If you are an overseas operator or investor looking to open a restaurant in the UK, this guide is for you. We cover the key legal requirements you need to consider before, during and after the successful opening of your restaurant, covering primarily the legal, financial and property-related regulations.
This guide is for informational purposes only, and strictly does not constitute legal advice. We strongly recommend that you consult a legal professional with hospitality expertise before opening a restaurant in the UK.
Legal structure and business registration
Before opening your UK restaurant, you must decide upon the legal structure for your business. In the UK, the common options include:
Registering as a Sole Trader
Ideal for small, owner-managed establishments, but does not offer any legal separation between the personal and business liabilities. Whilst registering as a sole trader is straightforward, for many restaurateurs, the downsides outweigh the positives. These include:
Unlimited personal liability
If your restaurant falls behind in payments to suppliers, rent, wages or other costs, you will be personally liable for the debts. This also affects health and safety claims, such as workplace accidents or food poisoning issues, which could lead to personal financial risk if legal action is taken.
Financial and investment challenges
Running a restaurant is expensive, with many operators turning towards commercial finance to help ensure you can launch your concept with full conviction. Lenders are more hesitant to lend to sole traders as opposed to limited companies, which could make your life more difficult when it is time to secure funding for your fit out, restaurant equipment or expanding.
Tax disadvantages
Sole traders will be responsible for paying income tax and national insurance on all profits, whereas limited companies can benefit from lower corporation tax rates. We highly recommend speaking with a specialist hospitality accountant or consultant to discuss what would be your most tax efficient route, especially given your overseas status.
Impact on personal finance
If your restaurant begins to struggle, especially with cashflow issues, your personal credit score might be affected. Taking out loans or supplier credit as a sole trader will mean that any missed payments will directly impact your financial standing.
Harder to sell the business
Should you decide to sell the restaurant business later down the line, as sole traders are not separate legal entities, it is much harder to sell the business. Buyers are more reluctant to take over personal liabilities or to re-establish supplier agreements from scratch, whereas if you are a limited company to begin with, this process is much smoother.
Registering as a limited company
In most cases, it is advisable for overseas operators to register as a limited company to run a restaurant in the UK. Using this approach, the restaurant will be a separate legal entity, protecting your personal legal assets should the restaurant business incur debts or face any legal claims.
In the hospitality industry, having this legal separation is key due to the possibility of food safety claims, employee disputes or supplier issues. Lenders also prefer lending to limited companies, which will improve your access to hospitality finance for property leases, equipment and fit out finance. You can also issue shares, allowing investors to buy their way into the business.
It isn’t just lenders who prefer working with limited companies, many landlords and suppliers prefer companies as opposed to sole traders as they are seen as more stable and reliable.
Compliance with UK laws surrounding employment, health and safety and food hygiene can be easier to manage within a corporate structure, and your commitment to an incorporated company may ease your UK business visa application.
Overall, it is highly recommended by industry professionals that for overseas investors into the UK restaurant industry, you run your restaurant as a limited company. The advantages include financial protection, tax efficiency, credibility and easier access to funding.
Visa and Immigration Requirements
Ensuring your compliance with visa and immigration requirements is absolutely crucial, you must ensure you have a valid visa to work in the UK. The relevant UK visa categories include:
Innovator Founder Visa
You can apply for an Innovator Founder Visa if you meet a certain criteria, covering:
- You want to set up a unique, innovative business that is different from anything else on the market
- Your business has been officially endorsed by an approved body
- You meet other eligibility requirements
To be eligible, you must be setting up a new business, rather than joining an established business. This new business must be original from anything else on the market, and be deemed viable and scalable. You will need to prove that you are able to speak, read, write and understand English fluently. At time of writing in March 2025, this type of visa entitles you to stay for 3 years if either you come to the UK on an Innovator Founder visa or switch to this visa from another whilst within the UK, subject to meeting certain criteria that can be found on the official gov.uk site.
Skilled Worker Visa
If you as the owner of the restaurant business are seeking employment from the company, you might apply for a Skilled Worker Visa, which replaced the historical Tier 2 (General) work visa. According to the official gov.uk guidance, to qualify for a Skilled Worker Visa, you must:
- work for a UK employer that’s been approved by the Home Office
- have a ‘certificate of sponsorship’ (CoS) from your employer with information about the role you’ve been offered in the UK
- do a job that’s on the list of eligible occupations
- be paid a minimum salary – how much depends on the type of work you do and the date you got your CoS
The specific eligibility criteria will depend upon the job, and you must be able to speak, read, write and understand English.
Given the complexities and legal requirements involved, we highly recommend speaking to a qualified legal immigration specialist to ensure full compliance with UK Home Office requirements.
Licenses and Permits
To stay compliant with all food safety, health and business regulations, there are a number of permits and licences that your restaurant business will require to operate legally in the UK.
Food Business Registration
You must register your food business with the local council at least 28 days before opening. There is no cost for this registration, but you will be inspected to ensure full compliance.
Licence to sell alcohol
If you intend to sell alcohol at your restaurant, in the UK there are two types of licence that you will need to apply for, these being a premises licence and a personal licence.
Premises licence
The premises licence is issued to your business premise, and is required to sell alcohol and provide entertainment. To apply for your premises licence, you will need to provide:
- Your operating schedule, which should cover how you will ensure the following principles are protected and promoted:
- Preventing crime and disorder
- Public safety
- Preventing public nuisance
- Protecting children from harm
- You will also need to provide information on your proposed hours of operation.
- As part of this premises licence, you will need to be eligible to work in the UK to obtain your Premises Licence, which may involve an immigration status check.
- A plan of your premises, considering details such as the:
- Toilets
- Staircases and steps
- Fire escape routes
- Property boundaries
- You will need to appoint a Designated Premises Supervisor to handle all communications regarding your licence. This individual will require a Personal Licence.
Personal Licence
A personal licence allows the holder to both sell alcohol and to authorise the sale of alcohol in a licenced venue. Restaurants and bars often only require one personal licence holder per venue, so not all members of your workforce need to hold a personal licence.
To be eligible for a personal licence, there are a number of safeguarding requirements to pass, such as passing a DBS check.
The process of applying for a personal licence differs in Scotland, where you will need to pass the SCPLH (Scotland) Course, Exam & Personal Licence Application Combined.
Music licence
To play music in your restaurant, you will need to hold a valid music licence from PPL PRS. This applies whether you are playing recorded music in public, including background music or staging live music events, among other scenarios.
The cost of the music licence will depend upon the venue and how the music is used.
Pavement licence
If you are going to place an advertising board on the pavement outside your restaurant, you will need to apply for a pavement licence. This is also true if you plan on placing any sort of furniture outside, such as tables and chairs.
Pavement licence fees vary depending on the council, but you will not pay more than £100 (correct at time of writing in March 2025).
Restaurant Insurance
There is no one single ‘restaurant insurance’, however there are insurance policies that should be considered for your restaurant, including:
- Employers’ liability insurance
- Contents insurance
- Public liability insurance
- Product liability
- Business interruption insurance
- Stock insurance
Employers’ liability insurance is a legal requirement if you hire employees. This is in place to protect your employees should they get injured or fall ill as a result of working for your restaurant. This insurance covers compensation and legal costs against your restaurant from employees.
Contents insurance is not a legal requirement for restaurants, although it is highly recommended to protect your restaurant’s assets such as the furniture, equipment and stock from damage or loss.
Public liability insurance covers members of the public should they get injured or fall ill on your restaurant premises. Not only does this cover your customers, it also covers anyone who visits your restaurant such as delivery drivers or tradespeople.
Product liability can cover any claims made against the food and drink you prepare and serve at your restaurant. For example, if a customer falls ill after eating at your restaurant, product liability can cover the potential compensation and legal fees.
Business interruption insurance can supplement lost income should your restaurant be forced to close following an insured event, such as a fire. Business buildings insurance can provide the cover you need for repairs that follow insured events such as a flood or a break-in.
Stock insurance covers the perishable stock in the event of loss or damage from insured events, as well as cover for other restaurant-specific issues such as a power cut to your freezer causing your frozen items to thaw out.
Health and safety compliance
Nobody wants to eat in a dirty, unsafe restaurant. You must maintain strict and stringent standards for health and safety in your restaurant.
How often are restaurants inspected for food hygiene?
This will vary from local authority to local authority, but generally the frequency of the inspections will depend upon the potential risk to the public. This risk assessment considers the type of food being handled, the number and type of customers, the food preparation service and the current hygiene standards at the previous inspection. Lower risk businesses could be inspected every two years, whereas a higher risk business could be every six months.
There are specific protocols such as the Food Safety Act and Hygiene Regulations that you will need to follow. Develop your own Hazard Analysis and Critical Control Point (HACCP) action plan, which will detail how you will manage food hygiene and safety procedures in your food business. There are 7 principles to HACCP, these being:
- Conduct a hazard analysis
- Determine critical control points
- Establish critical limits
- Establish monitoring procedures
- Establish corrective actions
- Establish verification procedures
- Establish record-keeping and documentation procedures
To ensure the safety of your employees, you will need to abide by the Health and Safety at Work Act. Identify potential risks in your restaurant, such as narrow spaces or dangerous equipment, and implement health and safety training policies aimed to minimise the risk of workplace accidents.
Employment
If you are hiring staff, you need to ensure you have employers’ liability insurance.
Furthermore, you should provide your staff with clear contracts of employment that detail the responsibilities, pay rates, policies and hours that are expected of the employee. Not only will this help to ensure everyone is on the same page, it will provide the necessary legal paperwork later down the line should there be an issue.
There are five key legal issues you should abide by when employing someone to work in the UK:
- Comply with the national minimum wage, no exceptions
- Check that the employee has the right to work in the UK
- Provide a contract of employment
- Enrol eligible employees into a workplace pension scheme
- Provide a data privacy policy
Environmental regulations
All UK restaurants must sort their waste into leftovers, packaging and disposables for recycling or for waste removal.
In March 2025, the DEFRA Simpler recycling scheme was introduced, designed to increase landfill diversion rates and to support a more sustainable, circular economy. Restaurants in England are legally obliged to segregate key recyclable materials, such as:
- Plastic, such as containers, bottles and packaging
- Glass, such as bottles and jars
- Metals, including cans and tins
- Paper and cardboard
- Food waste, including unused ingredients, out of date food and leftovers
With this in mind, your restaurant will likely require three bins to be compliant. A dry mixed recycling bin for paper, glass, metal and plastic. A food waste bin which cannot be mixed with the other bins, as well as a general waste bin.
Accessibility
Under the Equality Act of 2010, restaurants in the UK must make “reasonable” adjustments to be accommodating to disabled guests.
Closing remarks
Despite being an extensive guide, this is in no means a fully comprehensive guide to the legal requirements you need to abide by to open a restaurant in the UK. We strongly recommend talking to UK hospitality experts such as Main Course Associates prior to opening a restaurant. For any property related enquiries, contact Restaurant Property. For any commercial finance requests, Mill Wood Finance are the people to speak to.