Restaurant rules and regulations in the United States come from three levels of government at once: federal agencies set wage, tax, allergen, accessibility, and copyright standards; states handle alcohol licensing, workers’ compensation, and often their own wage floors; and local health and building departments issue the permits that actually let the doors open. Every restaurant with employees needs at minimum a federal tax identification number, a local health department permit, a certificate of occupancy, and compliance with federal labor law. Serving alcohol, playing recorded music, or operating as a chain adds further layers on top.
Food Safety and Kitchen Operations
The FDA Food Code is the model that nearly every state and local health department adopts when writing its own inspection rules.1Food and Drug Administration. FDA Food Code The code itself is not binding federal law, but the version your local health inspector uses almost certainly tracks it closely.
The core rule is temperature. Time and Temperature Control for Safety foods, which cover meat, dairy, cooked rice, and cut produce, have to stay below 41°F or above 135°F. The range in between is the danger zone. TCS foods left in that range for more than four cumulative hours have to be discarded.
Kitchen design is part of compliance, not separate from it. Handwashing stations have to be reachable from every prep area and stocked with hot water, soap, and single-use towels. Raw proteins and ready-to-eat foods need separate cutting boards and surfaces. Operations that smoke, cure, or vacuum-pack food usually have to file a Hazard Analysis and Critical Control Point plan with the local health authority identifying the hazards at each stage and the controls that prevent them.2Food and Drug Administration. HACCP Principles and Application Guidelines
Most jurisdictions require at least one certified food protection manager on site during operating hours. That person has to pass an accredited exam on sanitation, cooling and reheating, and allergen handling. Pest control is ongoing. Health departments expect to see service records from a licensed technician, and an inspector who finds rodent droppings or live insects near prep areas will typically close the kitchen on the spot. Failing an inspection can bring fines, reinspection fees, or a shutdown if the hazard is severe.
Licenses and Permits Before You Open
A restaurant needs clearance from several agencies before serving a single customer. The specifics vary by location, but the categories are consistent.
Health Permit
The health permit is the most critical local approval. Applications usually begin with a plan review of your layout, equipment, ventilation, and plumbing. Fees run from a few hundred dollars for a small low-risk operation to over a thousand for a full-service kitchen, and most jurisdictions require annual renewal. No restaurant can legally serve food to the public without one.
Employer Identification Number
Any restaurant with employees needs an EIN from the IRS. It functions as the business’s tax identity for payroll, employment tax filings, and bank accounts.3Internal Revenue Service. Employer Identification Number You can apply online at no cost and get the number immediately.
Certificate of Occupancy and DBA Registration
A certificate of occupancy, issued by local building officials, confirms that the space meets building codes, zoning rules, and fire safety requirements for commercial food service and specifies the number of people it can safely hold. Operating without one invites an immediate shutdown.
A restaurant operating under any name other than the owner’s legal name usually has to register a “Doing Business As” name with the county or state. Fees are typically under $100, and some jurisdictions also require you to publish a notice in a local newspaper.4U.S. Small Business Administration. Register Your Business
Alcohol Service
Serving alcohol brings in a separate regulatory layer. Every state has an Alcoholic Beverage Control board (or equivalent) that issues licenses, runs background checks, and enforces service rules. License classes commonly include on-premises consumption, off-premises sales, and beer-and-wine-only permits. Application timelines stretch across months in many states, and fees range from a few hundred dollars to tens of thousands depending on the state, the class, and whether a quota system caps the number of licenses.
Most states require applicants to post a public notice at the proposed location, commonly for 30 days, so neighbors can object before a license issues. Background checks cover every person with an ownership stake. Some states deny applications based on proximity to schools, churches, or similar locations.
Dram shop laws, in effect in most states, make a restaurant directly liable when it serves a visibly intoxicated customer or a minor who then causes injury or death. This is the source of most alcohol-related lawsuits against restaurants, and the financial exposure is substantial. Server training programs that teach staff to recognize intoxication and verify IDs are required or strongly encouraged in many jurisdictions. Selling alcohol to a minor is a criminal offense everywhere, with potential jail time for the server and steep penalties for the business.
Employment, Wages, and Hiring Paperwork
Workforce rules are governed primarily by the Fair Labor Standards Act, with federal immigration and tax requirements layered on. Wage mistakes are among the most expensive errors a restaurant owner can make, because affected employees can recover back pay plus an equal amount in liquidated damages.
Tipped Wages
Federal law allows employers to pay tipped employees a direct cash wage as low as $2.13 per hour, provided tips bring the total to at least the federal minimum of $7.25 per hour.5U.S. Department of Labor. Fact Sheet 15 – Tipped Employees Under the Fair Labor Standards Act This arrangement, called a tip credit, has conditions. The employer has to inform the employee about the tip credit in advance, the employee has to keep all tips, and the employer has to make up any shortfall in a pay period where tips fall below minimum wage.6Office of the Law Revision Counsel. 29 USC 203 – Definitions Many states set higher tipped minimum wages or prohibit the tip credit entirely.
Overtime
Non-exempt employees have to be paid one and a half times their regular hourly rate for every hour over 40 in a workweek.7Office of the Law Revision Counsel. 29 USC 207 – Maximum Hours Cooks, servers, and dishwashers are almost always non-exempt. Misclassifying them as exempt to avoid overtime is a frequent source of restaurant litigation.
Tip Reporting
Restaurants that typically employ more than 10 food or beverage workers on a normal business day have to file IRS Form 8027 annually, reporting total receipts and tips.8Internal Revenue Service. Instructions for Form 8027 If employee-reported tips come in below 8 percent of gross receipts, the employer has to allocate the difference among tipped staff for tax purposes.
Form I-9
Every new hire has to complete Form I-9, and the employer has to examine identity and work authorization documents and finish Section 2 within three business days of the hire date.9U.S. Citizenship and Immigration Services. Completing Section 2 – Employer Review and Verification If someone is hired for a job lasting fewer than three business days, Section 2 has to be done on day one. Penalties run into hundreds or thousands of dollars per form, and immigration enforcement treats late or missing forms as substantive violations.
Workplace Safety and Workers’ Comp
OSHA sets safety standards for restaurant kitchens, which are among the more hazardous workplaces in the service sector. Employers have to provide personal protective equipment for tasks like handling industrial cleaners and install guards on slicers and other dangerous equipment. Citations for serious violations carry penalties of up to $16,550 per violation, and willful or repeated violations climb far higher.10Occupational Safety and Health Administration. OSHA Penalties Workers’ compensation insurance is required in nearly every state for businesses with employees. Operating without it where required can result in criminal charges, civil penalties, and personal liability for workplace injuries.
Menu Labeling and Allergens
Federal law requires restaurant chains with 20 or more locations operating under the same name to display calorie counts on menus and menu boards, including drive-through boards.11Office of the Law Revision Counsel. 21 USC 343 – Misbranded Food These restaurants also have to post the 2,000-calorie daily reference statement and provide additional written nutrition data on request, covering fat, saturated fat, trans fat, cholesterol, sodium, carbohydrates, sugars, fiber, and protein.12Food and Drug Administration. Menu Labeling Requirements Self-service items like salad bars need individual calorie signs. Restaurants with fewer than 20 locations are not covered federally, though some states and cities impose their own rules.
Federal allergen labeling law under FALCPA primarily targets packaged foods and does not directly require restaurants to label allergens on menus.13Food and Drug Administration. Food Allergies Food prepared and wrapped after a customer orders it at the counter is exempt. Many state and local health codes do require staff training on allergens and posted notices telling customers they can ask. The FDA recognizes nine major allergens: milk, eggs, fish, crustacean shellfish, tree nuts, peanuts, wheat, soybeans, and sesame. Even without a federal menu-labeling mandate, serving a dish with an undisclosed allergen that causes a serious reaction creates significant liability.
Music Licensing
Playing music in a restaurant, whether through a streaming service, satellite radio, or a live performer, counts as a public performance under federal copyright law. That means a license from each performing rights organization whose catalog you play, typically ASCAP, BMI, and SESAC. Statutory damages run from $750 to $30,000 per song, and up to $150,000 per song where a court finds willful infringement.14Office of the Law Revision Counsel. 17 USC 504 – Remedies for Infringement Damages and Profits
A narrow exemption exists for restaurants that simply receive radio or television broadcasts with no cover charge. For food service and drinking establishments, the exemption applies automatically if the space is smaller than 3,750 gross square feet (excluding parking), and larger restaurants can still qualify if they meet strict limits on the number and size of televisions and loudspeakers.15Office of the Law Revision Counsel. 17 USC 110 – Limitations on Exclusive Rights Exemption of Certain Performances The exemption covers broadcast radio and TV only. Streaming services, CDs, playlists, and live music all require separate licensing regardless of square footage.
Accessibility Under the ADA
The Americans with Disabilities Act requires restaurants to be accessible to guests and employees with disabilities. The 2010 ADA Standards for Accessible Design apply to both new construction and alterations.16ADA.gov. 2010 ADA Standards for Accessible Design Accessible routes through the dining area have to be at least 36 inches wide. Ramps can be no steeper than 1:12. At least 5 percent of dining surfaces have to be accessible to wheelchair users, and those spots have to be dispersed throughout the dining area rather than grouped together. Restrooms need accessible stalls with proper grab bars and clearance. ADA violations carry no criminal penalties, but private lawsuits are common and legal fees accumulate quickly even when the physical fix is minor.
Fire Safety and Grease Management
Kitchen fires are the leading cause of restaurant fires. NFPA 96 governs commercial cooking operations, requiring automatic fire suppression systems installed directly above cooking surfaces.17National Fire Protection Association. NFPA 96 Standard for Ventilation Control and Fire Protection of Commercial Cooking Operations Grease duct cleaning is required on a schedule tied to cooking volume: quarterly for high-volume or heavy-charbroiling kitchens, semi-annually for moderate volume, annually for low volume, and monthly for solid-fuel cooking like wood-fired grills. Skipping cleanings is one of the fastest ways to lose insurance coverage, because grease buildup in ductwork is the ignition source in most catastrophic restaurant fires.
Federal environmental rules prohibit discharging fats, oils, and grease into the public sewer in quantities that cause blockages.18eCFR. 40 CFR 403.5 – National Pretreatment Standards Prohibited Discharges Local sewer authorities enforce this by requiring grease traps or interceptors, maintenance logs, and inspections. Spent cooking oil has to go into designated containers for pickup by a licensed recycler, not down the drain. Fines for grease trap violations can run thousands of dollars per incident, and a single major blockage that backs up a municipal line can leave the restaurant on the hook for the cleanup.