Almost every year, thousands of new restaurants open their paths with high hopes of global success and acknowledgment. Though the odds of blooming might seem taxing- with more than 8,000 restaurants already striving for the hearts and stomachs of locals and tourists. Opening a restaurant in Chicago can be the most rewarding experience of a restaurateur’s life.
It is so crucial to understand in advance the unique hospitality demand that is required to know about how to open a restaurant in Chicago without any hurdles. This ultimate guide will help you in making a mark on this vibrant food scene.
The Chicago food scene has something for everyone from local-style hot dogs to scrumptious pizzas by the famous James Beard. However, opening a restaurant in Chicago is not like walking in Lincoln Park.
Chicago is a nucleus of opportunity
Chicago is a great market because of its location. It is the central hub for everyone in the country and also right in the heart of everyone. Chicago is full of vitality and has variety. Being in the Midwest means it has great ethnic diversity with strong cultural association with food.
Chicago has top-class hotels and restaurants. With such a diverse and large population, Chicago offers a lot of opportunities to get success in food and production.
Chicagoans are very foodies by nature and they are open to trying various cuisines. The people of Chicago are always excited to try new recipes or flavors in different restaurants. They also prefer to try these cuisines in their kitchen.
All these legalities will help you in knowing how to open a restaurant in Chicago.
Like any other business, a restaurant should be registered as a corporate unit to operate in Illinois. For this legality, you need to select your business name and then submit the article of incorporation online or by mail to the secretary of state’s office. If your submission gets approved, a letter representing the status of the business will be issued to you.
- Permits: A building permit is required to make any additional changes to the premises. In Chicago, the Department of Construction permits this issue to all building permits. Local authorities must inspect the premises before the operation. If the restaurant passes the scrutiny, a sanitation certificate will also be granted.
- Federal Employer credentials Number: Every business must have a Federal employer credential number from the internal revenue service.
- Illinois Business Tax Number: Illinois requires an IBT (Illinois Business Tax) number. To do this, you have to register the restaurant with the Illinois Department of Revenue by submitting the form REG-1 online or through the mail.
- Restaurant License
If you have a question in mind -how to open a restaurant in Chicago? Then, a restaurant license which is also known as a retail food establishment license in Chicago is a must before every operation. This License is procured from the Department of Business Affairs and Consumer Protection once the restaurant is almost ready to open. Local authorities will conduct an inspection and if deemed safe, the restaurant is ready for business
- Liquor License
If your restaurant will serve Liquor on the premises, it must have two liquor licenses- one from the local authority and the other from the Illinois Liquor Control Commission. In Chicago, the BACP should be conducted for a retailer’s liquor license which includes a filing fee of $550. You must also include the local liquor license, FEIN, and IBT number.
If you want to serve beer, wine, or any liquor you need a license which is a little complicated to get. No alcohol can be sold or purchased by the restaurant until they have the liquor application and license.
- Food License
Without a food license, it is illegal to serve food in a restaurant. It is generally issued by the country or city health department. The health department person will visit the place to make sure that you are following all the norms required for food safety regulations. Once you have attained the license, the health department will continually visit the place for regular inspections of your restaurant.
It is important to keep up the standards of inspection. If you fail the inspection, your license will be at risk and your area will be sealed.
How to get a food service license
You can obtain the food vendor license application from the local health department, online or in person. You can also apply for a fixed, temporary, or also for mobile food service license. While applying for the application, you need the name of your restaurant and an address for permanent kitchen facilities along with the owner’s personal information. Your food license can also expire automatically in certain locations, so make sure you read the documents carefully.
The cost of a food service license
The food license requires a minimum fee of $15 and also a quick test online. It is permitted by the state’s department of revenue and after the paperwork and fee which will range up to $ 350; you will get your license. It can also vary by location and also the number of employees working with you. It can range from $150 to $1500.
- Business License
A business License is the first step required to operate and open any business in Chicago. This License legitimizes new business as a legal unit. Depending on your location, you might have to pay a percentage of your total sales or a flat yearly fee. If your restaurant sells alcohol, you might have to obtain a state business license and a federal business license. If not, you might have to attain a state business license.
How to get a business license
Search for your business license +state on Google and follow the application procedures as mentioned on your state government’s site. And don’t forget that you have to renew your license by paying before the deadline.
- Employer Identification Number
Just like a business license, all businesses must have an employee identification number to operate in the United States. An EIN is assigned by the IRS and it is a tax ID number.
How to get an EIN
You can apply for an EIN through the IRS website, phone, fax, or through the mail.
Costing of EIN
Obtaining an EIN is free
- Certificate of occupancy
Once your location has passed the final inspection, the zoning department or local building will issue a certificate of occupancy. The certificate of occupancy certifies that the building has been properly maintained and constructed.
How to get a certificate of occupancy
The whole procedure of obtaining a certificate of occupancy varies from jurisdiction and also on the building’s structure. Search for your state certificate of occupancy and follow the simple steps on your local government’s website.
Occupancy certificate cost
An occupancy certificate mainly costs about $120
- Sign Permit
Your sign is the most important part of making your brand a name in restaurant marketing. But before you put any sign to grab the attention of your restaurant, you need to sign a permit from the city government. The specifications like location, size, and lighting vary from city to city. If you lease or rent a building, it is a good idea to get written approval from the landlord with an official signed permit.
Procedure to get a signed permit
Usually, the outdoor signs need to be approved by the local government. The business owners must hire a licensed contractor to install, design, and permit the signage and then bring the design ideas actually to the planning department.
Cost of a sign permit
It can cost between $30 and $60.
- Music license
Music is an essential part of the restaurant experience, adding to the mood, ambiance, and individual aesthetic. To play music in your restaurant, you need to have a music license to avoid copyright infringement. This also includes live music, music from CD, or also streaming services.
The fine for playing copyrighted music without a license can range from $700 to $28,000. Plus nobody wants to get sued by any famous artist. To protect their business from these fines, make sure that you have secured your music before you hire any DJ or also plan a karaoke night.
The procedure for getting a music license
You can pay The American society of composers or the publishers and authors and broadcast Music Inc directly from the sites. Many licensed music solutions pay their fee on behalf of you.
Cost of Music license
Rates for bars, restaurants, and nightclubs depend on whether the music is recorded or live. Whether it is audiovisual or just audio, the number of nights per week music is offered, and whether the admission fee is charged. For background music, it can cost between $300 and $ 550.
There are some of the primary permits and licenses that a restaurant must acquire to operate or open legally. The exact regulations and laws for each license are often specific to various countries, states, and cities. Make sure that you understand all the various licenses you might need on the state, federal, and city levels. It can also be a tedious and drawn-out process, but securing all the necessary permits is a crucial step toward opening your new restaurant and also avoiding all the necessary penalties.
How Insurance plays an important role in opening a restaurant in Chicago
Purchase worker’s compensation insurance for your waiters, staff, and other chefs. It is illegal to operate a business in Chicago without insurance. The insurance will kick in if any of your staff is injured during the job and will provide the salaries as long as they are not able to join the work again. It is not required, but it is certainly a good idea. Some other types of insurance include property insurance and fire insurance for your restaurant.
How to open a restaurant in Chicago- risks involved in restaurant insurance in Illinois
Even though there are thousands of restaurants in Illinois, there are going to be some differences based on:
- The building that you are using
- Type of food you serve
- Kitchen equipment used in restaurant
- How do you cook or prepare the food
- Personal property on the building premises
- Staff roles and sizes
All these factors comprised one important thing: your restaurant insurance will be very different from the other restaurants in Chicago.
What is the basic coverage you need for your Chicago restaurant?
Illinois, like every other state, needs basic insurance coverage for restaurants, which includes:
- General commercial liability insurance
- Property insurance
- Employee insurance
Cost of restaurant insurance in Illinois
It’s impossible to offer any sort of blanket estimate regarding the annual cost of your restaurant insurance in Illinois. The cost splits in two ways:
- You have to pay an annual premium for liability and property insurance
- And another annual premium for worker’s compensation.
How to open a restaurant in Chicago-Things to be considered
Research the local market
Before you put in your savings on how to open a small restaurant in Chicago, you need to equip yourself with a wide array of hospitality experience. You will also learn how to conduct meaningful research about the Chicago restaurants scenes and also use it to construct the business of your dreams.
How to generate your vision
Once you are done with your preliminary research on how to open a restaurant in Chicago, you can start generating your vision. You can get the help of some professionals in turning your conceptual dreams into an actionable revelation, which will be guiding you through a 5W1H rule that is who, what, when, where, why, and how.
How to pen down your business plan
One of the most important steps in learning how to open a restaurant in Chicago is to pen down your business plan. You will also get step-by-step instructions on how you would want to refine and create your restaurant’s business plan.
How to register your business in Chicago
You can register your business in the city of Chicago and with the state of Illinois. You will also have to learn about the legal formalities like where to find the forms, and how much it costs to register your restaurant business in Chicago.
How to find the appropriate space for your restaurant
Chicago is no stranger to closet size spaces and high rent. Finding the appropriate space for your restaurant business will be the most daunting task in the whole process. So it would be best for you to get in touch with local resources just like real estate commercial firms that specialize in restaurant spaces.
Chicago restaurant permits 101
This will simplify the legal complications by explaining the certificates and permits you might need to open the restaurant, which inspections you need to pass on, and what legal requirements you need to stay in business.
Tips for creating the menu
This is the most fun part of the process: creating your menu. Your menu should be attractive and stand apart in this competitive restaurant market.
How to hire staff for your restaurant in Chicago
A restaurant is incomplete without its employees. These are the front-line people who deal with the consumers; they prepare the food, make drinks, and keep the area hygienic and clean. Hiring the right employees is like the cherry on the cake for the smooth operation of your business.
Local resources and associations for Chicago restaurant
No business is complete without local resources and associations. You can start accessing a list of local restaurant relations.
How much does it cost to open a restaurant in Chicago?
There are many uneven things involved in opening a restaurant- there is no one answer that fits with all the questions on how much it is expected to pay. But having a deep understanding of the areas where you also intend to spend your money will offer a more clear statement on final expected costs.
When starting the plan, you and your team should take the necessary time to plan everything properly which also comprises knowing how you will pay for every facet of starting your restaurant.
Generally, restaurants work on a very small margin and have many moving parts, so if you start up with a bad layout, you may lose thousands in additional labor costs and lost customers. An uncomfortable seating area will discourage people from visiting your restaurant. Poor equipment and spotty construction choices can also cost twice as much as down the road.
Below are some biggest restaurant startup expenses and costs that you can anticipate:
- Location
- Utilities
- Equipment and interior finishes
- Contingency and capital
- Pre-opening expenses
- Marketing
- Exterior finishes
- Development costs and organizational
- Technology
- Professional services
- Food cost
We all know that restaurants tend to fail when they are underfunded. Undercapitalization will make an already challenging business more complicated to float. To avoid the drawbacks, you have to work with professionals on every step.
Here is the list of professionals and trades that you should consult as you plan to open a restaurant:
- Attorneys
- Real estate agents
- General construction contracts
- Restaurant Marketing and delivery
- Architects
Enlisting the list of professionals will ensure that you are doing all the things in the right manner. If possible, seek out professionals that have experience working specifically only with restaurants.
Select the right social media platform
Collecting all the information on your target group will give you an idea of what social media channels are used for. But you can also pull in the results by choosing the right platform for your website analytics. Does Facebook drive more traffic to your site? Does Instagram drive more traffic to your site? Does Twitter help you in reaching the target audience?
All these social media channels are important because the channel that you will choose will influence the strategy and content of your campaign since each channel has different requirements. A posting that works well on Facebook does not necessarily work with Instagram or Twitter.
Pick up the right tools to be productive
Various social media management tools can help you in managing your campaigns. They can also help in increasing productivity in four key areas of social media campaigns: content sharing, content creation, social media analytics, and social media management.
One very important tool that you should decide on first is the calendar of social media, as it will help you in staying organized. Outlining the content and timing of your posts on various channels is a very vital step in running a social media campaign successfully. It is like you know what needs to be done at any given time of your campaign because timing is everything on social media platforms.
Final thoughts
Opening a restaurant in Chicago is neither a simple nor short process. Once you nailed a restaurant idea, you need to find the ideal location and pitch in your restaurant business plan to the investors.
The most painstaking part of the whole process begins with licensing. Acquiring all the necessary details about the food permits and licensing involves a lot of paperwork along with some patience. It takes a lot of time to get it approved. It is not a fun task but necessary. This whole guide covers the permits and licenses needed to open a restaurant.
Opening a restaurant in Chicago requires a lot of patience, hard work, and knowledge about the field. Make sure your goals are clear and your pre-opening research is clear with effective planning. Follow all the digital trends to keep your restaurant on top of the listing. Also, make sure that each step you take in this whole process is calculative and well-planned.