A fitted 40-cover restaurant unit can rent for about £32,000 a year, and on the figures in this guide it needs around 37 covers a day just to break even. Registration with the council is free and due 28 days before opening; what decides whether a restaurant survives is the margin on every cover, the lease and the kitchen it inherits.
The rules below are those of England unless stated: food registration and allergen duties apply UK-wide in substance, while licensing, planning and business rates differ in Scotland, Wales and Northern Ireland. Figures are drawn from current property listings, supplier price lists, HMRC guidance and the statutory fee schedules.
What is a restaurant business?
A restaurant business sells meals mostly eaten on the premises, from a unit that in England falls within Use Class E(b), the class for the sale of food and drink for consumption mostly on site. That classification is what separates it from a hot food takeaway, which is sui generis and needs its own planning permission. Its economics run on covers, the number of diners served, multiplied by the average spend per head, against a cost base that is mostly fixed: rent, rates, the kitchen team and the front-of-house staff.
SpudBros Express
The future of QSR
- Fast food
- 6 Locations
- Liquid capital: £50000
Dish’d
Restaurant Quality Virtual Brands
- Food
- 70 Locations
- Liquid capital: £15000
Griolladh
Fast Irish Comfort Food
- Food
- 13 Locations
- Liquid capital: £30000
Veeno
Wine bar, restaurant
- Food
- 6 Locations
- Liquid capital: £85000
How to open a restaurant in the UK, step by step
The checklist, in the order openings usually run:
- Concept tested against covers, average spend and table turns
- Site chosen: a fitted unit with a premium, or a shell to fit out
- Planning position confirmed, with extraction and odour control
- Kitchen equipped and gas work signed off by a Gas Safe engineer
- Food business registered 28 days before opening
- Premises licence, late night refreshment and music licences in place
- Staff recruited, with right to work, pay, tips and service charge rules set
- Menu costed dish by dish before prices are printed
- Waste and packaging set up to the current rules
- Soft opening, then covers and costs tracked weekly
| Stage | What typically happens |
|---|---|
| Months 1 to 3 | Concept and numbers tested, sites viewed, lease terms negotiated |
| Months 3 to 5 | Planning confirmed, fit-out or refurbishment, equipment ordered, licence applications made |
| Months 5 to 6 | Food registration, staff recruited and trained, menu costed, soft opening |
| Months 7 to 12 | Covers built, menu trimmed to what sells and what makes money, costs checked weekly |
1. Test the concept against covers and spend
Every concept comes down to the same arithmetic: covers a day, average spend per head, and how much of each pound is left after VAT, food and card fees. Food eaten on the premises is standard-rated at 20%, so a sixth of every bill belongs to HMRC once the business is registered. The worked example uses an average spend of £30 per head including VAT and a food cost of 30% of the net price:
| One cover at £30 | Figure |
|---|---|
| VAT at 20% | £5.00 |
| Net price | £25.00 |
| Food cost at 30% of net | £7.50 |
| Card fee at 1.69% | £0.51 |
| Left for staff, rent and everything else | £16.99 |
About £17 of a £30 bill is what pays the kitchen, the floor staff and the building. A concept with a lower spend per head needs more covers or faster turns; a higher spend needs fewer covers but usually more staff per table.
2. Choose between a fitted unit and a shell
A common route when opening a restaurant for the first time is a unit that has traded as a restaurant before, because the extraction, gas supply, drainage and planning use are already in place. The outgoing tenant asks a premium for that. Current listings show what the market looks like:
| Unit | Rent | Premium and terms |
|---|---|---|
| Fitted restaurant, about 40 covers | £32,000 a year | Premium invited for extraction, fire alarm, bar and a transferable premises licence; rateable value £19,750 |
| Fitted restaurant, about 52 covers | £32,500 a year | £40,000 for fixtures and fittings; 10-year lease with a 5-year break; six months’ rent deposit and a personal guarantee |
| Fitted restaurant over two floors | £21,000 a year | Lease assigned, rising to £25,000 a year in 2030; fixtures by separate premium |
| Fitted unit, about 1,000 sq ft, London | £43,000 a year | Extraction and gas in place |
| Fitted unit with extraction and gas | £40,000 a year | £90,000 premium for the fit-out; rent review in 2027 |
| Fitted restaurant, about 30 covers | £12,000 a year | Three months rent-free; kitchen equipment and fittings for £35,000; deposit of one quarter’s rent |
The terms matter as much as the rent. A personal guarantee puts the owner’s own assets behind the lease, a rent deposit of six months ties up cash before opening, and upward-only reviews mean the rent can rise but not fall. One closed chain restaurant was offered with no premium at £45,000 a year, but its first review was set to the higher of the market rent or a fixed £50,000.
When renting a restaurant, several of those terms are negotiable before signing, and the listings show what landlords offer:
- A rent-free period: one owner letting a fitted 30-cover restaurant offered three months rent-free, and a new drive-thru lease in 2025 came with three months; leases often claw that back if the tenant breaks early, so the break and clawback clauses are read together
- A stepped rent: a lower rent in the first year or two, rising later, as in one assignment set at £21,000 and rising to £25,000 in 2030, spreads the cost across the months when covers are still building
- The deposit and the guarantee: a quarter’s rent as deposit, as in the 30-cover example, ties up far less cash than six months, and a personal guarantee can sometimes be capped in amount or limited in time
- The premium: a premium covers the fit-out the outgoing tenant leaves behind, so the inventory is checked item by item and the extraction tested before a figure is agreed
3. Confirm the planning position and the extraction
A move into Class E(b) from another Class E use does not need planning permission for the change of use, but new external extraction ducting usually does, and councils attach conditions on odour, noise and operating hours. For a restaurant, a unit with a working extraction system and a record of restaurant use avoids most of that. Takeaway sales beyond the incidental move the business towards sui generis hot food takeaway use, which needs separate permission.
4. Equip the kitchen
Real prices from UK catering suppliers and a published public sector quotation show where the money goes when equipping a restaurant kitchen:
| Item | Published price |
|---|---|
| Complete kitchen extraction system, quoted for a public building | About £6,725 plus VAT: 2.4 metre stainless canopy £4,360, make-up air system £1,695, wall cladding £345, removal of old system £325 |
| 2.4 metre canopy alone, catalogue price | About £1,960 to £2,300 excluding VAT |
| Six-burner gas range, one Lincat model | £1,133.99 to £1,889.99 excluding VAT across UK suppliers |
Two lessons sit in that table. The canopy is a fraction of an installed system, which also needs replacement air, ducting, fans and electrics. And the same oven costs £756 more at one supplier than another, so pricing every item across suppliers pays for itself. All gas equipment has to be installed by an engineer on the Gas Safe Register for commercial work.
The timing of VAT registration decides how much of this comes back. Under HMRC’s rules in VAT Notice 700, VAT paid on goods bought up to four years before registration can be reclaimed if the business still holds them, but VAT on services only if they were received in the six months before registration. A builder’s fit-out is a service, so a restaurant that registers for VAT more than six months after its fit-out loses the VAT on that work, while equipment bought directly, such as the range and the refrigeration, stays reclaimable for four years. Registering voluntarily before the works start, or within six months of them, keeps the VAT on both.
5. Register the food business and plan for inspection
- Registration: free, with the local council, at least 28 days before opening; trading without it is an offence
- Food safety system: written procedures based on hazard analysis, usually the Food Standards Agency’s Safer Food, Better Business pack
- Allergens: information on the 14 regulated allergens available for every dish, in writing or by staff with a sign telling customers to ask
- Hygiene rating: the first inspection sets a rating from 0 to 5 in England, Wales and Northern Ireland, published online, and display at the door is compulsory in Wales and Northern Ireland
- Calorie labelling: required in England only for businesses with 250 or more employees, so most independent restaurants are outside it
6. Put the licences in place
A restaurant serving alcohol needs a premises licence for the building and a personal licence, costing £37, for the designated premises supervisor. Premises licence fees are set nationally by rateable value, from £100 to apply in the lowest band to £635 in the highest, with annual fees from £70 to £350; a fitted restaurant with a transferable licence can change hands for a £23 transfer fee. Hot food served between 11pm and 5am is late night refreshment and goes on the same licence, and playing music, including background radio, usually requires TheMusicLicence from PPL PRS.
- An opening event before the licence: a temporary event notice, costing £21 and given to the council at least ten working days ahead, covers alcohol sales at an event for up to 499 people, a way to run a launch evening while the premises licence is still being decided
- Tables outside: a pavement licence for outdoor seating has been a permanent regime in England since 31 March 2024; councils set the fee up to £500 for a new licence and £350 for a renewal, some still charge £100, a decision can take up to 28 days, and at least 1.5 metres of clear pavement has to remain
Franchise Restaurants in the UK
The UK franchise sector is worth over £19 billion and food and beverage remain one of its strongest categories.
Franchised restaurants represent a significant share of branded dining outlets in the UK, particularly in fast casual and quick-service segments.
For first-time operators, a franchise can offer:
- A lower failure rate than completely independent start-ups
- Access to established supply chains
- Immediate brand trust with customers
However, it also means operating within someone else’s framework. For entrepreneurs who value autonomy and brand-building, independence may be more attractive.
For anyone preferring system support and reduced uncertainty, franchising can be a strategic entry route.
7. Recruit and set the pay, tips and service charge rules
- Pay: the National Living Wage is £12.71 an hour at 21 and over from 1 April 2026, and £10.85 at 18 to 20; tips never count towards it
- Right to work: from 1 October 2026 the Home Office scheme covers workers and individual subcontractors as well as employees, with civil penalties of up to £45,000 per worker for a first breach and £60,000 for a repeat; takeaways and restaurants are among the sectors it names in its enforcement figures
- Tips: since 1 October 2024, all tips paid through the business must reach staff without deductions, under a written policy where tips are regular
- Employer costs: employer National Insurance at 15% above £5,000 a year, offset by the £10,500 Employment Allowance, with 0% for under-21s up to £50,270
In a restaurant, how tips are distributed also changes the payroll bill. HMRC’s guidance on tips, known as E24, exempts tips from National Insurance when an independent troncmaster, not the employer, decides who receives what, under a separate tronc PAYE scheme registered with HMRC. Where the employer allocates the tips itself, employer and employee National Insurance are due on them. On £10,000 of tips a year, a properly run tronc saves the restaurant about £1,500 of employer contributions at 15%; a compulsory service charge never qualifies.
Good to know
How a service charge is presented changes its VAT. HMRC’s manual treats a compulsory service charge as part of the price of the meal, so it is standard-rated. A charge that the menu and bill make clear is genuinely optional is outside the scope of VAT, even when it is added to the bill. Discretionary service charges paid through the business also count as tips, so they pass to staff in full.
8. Cost every dish before the menu is printed
In a restaurant, the menu is costed recipe by recipe: every ingredient weighed, priced and set against the selling price net of VAT. Dishes that sell well but carry a high food cost pull the average down without anyone noticing until the accounts arrive. Delivery changes the arithmetic again: Uber Eats publishes UK fees of 30% of the order when its couriers deliver and 13% for self-delivery, charged on top of the VAT and food cost, which is why restaurants often price their delivery menu above their dining room menu.
9. Set up waste and packaging
- Food waste: in England, businesses with 10 or more full-time equivalent employees have had to separate food waste for collection since 31 March 2025; smaller businesses must from 31 March 2027
- Takeaway packaging: single-use plastic cutlery and polystyrene food containers have been banned in England since 1 October 2023, including for delivery orders
- Grease: fats and oils kept out of the drains, usually with a grease trap and a contract for used cooking oil
10. Open softly and track the numbers weekly
Owners who have opened restaurants describe the same first months. One pair of chef-owners in London reported a first month with takings 16% above budget but front-of-house costs 10% over, and a fit-out that had cost £600,000. A couple who took over a country pub-restaurant described being heavily overstaffed on the first night and then moving their sales mix from 60% drink and 40% food to 30% and 70% over the following years. A soft opening for invited guests tests the kitchen before reviews do, and covers, food cost and labour cost tracked every week show problems long before the year-end accounts.
- Staff the first weeks for the covers booked, not for the room’s capacity, and add shifts as the diary fills
- Start with a shorter menu: fewer dishes means less stock, less waste and a kitchen that learns faster; dishes that do not sell or do not earn come off at the first review
- Hold a card for larger bookings, so a no-show on a table of eight does not empty a service
- Track three numbers every week: covers, food cost as a share of net sales, and labour cost as a share of net sales
SpudBros Express
The future of QSR
- Fast food
- 6 Locations
- Liquid capital: £50000
Dish’d
Restaurant Quality Virtual Brands
- Food
- 70 Locations
- Liquid capital: £15000
Griolladh
Fast Irish Comfort Food
- Food
- 13 Locations
- Liquid capital: £30000
Veeno
Wine bar, restaurant
- Food
- 6 Locations
- Liquid capital: £85000
Types of restaurant business
| Type | How it works |
|---|---|
| Casual dining | Mid-range spend, quicker turns, menu built for consistency across shifts |
| Fine dining | High spend per head, fewer covers, more staff per table and longer services |
| Café-restaurant | Daytime trade, lower spend, often no alcohol licence |
| Pub-restaurant | Food and drink together, with the mix between them deciding the margin |
| Delivery-led restaurant | Dining room plus delivery, with platform fees priced into a separate menu |
| Franchised restaurant | A brand’s format, suppliers and systems, against fees set in the agreement |
How much does it cost to open a restaurant in the UK?
No official UK average start-up cost exists for a restaurant. What can be stated is what the statutory lines cost, what fitted units ask, and what equipment costs:
| Cost line | Published figure |
|---|---|
| Food business registration | Free, 28 days before opening |
| Premises licence | £100 to £635 to apply, £70 to £350 a year, by rateable value |
| Personal licence | £37 |
| Business rates, England | Rateable value × 38.2p below £51,000 for hospitality; a £19,750 rateable value pays about £7,545 a year |
| Fitted unit premiums, examples | £40,000 to £90,000 for an existing fit-out |
| Kitchen extraction, installed example | About £6,725 plus VAT |
| Staff | £12.71 an hour at 21 and over; employer NI 15% above £5,000 |
A week in a 40-cover restaurant
The worked example takes a fitted 40-cover unit at the £32,000 rent and £19,750 rateable value advertised above, open six days, with two kitchen staff on 45 hours and two front-of-house staff on 35 hours:
| Weekly line | Figure |
|---|---|
| Rent | £615 |
| Business rates | £145 |
| Staff: 160 hours at £13.00, plus about 13% on-costs | £2,350 |
| Utilities | £400 |
| Insurance, software, repairs and marketing | £300 |
| Fixed costs | £3,811 |
| Covers needed at £16.99 each | 224 a week, about 37 a day |
For a restaurant of this size, thirty-seven covers a day is close to one full turn of a 40-seat room on every trading day, before the owner takes any pay. Every cover after that adds about £17. Adding a second sitting at dinner or a lunch trade changes the picture more than any price rise.
What restaurants sell for
Buying a restaurant that already trades brings its kitchen, licence and customers, at a price that reflects them. Current listings show the range: a 30-cover restaurant with turnover above £260,000 a year and rent of £18,000 offered at £120,000 for the lease, fixtures and goodwill, and another reporting £8,000 to £10,000 a week, verbally, at £50,000. Turnover figures in listings are the sellers’, so the accounts, the card records and the VAT returns are what confirm them.
Opening a restaurant on a lower budget
Opening a restaurant on less capital usually means a fitted unit whose previous restaurant has closed, where the extraction, gas and planning use are in place and the premium is low or nil; the trade-off is a lease written for someone else. Start Up Loans lends up to £25,000 per applicant at a fixed 7.5%, unsecured, which covers equipment and working capital rather than a full fit-out.
Restaurant franchise opportunities in the UK
Franchising in the UK is governed by general contract law, with no franchise statute and no statutory disclosure, as set out in what a franchise is. A franchised restaurant comes with a format, supply chain and systems, against an initial fee and ongoing royalties set in the agreement. Brands recruiting in the UK are listed in the restaurant franchise directory, with the liquid capital each asks for.
Editor’s tip
A premium buys the fit-out, not the business. Before paying one for a fitted restaurant, check that the extraction has been serviced and works, that the premises licence is transferable and what conditions it carries, whether the landlord will consent to the assignment, and what the lease says about rent reviews and personal guarantees. A closed restaurant offered at a nil premium can be better value than a trading one at £90,000, if the lease terms are right.
The practical difficulties operators report
- Fixed costs set the bar: rent, rates and the core team run whether the room is full or empty
- Staff costs rise every April: the wage floor moves each year, while prices can only follow as far as customers accept
- Fit-outs overrun: extraction, gas and drainage cost more than the dining room, and surprises surface during the works
- Leases outlast restaurants: a personal guarantee or a long upward-only lease can outlive the business it was signed for
- Delivery takes a large share: at 30% commission on top of VAT and food cost, an app order keeps far less than a table
- Right to work enforcement: restaurants and takeaways feature in Home Office enforcement figures, and the October 2026 rules widen who must be checked
The bottom line
Opening a restaurant in the UK needs free food registration 28 days before trading, a premises licence and a £37 personal licence to serve alcohol, and the right to work, tips and service charge rules in place for staff. The commercial test is the cover: on illustrative figures, a £30 bill leaves about £17 after VAT, food and card fees, and a fitted 40-cover unit at £32,000 a year needs about 37 covers a day to cover its fixed costs. The lease, the extraction and the kitchen the unit inherits decide how high that bar sits.
Frequently asked questions about opening a restaurant in the UK
Food business registration with the council, which is free and due 28 days before opening. To serve alcohol, a premises licence for the building and a personal licence for the designated premises supervisor. Hot food after 11pm needs late night refreshment on the licence, and music usually needs TheMusicLicence.
No official average exists. Fitted units currently ask premiums of about £40,000 to £90,000 on rents of £21,000 to £43,000 a year, while a shell needs a full fit-out, with an installed kitchen extraction system alone quoted at about £6,725 plus VAT.
Not for the change of use where the unit is already in Class E, since restaurants fall within Class E(b). New external extraction ducting usually needs permission, and a mainly takeaway business is a separate sui generis use that needs its own permission.
It depends on the costs. On illustrative figures, a 40-cover unit at £32,000 a year with four staff and a £30 average spend needs about 224 covers a week, or 37 a day over six days, before the owner is paid.
A compulsory service charge is part of the price of the meal and is standard-rated. A service charge that the menu and bill make clear is genuinely optional is outside the scope of VAT, according to HMRC’s manual, and counts as a tip that passes to staff.
Yes. Since 1 October 2024, all tips paid through the business, including discretionary service charges, must reach staff without deductions, under a written policy where tips are regular. Tips never count towards the minimum wage.
The council inspects after registration and awards a rating from 0 to 5 in England, Wales and Northern Ireland, published online. Display at the premises is compulsory in Wales and Northern Ireland and voluntary in England.
In England, only businesses with 250 or more employees must show calories on menus. Most independent restaurants are outside the rule, but all must provide allergen information on the 14 regulated allergens.
Usually, because the extraction, gas, drainage and planning use are already in place. The outgoing tenant asks a premium for that, from nil for some closed units to £90,000 or more, and the lease terms come with it.
In England, restaurants qualify for the hospitality multiplier of 38.2p below £51,000 rateable value from April 2026. A unit with a £19,750 rateable value pays about £7,545 a year before any relief.
