Food establishments in Canada can be quite lucrative, which makes launching such a business an attractive idea. If you think the same, you must wonder what licensing requirements you must meet to operate a restaurant, serve alcohol, comply with general health and safety rules, etc.
For food service businesses to operate legally in Canada, adhering to regulations is crucial, including ensuring food safety and quality in your restaurant. Non-compliance of licences can lead to severe consequences, including fines exceeding $45,000 and potential business foreclosure.
Types of Restaurant Licences and Permits in Canada
Simply put, to open and operate a business in Canada, you need to carry a relevant business licence and in many cases, a range of business licences. However, when buying an existing business, you must trust that these are all in order and check for the appropriate business licence.
To curb the risk of fines and closures, you must have several licences and permits when evaluating a potential restaurant purchase. If you are obtaining an existing business, this list will help you ensure it already has all the required licences and permits.
Your restaurant may require permits and licences from municipal, provincial, and even federal levels of government. The good news is that you can apply for only a few of these in person. Here is a quick recap of what you need.
First, you need to register your restaurant as a legal entity. To do it, you need a business licence. If you don’t have a business name now, it would be a good time to develop one. It’s one of the most important documents to obtain. Why? Because a business licence proves that you have legal permission to run your restaurant.
How to Get One
Fortunately, Canada allows filing applications for business licences online. You can apply for this type of licence at the provincial or federal level, so which one do you need?
If you plan to operate in only one province, understanding the legal considerations when buying a restaurant in Canada is crucial, including registering with the provincial government for a business licence. To operate restaurants across Canada, you must register with the federal government.
Business licence costs are around the $60 mark. They generally depend on the business type and location.
Another thing to consider is the business taxes. As a restaurant owner, you might need a business number. This will allow you to collect and remit the Harmonized Sales Tax (HST).
Most businesses that make less than $30,000 in a year must do it, and it’s best to check with the Canada Revenue Agency to verify whether this applies to you.
Food Service Licence
All food service businesses in Canada are required to have a valid food service licence. Fortunately, the Canadian Food Inspection Agency’s licensing system is completely digital, and you can apply for this business licence online too.
How to Get One
The type of food service licence depends on the business and service provided. For instance, a catering business may only need a processing licence. A traditional restaurant or similar establishment may require additional permits.
That’s why contacting the local health department is best to ensure you have all the necessary licences. This type of business licence usually costs around $1,000.
Liquor Sales Licence
A liquor licence is a legal requirement in Canada that all businesses that plan to serve alcohol must meet. All restaurants that serve alcohol in the area where they serve food and offer entertainment must have it approved.
If you are buying an existing business, the establishment already has it. However, if opening a brand-new restaurant, you must contact the Alcohol and Gaming Commission of the province where you will operate. The application process might differ from province to province.
How to Get One
There are three other business licences and permits you need to know about when serving alcohol. You will need a Bring Your Wine liquor licence if you allow customers to bring their unopened wine from home.
If your business operates in an unlicenced area, which often happens if you are catering, you must get a liquor sales licence endorsement.
Finally, you need a provincial liquor delivery licence to make alcohol deliveries to individuals. In this case, you will also need to meet the requirements for record-keeping and training on handling alcohol.
This is another business licence you must obtain to use recorded music in your restaurant for entertainment. You can save some time if you are acquiring an existing business by checking whether they have it.
How to Get One
You will need two music licences, the SOCAN and the RE:SOUND licence. You can obtain both through Entadem to ensure you use different songs legally and ethically. Otherwise, you risk copyright infringement and fines up to $30,000.
Obtaining this business licence will cost you around $500. The fee depends on whether the music is live or recorded and how many nights per week you play it.
Refreshment Vehicle Licence
If you plan to have a mobile or stationary vehicle that offers food and/or beverages to consumers, you will need to obtain a refreshment vehicle licence.
This business licence is obtained from the federal government, and the fees are variable as they depend on multiple factors.
Building permits may not be required, but we still have to mention them as you will need to get one if you are planning to:
- Make structural changes to the restaurant entrance
- Close a section of the road for special occasion (for instance, a grand opening);
- Renovate your restaurant;
- Perform any sewage or septic work.
Every building permit fee is different and may vary from province to province. Check the relevant provincial or federal government websites for more detailed information on the application process. If you rent, you may have to work with the property owner.
A sign permit is a standard follow-up procedure after obtaining a business licence. Food service businesses are famous for their unique signage. Sign regulations vary from city to city. Check your city’s specific required permits and requirements for business licences to ensure compliance before investing in any outdoor signage.
In Canada, you are required to get an occupancy permit if you want to operate a restaurant. If your restaurant sells alcoholic beverages, you will need this permit to apply for a liquor licence or liquor permit.
An occupancy permit is not the same as a building permit. Although often issued by the same authority, local building, or zoning department, this permit is a sign that your restaurant’s building passed inspection, including general building inspection, met the fire safety standards and other safety codes, and has top-notch electrical and plumbing installations.
Food Handler’s Permit
A food handler’s permit (the Employee Health Permit) is a must-have when legally operating a restaurant in Canada. You need to ensure your restaurant staff has completed a food safety certification, and this permit proves that they all did.
How to Get One
There are no uniform requirements for this permit in Canada, as they differ in every province. Foodsafe is an excellent resource for this type of certification, and you should check it out with your staff to ensure compliance.
The costs will depend on the number of employees that need to undergo the certification program. For most courses, your employees will not be required to be present in person.
The Bottom Line
Opening a restaurant in Canada is a truly exciting endeavour. However, many technicalities are involved in getting business licences approved, especially if you offer live entertainment or play recorded music or your restaurant sells alcohol.
While we gave you general advice, the safest course of action is to check all the legal requirements with the province and federal governments, as they both have elaborate websites and on-demand helpful personnel.
What licences are required to open and operate a restaurant in Canada?
To open a restaurant in Canada, you need a business licence, food service licence, liquor sales licence, and music licence. Additional permits include the building, sign, occupancy, and food handler’s permit.
How much does it cost to get restaurant licences in Canada?
The cost of getting a restaurant licence in Canada depends on several factors, such as where it is located (borough, city, province), its type and size, and the scope of its services. However, you can expect all fees to add up to approximately $2,000.
How do you get restaurant permits and licences in Canada?
Most restaurant licences and additional permits are obtainable through online portals of relevant authorities such as city, provincial, and federal governments.
Do I need a special agreement to serve alcohol in my restaurant?
You need an agreement in the form of a liquor license, which is a legal requirement to serve alcohol in any food establishment in Canada.
What are the basic requirements for starting a food establishment in Canada?
To start a food establishment in Canada, you must obtain various permits, pass health inspections, and comply with local food safety regulations.