sinks and stoves — it’s the certified handler and TABC permits that are strict state mandates. Employers have 30 days upon hiring staff to get them certified. The good news is that the Texas Workforce Commission recently teamed up the Texas Restaurant Association to provide free online food handler classes.  

What equipment do I need to open a restaurant in Texas?

You’ve got your restaurant location, and you’re starting to hire employees. If you haven’t already started thinking about what equipment you’ll need to open a restaurant you’re in trouble. And if you haven’t considered what equipment you’ll need to open a restaurant in Texas, boy howdy!

Here’s the little known secret about Texas: It can get hot. Grab-an-extinguisher hot.

While considering all the standard equipment like POS systems, waste management tools, or that fancy sous vide machine, don’t forget to keep cool. Literally. Outdoor cooling systems are a must for Texas restaurants whose patrons love their patios.

The patrons aren’t the only ones you need to care for, either. Your employees need some serious air flow and cooling in their work areas. Start daydreaming about your perfect restaurant HVAC.

“Depending on where you are in the state, you’re looking at 100-plus degrees for weeks at a time in the summer,” says Monastero. “There are a lot of restaurants who have taken extra steps to do as much as possible to control and improve airflow in keeping that temperature cool so that for your staff working on that line it’s not literally hell’s kitchen.”

ADA accessibility in Texas

As with the other Texas’ guides for restaurateurs, the state’s rules and regulations for accessibility are laid out clearly and in plain English. The starting point is the Texas Accessibility Standards (TAS) Online, which covers everything you’ll need to be accessibility compliant, from parking spaces to restrooms. 

Like every place else, Texas follows the federal standards set by the Americans with Disabilities Act (ADA). But since you’re looking to make your restaurant a fantastic experience for everyone who comes, you’ll undoubtedly reach out to a number of local organizations to ensure you’re doing the best for the most. Start your community outreach with the Disability Rights Texas (DRTx), the federally funded protection and advocacy agency that’ll provide you with the best resources to open your doors to everyone.

Restaurant health inspections in Texas

As with zoning, health and food inspections are primarily conducted by local governments and if you’re planning on that isolated spot in the middle of nowhere, it's DHSH that’ll pick up the slack on inspections. Either way, you’re going to want to start with the guidelines from the Texas Food Establishment Rules (TFER), the state’s minimum standards for restaurants. 

The insurance your restaurant will need in Texas

Running a restaurant without insurance would be like going to Texas and not eating barbecue: extremely foolish. There are some obvious insurance types that any food establishment should have in place, such as general liability and product liability insurance. 

But Texans also drive everywhere and can have a “come and take it” mentality. Here's how much this state values freedom: So long as you're below the legal intoxication limit of 0.08% BAL, it's legal to drink while you drive. Wild, right? Anyway, if you're serving suds, it’d be smart to look into liquor liability insurance as well as assault and battery liability insurance. Texans in general are a friendly bunch but it just takes one who ain't.

As with your location, keep in mind where in the state you’re starting your restaurant. Don’t forget about that weather protection. Houston has floods and hurricanes, West Texas has tornadoes and fires; Austin has a flagship campus full of college students. Hope for the best and plan for the worst.

What to know about taxes in Texas

While Texas is known for being extremely business friendly and there’s no property tax, that doesn’t mean you can pocket all the extra change. Thankfully, however, the language of what you owe is laid out by the state comptroller: Texas imposes a 6.25% state sales tax, and local taxes could add another 2%, for a total of 8.25% sales tax.

No matter what kind of restaurant you’re looking to start in Texas, the process in Texas is built to be streamlined and owner-friendly. You don’t have to be bigger here, you just have to do your best.

[Photo by Luis Santoyo on Unsplash]

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