How to Start a Meal Prep or Ghost Kitchen Business in California

California charges $800 a year just for the privilege of being an LLC. Its state income tax hits 13.3% at the top bracket. And starting a food business here means dealing with county health departments that can make or break your timeline before you’ve sold a single meal.

But California also has something most states don’t: a legal pathway to sell prepared meals — including potentially hazardous foods — directly from your home kitchen. Not baked goods. Not jam. Actual meals. The MEHKO program exists, it works, and almost nobody starting a meal prep business knows about it.

This guide covers both paths: the commercial ghost kitchen route and the home kitchen MEHKO option. You’ll also get the full cost picture so you’re not surprised six months in.

Three Paths — Ghost Kitchen vs. MEHKO vs. Cottage Food

Before spending money, get clear on which model you’re actually building.

Ghost Kitchen (Delivery-Only Commercial Kitchen)

A ghost kitchen is a licensed food facility that operates delivery or pickup only — no dining room, no walk-up counter. From a regulatory standpoint, it’s a restaurant. You need a county health department food facility permit, plan review before build-out, and full compliance with the California Retail Food Code (CalCode). The advantage: zero meal caps, full menu flexibility, ability to hire staff, and the ability to scale. The cost is the highest of the three paths.

MEHKO — Microenterprise Home Kitchen Operation (AB 626)

This is the one worth knowing about. AB 626, signed in 2018, allows you to sell prepared meals from your permitted home kitchen, including meals that require refrigeration or cooking to safe temperatures. You’re capped at 30 meals per day or 60 meals per week, and your gross sales can’t exceed $75,000 annually (verify the current cap with your county, as this figure is subject to change). You can’t hire employees — this is a solo operation by law.

The catch: your county has to have opted in. Not all of them have.

Cottage Food Operation

Cottage food is the other home-based option, but the scope is narrower than most people assume. You’re limited to non-hazardous foods — baked goods, jams, candy, dried herbs, that category. Nothing that requires refrigeration. Class A allows direct sales only (farmers markets, roadside stands, your front door). Class B adds indirect sales through retailers. It’s the lowest-barrier path, but it won’t work for a meal prep business selling chicken bowls or refrigerated lunches.

Choosing Your Path

	Ghost Kitchen	MEHKO	Cottage Food
Menu flexibility	Full	Full (within food safety rules)	Non-hazardous only
Meal cap	None	30/day or 60/week	None
Employees	Yes	No	No (Class A)
Compliance cost	Highest	Moderate	Lowest
Location	Commercial kitchen	Your home	Your home

If you’re testing a concept or building a small client base first, MEHKO is a legitimate starting point. If you already have clients, need volume, or want to hire even one employee, go straight to the ghost kitchen path.

County Health Department Permit (Ghost Kitchen)

Every ghost kitchen in California is regulated by the county department of environmental health (DEH) where the kitchen is physically located. Not the state. Not the city. The county.

Plan Review Comes First

Before you sign a lease on a commercial space or start any build-out, submit your plans to the county DEH for review. This isn’t optional — it’s required before construction. You’ll submit a floor plan showing equipment layout, ventilation, hand-washing stations, and storage areas, along with equipment specifications for everything that touches food. The county reviews this against CalCode requirements and either approves, requests revisions, or rejects.

Skipping plan review and building out first is the most expensive mistake new food operators make in California. You can easily spend $30,000 on a build-out and then be told to tear out a wall because your hand-washing sink is in the wrong location.

The Pre-Opening Inspection

Once construction is complete and equipment is installed, you request a pre-opening inspection. The county inspector walks through, checks that what was built matches what was approved, and verifies equipment is operational and the facility is ready to handle food safely. Pass the inspection, and your health permit is issued. Fail, and you schedule a re-inspection (often at additional cost).

CalCode Compliance

The California Retail Food Code governs everything: food storage temperatures, surface materials, warewashing equipment, employee hygiene requirements, pest prevention. Your kitchen has to meet these standards on the day of inspection and every day after.

Certified Food Protection Manager

California requires at least one Certified Food Protection Manager (CFPM) per food facility — someone who has passed an accredited exam like ServSafe. This isn’t the same as a Food Handler Card. The CFPM exam takes preparation; budget time and roughly $150-$200 for the course and exam.

All food employees — anyone who handles unpackaged food — must also hold a California Food Handler Card. Cards cost around $15 and require completing an approved food safety course.

Permit Fees and Renewals

Fees vary significantly by county. Los Angeles County is among the most expensive in the state; a new food facility permit can run several hundred to over a thousand dollars depending on facility type and seating (even ghost kitchens get classified by risk level). San Diego, Sacramento, and the Bay Area counties have their own fee schedules. Call your county DEH before you budget — don’t guess.

Permits renew annually. Renewal comes with re-inspection. Operating with an expired permit is a quick way to get shut down.

MEHKO — Home Kitchen Option

If you haven’t heard of the MEHKO program, you’re not alone. It gets buried under cottage food rules in most guides, even though it’s a fundamentally different — and more useful — option for meal prep businesses.

What AB 626 Actually Created

AB 626, signed into law in 2018, created the legal framework for Microenterprise Home Kitchen Operations in California. The intent was to give small food entrepreneurs a lower-cost entry point while maintaining food safety oversight. A MEHKO permit is issued by your county environmental health department, not the state.

How It Works

You apply to your county DEH for a MEHKO permit. The county will inspect your home kitchen to verify it meets their requirements — adequate refrigeration, proper food storage, a functional handwashing setup, no pets in the kitchen during food prep, that kind of thing. You’ll need food safety certification (typically ServSafe or equivalent). Once approved, you can legally prepare and sell meals from your home.

The operational limits are real:

30 meals per day maximum
60 meals per week maximum
$75,000 maximum in annual gross sales (confirm current figure with your county)
No employees — you operate alone

Delivery is allowed. Direct sales are allowed. You can use delivery apps if they’ll work with a MEHKO operation, though some platforms have their own commercial kitchen requirements — check before assuming.

The County Opt-In Problem

This is the critical detail. AB 626 gave counties the option to allow MEHKOs — it didn’t require them to. As of now, counties including Los Angeles, San Diego, Riverside, and several others have adopted MEHKO programs, but not every county has. Before you spend any time on this path, call your county environmental health department and ask directly: “Do you issue MEHKO permits?” If the answer is no, you’re on the commercial kitchen path by default.

Why MEHKO Makes Financial Sense at Small Scale

The math is straightforward. A commissary kitchen in Los Angeles rents for $15-$50 per hour or $1,000-$3,000 per month for a dedicated space. A MEHKO permit costs roughly $200-$500 depending on your county. You’re already working in a kitchen you’re paying for (your home). The savings in year one can easily exceed $10,000 compared to renting commercial kitchen time.

The 30-meal-per-day cap is a real ceiling, but it’s not as tight as it sounds for a solo meal prep business. At an average of $15-$20 per meal, 30 meals a day at full capacity is $135,000-$180,000 in gross revenue annually — well above the $75,000 sales cap, which means the sales limit actually hits before the meal limit for most operators. Plan accordingly.

MEHKO as a Stepping Stone

The most practical way to think about MEHKO: it’s a proof-of-concept phase. Build your client base, refine your menu, generate revenue, and build your reputation — then use that traction to justify the investment in a commercial ghost kitchen operation when you outgrow the cap.

Business Formation and State Requirements

Regardless of which kitchen path you choose, the business formation side is the same.

Form an LLC

An LLC protects your personal assets if something goes wrong with a customer order — food safety issues generate liability. File Articles of Organization (Form LLC-1) with the California Secretary of State at bizfileOnline.sos.ca.gov. Filing fee: $70.

Then the $800 hits. Every LLC doing business in California owes $800 per year to the Franchise Tax Board as the minimum franchise tax. This is due by the 15th day of the 4th month after formation in your first year, then April 15 annually after that. The first-year exemption that existed under AB 85 expired December 31, 2023 — it’s gone. Budget for it from day one.

File your Statement of Information (Form LLC-12) within 90 days of formation and every two years after. Fee: $20.

Get Your EIN

Free at irs.gov/ein. Takes about 10 minutes. You need this to open a business bank account and to file taxes.

CDTFA Seller’s Permit

If you’re selling food — and you are — register for a seller’s permit with the California Department of Tax and Fee Administration at cdtfa.ca.gov. It’s free to register. California’s base sales tax rate is 7.25%, but most cities and counties add on top of that, pushing the effective rate to 8-10%+ depending on location.

Costs at a Glance

Numbers people actually need before committing to this.

One-Time and Annual Fixed Costs

LLC filing: $70
$800/year franchise tax (ongoing)
Statement of Information: $20 (every 2 years)
CDTFA seller’s permit: free
EIN: free
Food Handler Cards: ~$15 per employee
Certified Food Protection Manager exam: ~$150-$200
Business liability insurance: $1,000-$3,000/year (non-negotiable — get it)

Path-Specific Costs

MEHKO (Home Kitchen):

County MEHKO permit: ~$200-$500 (varies by county)
Kitchen upgrades to pass inspection: $0-$2,000 depending on your home setup
Packaging and supplies: $500-$1,000 to start

Ghost Kitchen — Commissary Model (renting time in an existing commercial kitchen):

County health permit: varies by county
Commissary kitchen rental: $15-$50/hour or $1,000-$3,000/month
No build-out cost — you’re renting an already-approved space

Ghost Kitchen — Dedicated Space (leasing and building out your own commercial kitchen):

Plan review fees: $200-$1,000+
Pre-opening inspection: included or additional fee depending on county
Build-out: $30,000-$150,000+ depending on space condition and scope
Equipment: $10,000-$50,000+

Realistic Total Startup Costs

MEHKO lean startup: $2,000-$5,000
Ghost kitchen (commissary rental model): $5,000-$15,000
Ghost kitchen (dedicated space): $50,000-$150,000+

The commissary rental model is the middle path that most ghost kitchen businesses actually use at launch — you rent certified commercial kitchen time by the hour, operate during off-peak hours, and scale up or move to dedicated space once revenue justifies it.

What to Do First

Don’t form the LLC before you know which kitchen path is viable in your county. That’s the first call to make.

Week 1: Contact your county department of environmental health. Ask whether they issue MEHKO permits. If yes, get the application requirements. If no, ask about the process for a new food facility permit and whether they require plan review for a commissary-based ghost kitchen operation.

Week 2: Once you know your path, form your LLC at bizfileOnline.sos.ca.gov, get your EIN, and register for a CDTFA seller’s permit.

Week 3+: Submit your health permit application or MEHKO application, get your Food Handler Card, schedule your CFPM exam if you haven’t already, and get a liability insurance quote before you start selling anything.

The MEHKO path can move fast — some counties process applications in 4-8 weeks. The ghost kitchen path with plan review and build-out can take 3-6 months before you’re legally open. Plan your timeline accordingly and don’t start selling before you have your permit in hand. California’s county health departments do follow up on unpermitted food operations, and the fines aren’t worth it.