How to Open a Restaurant Business in Alabama: Business Plan, Setup Cost, Profit, and License/Permit

Opening a restaurant in Alabama is one of the more difficult business ventures, as the process requires a lot of planning to ensure that the restaurant is suitable for local cuisine and meets legal requirements for business operations. Then, as a restaurant owner in Alabama, apply for all permits and licenses associated with operating a food-based establishment in Alabama. So, it would help if you didn’t spend energy preparing a menu and planning the decor of the restaurant’s dining room before going through health inspections and getting all the proper licenses and permits approved.

How to Open a Restaurant Business in Alabama

How to open a restaurant business in Alabama

Benefits of operating a restaurant in Alabama

There is always a great demand for good food. In addition, the state has a growing population of tourists who love trying new restaurants. If you have the right business strategy, opening a restaurant in Alabama can easily lead to greater success. You can operate your restaurant in many areas, and if you are creative and aggressive, you should succeed even in tough markets.

Tips for opening a restaurant business in Alabama

  • Research the local regulations in your area. There are many rules and regulations regarding food service establishments that must be followed, so make sure you’re aware of them. 
  • Next, identify an area with high population density with a strong demand for restaurants. Then, develop a business plan and begin scouting locations. 
  • Establish relationships with suppliers and prepare to spend plenty of money on initial expenses such as equipment and inventory.
  • From listing the appetizers, entrées, desserts, and drinks, you’ll serve to price each item, developing a restaurant menu is a task that requires a lot of time and attention. Aside from the content of your menu itself, design is also an important consideration.
  • Contact the Alabama Department of Public Health local branch and ask for a representative to inspect the restaurant before opening the doors. The inspection mainly ensures the space is sanitary for food preparation. In addition, the representative checks the temperatures of freezers and ovens to ensure the food stored or prepared is healthy for serving.
  • When choosing a location for your restaurant in Alabama, it is important to consider factors such as the population density around your property and the accessibility to major roadways. You also want to make sure that your property has parking available for customers and that it is easy to access by public transportation.

How do you choose a restaurant location in Alabama?

Selecting the right location for your restaurant is critical. You’ll need to research the demographics, market, and competition in your location, the actual restaurant space, and its size, visibility, and history. 

In case you missed it: How to Start a Recycling Business in Alabama: Business Plan, Cost, Profit, and License/Permit

Restaurant Interior Design

If you choose to have a physical location for your restaurant, you can either buy or lease restaurant space, or you can build your restaurant from the ground up. Below are additional tips for selecting a location for starting a restaurant business;

  • Target market and ideal customer profile
  • Real estate market conditions
  • Community
  • Size of the site
  • Previous tenants

It’s important to remember that your location and available square footage will also play a huge role in your kitchen design and restaurant floor plan. 

Major permits and licenses required to open a restaurant business in Alabama 

Apply for an Alabama business license with the Alabama Secretary of State’s office. Based on the US Small Business Administration, restaurant owners can register the restaurant with the trade name with the Secretary of State. In addition, you must obtain a tax ID for the restaurant from the IRS (Internal Revenue Service). This number identifies the restaurant during the income tax filing period. 

Obtain a building permit from the local county planning and development department in Alabama to convert the property where you plan to place the restaurant. Alterations include changing the space to include an outdoor patio or expanding the indoor dining room with an extension to the original building. Get permission before planning any changes to the space. If the space is rented, ask the restaurant owner to apply in the owner’s name for permission.

Then, ask the landlord for permission to renovate and file for a building permit from the landlord. Local municipalities primarily regulate restaurant permits in Alabama. To open a restaurant in the state, you will likely need to obtain a general business permit from your municipality and a specific food service permit from your county. You may also need to apply for zoning and build permits depending on the location of your restaurant.

You can find more information about each of these permits at the websites of your respective municipality or county. Like any other state, Alabama has particular requirements around the licenses and permits needed to open a restaurant. Some licenses are administered by the state, while several others are done on a local (city or county) level. The licenses you’ll need to open a restaurant in Alabama include the following:

Business LicenseLiquor License Permit
Certificate of OccupancyFood Facility Health Permit
Food Handler’s License, also known as Food Service LicenseBuilding Health Permit
Seller’s Permit

In case you missed it: Key Rules to Start a Cleaning Business in Alabama: Business Plan, Setup Cost, Requirements, and License/Permit

Serving in a Restaurant

Cost of starting a restaurant in Alabama

The cost of starting a restaurant in Alabama can vary depending on the location, type of food service, restaurant size, and other factors. Therefore, opening a restaurant in Alabama typically ranges from $60,000 to $360,000.

What types of food can be served at a restaurant in Alabama?

In Alabama, there are many types of restaurants that can serve food. Some examples are Mexican, Italian, Chinese, Greek, and Americanized versions of international cuisines. In addition, restaurants can provide a wide range of food options for their customers, including appetizers, entrees, desserts, and drinks. Because there are so many types of restaurants in the state, it is important to choose the right one for your business.

When opening a restaurant in Alabama, it is important to get licensing from the state. This includes getting a food safety permit and an establishment permit. The food safety permit allows you to open your restaurant and serve food. The establishment permit allows you to change the signage on your property and opens up other opportunities, such as charging for seating and service.

Steps to create a business plan

1. Write a business plan – The business plan includes your restaurant’s name, service style, size, seating capacity, operating hours, meals served, general menu theme, and a sample menu. Mention details such as the décor, the presence of a bar or banquet room, and any services you plan on offering, such as delivery, catering, take-out, or retail.

Note any marketing strategies you’ll undertake, such as frequent-diner programs, campaigns, or community involvement. Finally, map out your plan for management and administrative controls. Your business plan includes your target market and how you will reach them. You should also outline your financial projections and discuss strategies for mitigating potential risks associated with opening a restaurant.

2. Get licensed – To serve food, you must obtain a food-service license, a business license, and an employer identification number. If you plan to serve alcohol, you must also obtain a liquor license. Outdoor patios or cafes may need additional permits. A music license may be required to pay copyright within your restaurant. Some areas require permits for signage or installing alarm systems. Check with your state, city, and county departments for a full list of necessary mandatory licenses and permits.

3. Hire the right people to work with you – Even though experienced restaurant staff may expect higher pay, it’s worth hiring some of these people so that you aren’t starting with a brand-new team. A positive, friendly attitude will also go a long way.

4. Get a good understanding of your area – Before opening your restaurant, you must understand the local market. Visit different restaurants and observe what they do well and what they could improve on. Then, this will give you an idea of what type of food people in your area like and which trends are popular now.

In case you missed it: Key Rules to Start a Catering Business in Alabama: Business Plan, Setup Cost, Requirements, and License/Permit


5. Calculate your start-up costs – Start by estimating the cost of acquiring necessary licenses and permits and purchasing equipment and supplies. Also, factor in costs for marketing and advertising your restaurant, such as signage or uniforms for staff.

6. Make sure the location is right – When choosing a location for your restaurant, consider both the practical and aesthetic factors, especially if you plan on marketing your establishment through advertising or public appearances. You’ll also want to ensure the neighborhood is hospitable and has enough customers who are likely to eat out frequently.

7. Hire the right staff – Once you’ve drafted your business plan and have all the necessary licenses and permits, it’s time to hire staff. You’ll need someone who can handle operations while you focus on cooking up some delicious dishes – look for candidates with experience in food service 

8. Get financing – Opening a restaurant is a big investment, and you’ll likely need some financial backing to get started. Look for loans or grants specifically designed for restaurateurs, as these tend to have lower interest rates and more flexible terms than traditional loans. Restaurant expenses can quickly add up if you’re not prepared for them. Keep track of your expected income and expenses, so you aren’t surprised by large bills. Also, keep in mind tips on how to save money on food costs.

9. Plan your opening carefully – When it comes time to open your restaurant, plan everything meticulously down to the smallest detail, so everything goes smoothly on launch day. For example, ensure all paperwork is filed correctly with government agencies, hire the right staff members, etc., so your customers have an enjoyable experience visiting your establishment.

Financial considerations for new restaurants in Alabama

You’ll need to be prepared to invest money and time into your venture. You will need to put up funds for the initial start-up costs and ongoing expenses like rent, food, and employee wages. Additionally, expect to pay state taxes on your income and sales. When it comes to choosing a location, be sure to consider the local population and what types of restaurants are already operating in that area.

In case you missed it: How to Start a Laundry Business in Alabama: Business Plan, Setup Cost, Requirements, and License/Permit

Restaurant Business

Additionally, consider how restaurateurs in other parts of the country have successfully opened businesses in Alabama – look for opportunities to study their successes or mistakes. Once you’ve chosen a location, prepare your business plan. This document will outline your goals for opening the restaurant and how you plan on reaching them. Also essential is a financial analysis showing how much money you’ll need to make during your first year of operation to be profitable.

What do you need to open a restaurant business in Alabama?

You’ll need to meet certain requirements and pass a business license exam. In addition, you’ll likely need to secure financing and make other preparations before starting your business. Contact the Alabama Division of Economic and Community Development to start the business process for more information. In addition, the agency can provide tips on how to apply for a business license and other necessary permits.

You’ll also need to gather accurate information about your location. This includes studying local demographics, zoning laws, and competition. Make sure to investigate what’s available regarding real estate and equipment prices.

Requirements to open a restaurant business in Alabama

A business plan is necessary if you want to open a restaurant successfully. It’ll outline everything from your financial goals to your operating procedures. Make sure to work with an accountant or business consultant to help create a realistic plan that meets your needs. Register with the Alabama Department of Revenue as a food establishment. Once registered, you will need to apply for a food service permit from the city or county where you plan to open your business. Also, you must apply for a federal Employer Identification Number (EIN) and pay applicable taxes.

In case you missed it: How to Open an EV Charging Station in Switzerland: Business Plan, Setup Cost, Profit, and License/Permit

Restaurant Kitchen Business


Running a restaurant in Alabama can be an extremely profitable venture. Compared to other businesses, running a restaurant is relatively low-cost. You only need a small kitchen and seating area, and most food costs are negligible. However, you will need adequate funding, time, and personal and professional support to move forward with your business successfully.


Please enter your comment!
Please enter your name here