There are lots of things you need to know before you start a restaurant or an online/home-based food business in California. The very first thing you need to do is decide whether you want to open up a restaurant or sell food from home, and for that, you need to assess your goals, resources, and local regulations.
Then, you need to choose a business entity for your company. Then comes the most important step – obtaining the necessary licenses and permits like a cottage food permit and Class A/B permits.
The next step is to get insurance for your food business, and then you can start setting up your kitchen or restaurant! After that, you just have to hire employees and your food business is good to go.
In this article, we will explain all of these steps in detail so you can learn how to start a food business in California and begin sharing your culinary creations with the world.

How to Start a Food Business in California
Step 1: Decide Between Restaurant or Home-Based Food Business
Step 2: Choose a Business Entity
Step 3: Choose a Registered Agent in California
Step 4: Obtain the Necessary Licenses and Permits
Step 5: Get Insurance for Your Food Business
Step 6: Set up Your Kitchen or Restaurant
Step 7: Open a Business Bank Account
Step 8: Hire Employees
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Thinking about starting an LLC in California? We’ve got all the details you need.
Begin by selecting a unique business name, appointing a registered agent, and filing your Articles of Organization with the California State Corporation Commission, which includes a $100 processing fee.
You can do this independently, consult with a business attorney for specialized legal guidance, or join the other 75% of our readers and hire a specialized California LLC formation service (recommended).
Starting a Restaurant or Home-Based Food Business in California
Starting any business requires a great ton of dedication and effort. Follow the steps below to start your entrepreneurial journey towards culinary success in the vibrant landscape of California’s food industry.
Step 1: Decide Between Restaurant or Home-Based Food Business
The first step in starting a food business in California is to determine whether you want to establish a traditional restaurant or operate a home-based food business. This decision will shape the direction of your venture and have significant implications for your operations, resources, and legal requirements.
If you’re considering opening a restaurant, you’ll need to think about factors such as location, target market, startup costs, and maybe even a theme. Location plays a crucial role in the success of a restaurant, as it can significantly impact foot traffic and visibility.
Think about what sort of customers will be patronizing your restaurant. Understanding their preferences and expectations will help you craft an experience that resonates with them and keeps them coming back.
Starting a restaurant typically requires a large amount of investment in equipment, furnishings, staffing, and marketing.
A home-based food business, on the other hand, will be much easier to set up. These businesses were all the rage during the pandemic and they’re still very lucrative for aspiring entrepreneurs.
Home-based food businesses offer more flexibility and lower overhead costs but comes with its own set of challenges. You won’t have to worry about the location and if you’re like most people, you probably already have a kitchen in your home, so there’s no need for a big investment in renting or buying commercial space.
However, you will have to assess whether your home kitchen meets the regulatory requirements for food production. You’ll also have to take into consideration factors such as zoning regulations, storage space, and production capacity.
Whether you should open a restaurant or start a food business in California from home is something that will depend on your personal preferences, resources, and long-term goals. Can you handle the pressure of running a restaurant? Do you have enough capital to sustain a brick-and-mortar establishment?
If you’re feeling unsure about which path to choose, we suggest putting together a solid business plan. This involves describing your business, analyzing your competition and the food industry, making financial projections, and more. Going through these steps will help clarify the direction you want your business to take.
How Much Does It Cost to Start a Restaurant in California?
The cost of starting a restaurant in California depends on several factors, such as its location and size, but on average, you should budget from anywhere between $100,000 to $1 million.
This budget will generally include expenses such as leasing or purchasing commercial space, renovating or building out the restaurant, and purchasing equipment and furniture. You’ll also want to consider the costs of obtaining permits and licenses, hiring staff, marketing and advertising, and initial inventory.
Keep in mind that the size of the restaurant is very important and will have a huge effect on the cost. For example, starting a small cafe with minimal renovations and basic equipment would likely demand a smaller investment than launching a lavish fine dining restaurant with extensive decor.
How to Start a Food Business in California Online
If you’ve decided to start an online food business in California instead of opening a restaurant, then you’ll need to define your niche and target market. You’ll need to do some research on which food items are in demand in the areas where you’ll be delivering.
You’ll have to register your business and get all the necessary licenses and permits (explained in detail in steps 2 and 3).
Finally, you’ll need to establish a strong online presence by creating profiles on popular social media platforms like Instagram, Facebook, and Twitter. Share enticing photos of your food offerings, engage with your audience, and use targeted hashtags to expand your reach and attract potential customers.
Step 2: Choose a Business Entity
Next step is to decide on the legal structure of your business entity. This involves determining whether you’ll operate as a sole proprietorship, partnership, limited liability company (LLC), or corporation. Each option has its own set of advantages and disadvantages in terms of liability, taxation, and administrative requirements.
Sole Proprietorship
If you’re running your food business from home and you’re doing everything yourself, then you may consider registering as a sole proprietorship. It’s the simplest form of business entity and it gives you full control over your business and its profits.
However, being a sole proprietor also means that you are personally responsible for any business debts or obligations, which could put your personal assets at risk.
Partnership
Partnerships involve two or more individuals sharing ownership and management responsibilities of the food business. While this setup allows for combining resources and expertise, it also means that partners share liability for any business-related obligations or debts.
LLC
Creating a limited liability company (LLC) strikes a balance between the simplicity of a sole proprietorship and the formality of a corporation. It protects the owner’s personal assets from business liabilities while still allowing for flexibility in management and tax treatment.
An LLC may be the best option if you’re starting a restaurant. Considering how important this decision is, though, we recommend consulting with a legal advisor or business expert to determine the most suitable business entity for your specific circumstances.
Corporation
On the other hand, a corporation is a distinct legal entity independent of its owners, providing the utmost protection for personal assets. However, setting up and maintaining a corporation involves more intricate procedures and adherence to regulatory standards.
Once You’ve Decided
Once you have decided what business entity you want to go with, you should reserve your business name and get your business registered as soon as you can.
To reserve your company’s name, you’ll have to file an application with the California Secretary of State. This will ensure that no one else in the state can use the name. Then, you can go ahead and register your business.
If you’re a sole proprietor, then you don’t have to do anything. However, if you’re an LLC, then you’ll have to file articles of organization with the California Secretary of State and hire a registered agent who can act as your official representative for legal and administrative purposes.
Step 3: Choose a Registered Agent in California
If you’ve decided to establish your business as an LLC or corporation in California, the next crucial step is to appoint a registered agent. This is a mandatory requirement when preparing your Articles of Organization, the document needed to officially register your LLC or corporation with the California Secretary of State.
So, what exactly does a registered agent do? A registered agent is a person or business entity responsible for receiving important documents on behalf of your business, including tax forms, legal notices, lawsuits, and official government correspondence. Essentially, your registered agent serves as your business’s primary link to the state.
Who qualifies as a registered agent? The registered agent must be a California resident or a corporation authorized to conduct business within the state, such as a registered agent service. If you choose to be your own registered agent, you must appoint an individual within your company, as California law doesn’t allow business entities to act as their own registered agents.
For more detailed information on the requirements for registered agents in California, refer to the California Corporations Code.
Don’t forget that to run a business, you need to: register a business entity (LLC is the most suitable option, more details here), obtain an EIN (you can apply online here), open a business bank account (more details here), understand accounting and taxes (more details here), and register a domain and create a website (this is optional, you can do it here).
Alternatively, you can delegate all of this to a registered agent starting from $0 + State Fees and get everything done in 1 day. This can save you time and ensure everything is done correctly, leaving you to focus on growing your business.
Step 4: Obtain the Necessary Licenses and Permits
The specific permits required will depend on various factors, including the type of food you plan to sell, your location, and the scale of your operation.
In California, all businesses, even if they’re being run by a sole proprietor, are required to get a general business license, also known as a business tax registration certificate. You can usually apply for this license through the official site of your city or council.
Since you’re handling and selling food products, there are a couple of other permits and licenses you’ll need before you can start cooking in the kitchen.
What Permits Do I Need to Sell Food in California?
Here’s what you need to start a food business in California:
- Seller’s Permit: You need this permit if you’re going to be selling taxable goods.
- Health Permit: Issued by the local health department, this permit ensures that your food handling and preparation practices meet safety and sanitation standards.
- Food Handler’s Permit: If you or your employees will be involved in handling or preparing food, you may need to obtain a food handler’s permit, which demonstrates knowledge of safe food handling practices.
- Cottage Food Permit: If you plan to sell certain low-risk food products made in your home kitchen, you may need a cottage food permit, which allows for the sale of homemade food items directly to consumers.
- Class A Food Permit California: A Class A food permit in California is required for establishments that handle, prepare, or serve homemade kitchen food directly to consumers. Examples of Class A establishments include restaurants, cafes, and catering businesses. Class A permits typically involve more rigorous inspections and compliance requirements. A Class A permit has capped the gross annual sales at $75,000 for the business.
- Class B Food Permit California: A Class B food permit in California allows your business to sell homemade kitchen food either directly to consumers or indirectly through restaurants and food markets. A Class B permit limits the gross annual sales for the business to $150,000.
- Zoning Permits: Depending on your location and the nature of your food business, you may need zoning permits to ensure compliance with local zoning regulations, particularly if you are operating from a commercial space.
We recommend checking out the CalGold site to see what other permits you need. You’ll have to enter the name of your city or council and the type of business you’re operating, and then it’ll show you a complete list of all the permits and licenses you need.
How to Get a Cottage Food Permit in California
To get a cottage food permit as a cottage food operation, you’ll have to get in touch with your local Environmental Health Department. You must also meet the following requirements:
- You can only sell foods that are on the California Department of Health’s list of Approved Cottage Food List.
- Complete a Cottage Food Operator Training within three months of getting the permit.
- Prepare your home kitchen to meet the necessary sanitation and safety standards outlined by California’s Cottage Food Law.
- Adhere to the maximum allowable revenue set by the California Department of Health for Class A and Class B permit holders.
How Much Is a Food Permit in California?
Different food permits in California come with different price tags. Here’s the cost of the 4 food permits described above:
- Food Handler’s Permit: The food handler’s permit has to be obtained by every single employee that directly handles or prepares food. It costs $15 per person.
- Class A Food Permit: The cost tends to vary by city and council, but you can generally expect to pay between $100 and $150 annually.
- Class B Food Permit: The cost of a Class B food permit typically ranges from $150 to $250, but just like Class A, it varies depending on the city and council.
What Food Operations Do Not Need Permits in California?
Compact Mobile Food Operations (CMFO) generally don’t require food permits in California, but only if they are selling pre-packaged, non-potentially hazardous foods. These include packaged snacks, bottled beverages, or pre-packaged sandwiches.
These operations typically involve vending machines, food carts, or trucks selling pre-packaged items that do not require extensive preparation or pose minimal risk to consumer health.
Farms in California typically do not need food permits for the direct sale of whole, unprocessed agricultural products that they grow or produce on their own farm. This exemption applies to items such as fresh fruits, vegetables, nuts, honey, and eggs, as long as they are sold in their natural state without significant processing or alteration.
Unfortunately, most other food operations will require food and health permits. However, we recommend that you get in touch with your city or council’s health department to find out what type of food permits your business is exempt from.
Step 5: Get Insurance for Your Food Business
Getting insurance coverage for your business is the best way to protect your investment and mitigate potential risks. Whether it’s a restaurant or a kitchen in your house, having the right insurance policies will not only protect your business, but also your employees.
Insurance coverage is essential to safeguard against liabilities arising from slip-and-fall accidents, foodborne illnesses, property damage, or allegations of negligence. Home-based food businesses face various risks, such as product liability claims, food contamination incidents, or property damage.
Plus, when your business is insured, it shows your commitment to ensuring the safety and well-being of your customers and employees. It signals your commitment to responsible business practices and your readiness to address potential challenges or emergencies that may arise.
One of the most important insurance coverages that you’ll need as a food business in California is Workers’ Compensation. This coverage provides benefits to employees who suffer work-related injuries or illnesses.
Some other insurance coverages that you may need include liquor liability coverage, restaurant endorsement, general liability insurance, property insurance, and commercial auto insurance.
Step 6: Set up Your Kitchen or Restaurant
Now comes the part you’ve been waiting for – setting up your kitchen or restaurant. This is where you finally start to see the fruits of your labor.
Whether you’re operating from a commercial space or a home kitchen, careful planning and attention to detail are essential to create a functional and efficient workspace. The perfect space meets regulatory standards and facilitates smooth operations.
Commercial Space
If you’re opening a restaurant, then you need to think about how you’re going to design it. Design the kitchen layout to streamline food preparation, cooking, and plating processes, while also making sure that there’s adequate space for the staff to move around.
Invest in high-quality kitchen equipment and supplies that are tailored to your menu and operational needs. This may include cooking appliances, refrigeration units, food storage containers, utensils, cookware, and servingware. Make sure that all equipment meets safety and sanitation standards and is properly maintained.
You’ll also have to train staff on proper food handling, storage, and sanitation procedures. Establish cleaning schedules and protocols to maintain a clean and sanitary kitchen environment.
Then, you’ll have to make sure that your restaurant complies with local health department regulations and food safety requirements. If health inspectors identify any issues during their visit to your restaurant, try to address them as soon as possible.
Home Space
If you’re running your food operation from home, then you’ll still have to make sure that your kitchen meets regulatory requirements for operating a food business.
You may have to install some modifications or upgrades to comply with health and safety standards. This may include installing separate sinks for food preparation and dishwashing, providing adequate ventilation, and ensuring proper storage of food ingredients and supplies.
Then you’ll have to buy commercial-grade appliances, food preparation tools, packaging materials, and storage containers for your kitchen .
Don’t forget to read up on cottage food laws and regulations that govern home-based food businesses in California.
Step 7: Open a Business Bank Account
Once you’re done designing your kitchen/restaurant, it’s time to open up a business bank account. A business bank account will help you keep track of your incoming revenue and outgoing expenses more effectively.
Plus, it’ll make it easier for you to handle your taxes, especially if your business is operating an LLC. As an LLC, it’s important that you separate your personal and business finances to maintain the limited liability protection that the LLC structure offers.
After deciding which bank to go with, gather all the necessary documents required for opening a business bank account. This typically includes your business formation documents, such as articles of incorporation or organization, your Employer Identification Number (EIN) issued by the IRS, and any relevant business licenses or permits.
Step 8: Hire Employees
According to the California Homemade Food Act, a cottage food operation is only allowed to have one full-time employee. Note that an employee doesn’t refer to your immediate family/other household members or the person who delivers your food items.
As a restaurant, though, you can hire as many people as you want. We recommend using social media platforms like LinkedIn, Indeed, and Instagram to look for potential candidates.
Depending on your restaurant’s size, you’ll need roughly 1-5 waiters for customer service, 4-5 kitchen staff for cooking, and about 4 support staff to handle HR, accounting, and cashier duties.
You may also need a manager to oversee daily operations, coordinate staff schedules, manage inventory, and ensure compliance with health and safety regulations.
In the early stages of a restaurant’s operation, restaurant owners decide to handle managerial tasks themselves. It helps them keep a close eye on everything, cut down on labor expenses, and make sure their restaurant runs just the way they envision it.
However, if you’ve never worked in a restaurant before, then we recommend hiring a manager who has experience in the industry.
Use Social Media to Market Your Food Business
Using social media is one of the best ways to market your food business, whether it’s based out of your home kitchen or a physical location like a restaurant or cafe. There are tons of things you can do to get started, from posting well-composed photos of your dishes to engaging with your followers through contests and giveaways.
We also recommend running ads on Instagram, Facebook, and even Google if you have a website for your business. You can target specific demographics, interests, and locations, so your ads reach the right audience.
You could also make short reels or videos on Instagram and YouTube to show what goes on behind the scenes in your kitchen, share cooking tips, or highlight special menu items.
Remember to stay consistent and post regularly to keep your audience engaged. Consistency is key to building a strong presence on social media and maximizing your reach. Experiment with different types of content, such as recipe tutorials, behind-the-scenes footage, customer testimonials, or special promotions, to keep your feed engaging.
We also recommend using relevant hashtags to increase the visibility of your posts and attract users who are interested in food-related content.
Another great strategy is partnering with influencers in your area who are active in the food and lifestyle space. Look for influencers whose audience aligns with your target demographic and offer to provide them with complimentary meals or products in exchange for promotion on their social media channels.
Finally, make sure you actively engage with your followers by replying to their comments and messages in a timely manner. Show appreciation for positive feedback and address any concerns or questions raised by customers. Don’t just copy and paste the same message for everyone; instead, personalize your responses and genuinely interact with your audience.
Building meaningful connections with your followers fosters trust and loyalty, ultimately contributing to the success of your food business.
Share Your Culinary Expertise With the World
Starting a food business in California can be fun, but it requires careful planning, dedication, and attention to detail. Whether you choose to open a restaurant or operate a home-based food business, there are several steps that you need to follow if you want your business to be successful.
From deciding on your business entity and obtaining the necessary food business licenses and permits to setting up your kitchen, each step is critical to the operation of your venture.
Running a restaurant is much harder than operating a home-based kitchen as you have to consider factors like location, startup costs, hiring and training employees, and more. Home-based food businesses are cheaper to set up but they have their own set of challenges.
No matter which type of business you choose, remember to use social media to get the word out about your business. Partner with influencers, food bloggers and YouTubers, run Instagram and Google ads, and just engage with your followers to build a loyal customer base.
By following the steps mentioned above, you can turn your passion for food into a thriving business in California.