How to Start a Restaurant in New York City

How to Start a Restaurant in New York City

July 17, 2020, 03:39 PM UTC

New York City is home to over 50,000 restaurants with one of the most dynamic and competitive dining cultures in the U.S. If you want to start a restaurant in any of the Big Apple's five boroughs, chances are you’ll find yourself on the same block with an award-winning chef, wealthy restaurateur, or longstanding mom-and-pop operator.

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While there are basic steps you should take no matter where you are starting a restaurant, here are a few things to keep in mind that are unique to NYC.

Location

Perhaps the most important decision you’ll make is where to open your new restaurant. New York City is made up of five diverse boroughs, each offering its own attractions and special flavor.

  • Manhattan is the most well-known borough, home to popular tourist attractions like Central Park, the Empire State Building and Time Square. It’s also the hub where many people work in the city, making it popular for weekday lunches and happy hours. Neighborhoods like SoHo, the Lower East Side and NoMad are known for their lively dining and nightlife. Manhattan is the borough where you’ll find the most expensive rents and the most competitive markets, but the highest volume.
  • The Bronx has its own set of attractions like The Bronx Zoo and Yankee Stadium, along with a large student population due to Fordham University and Manhattan College. It tends to offer more affordable real estate options compared to Manhattan.
  • Brooklyn in many ways has become an extension of Manhattan, especially in popular neighborhoods like Williamsburg and Greenpoint. This means depending on the area, your operating costs could be higher, but again you’ll benefit from a lively, coveted eating and drinking scene.
  • Queens is the largest borough in New York City and home to a solid and eclectic middle class. Neighborhoods are rich with influences from all over the world. Areas like Astoria also allow quick access in and out of Manhattan while supporting a strong nightlife.
  • Staten Island should not be overlooked as a location option. Restaurants here can cater to families and enjoy less overhead for their restaurant opening. It’s a good spot to get your feet wet.

No matter where you choose to start your restaurant in New York City, pick your location based on how customers will access it. Finding a spot with either strong foot traffic, proximity to a subway or an enthusiastic local dining culture is imperative.

Zoning

Another factor to keep in mind as you pick a restaurant location in New York City is zoning. Make sure that the area you want to open your restaurant is zoned for businesses. An easy way to do this is to look for spaces to rent that were previously restaurants. This could also potentially help you cut build-out costs depending on how much you want to change. The city offers additional guidance on zoning requirements. If for some reason your potential restaurant location is not in a business zone you can apply for a zoning permit if you can prove your restaurant will enhance the community. Talking with the local alderman or council member is also advised.

Licenses and Permits

Along with figuring out your zoning, New York City requires that restaurants get a number of permits and licenses in order to open. Here are some of the top one you need to apply for:

Equipment

The equipment you outfit your restaurant with will depend on your cuisine, the size of your operation and the space you have. What’s most important is that you work with a contractor or builder that knows NYC regulations for kitchen equipment installation. For example, all commercial cooking equipment has to have a range hood. You’ll also need to be sure to take measures to ensure your space and equipment meets all of New York City’s fire code regulations.

There are plenty of places in New York City where you can source restaurant supplies and kitchen equipment. However, the cluster of restaurant supply stores on the Bowery is a great place to start. These stores are also handy when you need to source something in a pinch. Fishs Eddy is also a fun spot to source diningwares.

ADA Accessibility

No matter where you are in the U.S., restaurants must comply with Americans with Disability Act (ADA). when it comes to your build-out in New York City, make sure your contractor and crew are familiar with these requirements. You’ll be dealing with smaller spaces so you’ll need people who know how to maximize space while adhering to ADA guidelines. Do yourself a service and become familiar with the ADA guidelines that are outlined for small businesses so you have more awareness over how to make your restaurant more accessible to all.

Health Inspections

As mentioned before, to open your restaurant in New York City, you are going to need a food protection certificate. One of the biggest reasons you--and all your staff-- should have this certification is because it builds awareness of the New York Department of Health requirements for restaurants. As you build out your restaurant, it's imperative that is built with DOH standards in mind. DOH food safety guidelines cover structural components like:

  • Where you install handwashing sinks
  • When and how surface are cleaned
  • The way your food is stored
  • The way your food is monitored for temperature
  • How your plumbing is maintained
  • How often you clean your grease traps

This list is not exhaustive, but hopefully paints a picture of how crucial it is to abide by these guidelines.

At least once a year, you will get a DOH inspection. There must be someone on staff that has their food safety certification (preferably a manager) that can go through the inspection with the DOH representative. Any infractions could cost you exorbitant fines and a loss of a letter grade. All New York City restaurants are graded for their ability to meet DOH standards, an “A” being the highest achievable grade.

Insurance

If you are starting a restaurant in New York City, you need to protect yourself against the unknown, otherwise, you risk losing everything you have worked so hard to build. It’s worth protecting your investment for the long term. Also some insurance is required by the state like:

Other crucial insurance options to consider:

  • General Liability Insurance
  • Commercial Property Insurance
  • Liquor Liability Insurance
  • Food Contamination Insurance

One big thing to note, over the past 10 years, New York City has been subject to weather emergencies, including Hurricane Sandy. Check out if your restaurant is in a flood zone. Take your insurance to task on what they offer in terms of protection from natural disasters. The city’s proximity to water lends it to more risk from the weather. Be prepared for anything.

Taxes

First off, we highly recommend hiring an accountant to help with your bookkeeping. There are companies like RSI that specialize in hospitality-specific accounting, not to mention plenty of local accountants that can do the job. If you are not sure where to start, ask your fellow restaurant owners who they use in the area.

All that being said, here are the different taxes your restaurant will be subject to in New York City:

  • Income Tax
  • Payroll Tax
  • Sales Tax - 8.875% for food and beverage sales
  • City Sales Tax - 4.5%
  • Metropolitan Commuter Transportation District Surcharge – 0.375%

If your staff works on tips, it’s also good to remind them that their tips are taxable if they earn over $30 a month. They will need to claim those tips on their tax return.

[Photo: jurien huggins via Unsplash]