Opening a restaurant in Thailand is a dream for many, particularly for those passionate about sharing their culinary creations. However, the process involves a number of legal steps and requirements that both locals and foreigners must follow. Here’s everything you need to know to make your dream of opening a restaurant in Thailand a reality.
Can Foreigners Own a Restaurant in Thailand?
Foreigners cannot own 100% of a restaurant in Thailand due to the Foreign Business Act (FBA), which restricts non-Thai nationals from fully owning businesses related to food and beverage services. This restriction is part of the country’s effort to protect local businesses. To operate a restaurant, foreigners must set up a company where at least 51% of the shares are owned by Thai nationals.
While the majority of shares must be held by a Thai person, foreign entrepreneurs can still control the business through a preference share structure and shareholder agreements. A common approach for foreigners is to establish a Thai Limited Company with a Thai shareholder holding the majority of the shares.
Key Steps for Opening a Restaurant in Thailand
1️. Choosing the Location and Leasing the Property
The first step in opening a restaurant is selecting the right location and signing a lease. Typically, restaurant leases in Thailand are for a period of 3 years, with an option to renew. For longer lease security, it’s recommended to register the lease with the Land Office, which could allow leases to extend up to 30 years. However, unregistered leases might face renewal complications after 3 years.
2️. Company Registration
Once the location is secured, you will need to register your business with the Department of Business Development (DBD). If you plan to hire foreign staff, the business must also meet specific requirements, such as having a capital of 2 million THB per foreign employee and maintaining a ratio of 4 Thai employees for each foreigner.
3️. Licenses Required for Operating a Restaurant
To legally operate your restaurant, you’ll need to acquire several licenses:
- Restaurant License: This license is mandatory for restaurants larger than 200 square meters. For smaller establishments, a certification of notice may suffice.
- Liquor License: If you intend to serve alcohol, you must obtain a liquor license from the Local Excise Department.
- Music License: A music license is required if the restaurant will play any form of music, whether live or recorded.
4️. Employee Requirements
Every Thai employee working at the restaurant must pass a hygiene test at the district office. This test includes 50 multiple-choice questions, and employees must answer at least 40 correctly. Once passed, the district officer will issue a food and hygiene certificate. Foreign employees will also need work permits, which are subject to the company’s compliance with Thai employment law, including the aforementioned ratio of Thai to foreign staff.
Restaurant License Application Process
The application for a restaurant license in Thailand involves several steps and the submission of various documents:
- Submit the required documents to the district officer, including the restaurant’s logo, lease agreement, company registration, and ID documents of the business owner and director.
- Once submitted, an inspection of the restaurant premises will be scheduled. Employees may need to explain food preparation processes during the inspection.
- After the inspection, the district officer will issue the food license if all conditions are met. This process can take up to a month, and a government fee must be paid.
Required Documents for License Application:
- A color logo of the restaurant
- House registration of the building
- Lease agreement or consent letter
- Copies of the ID cards and house registration of the owner and company director
- Power of attorney (if necessary)
- Map and photos of the restaurant (both exterior and interior)
- Layout plan showing the arrangement of the kitchen, tables, and other key areas
- Documents proving ownership of the property (e.g., sale and purchase agreement)
Why Register the Lease?
Registering the lease at the Land Office not only secures a longer-term lease of up to 30 years but also offers protection in case the property changes ownership. While registering the lease involves extra fees, it safeguards your business for the long term.