Opening a new restaurant in Singapore demands compliance with a dizzying number of regulatory requirements. This will likely mean having to engage with a vast array of government agencies bearing a variety of acronyms such as NEA, SFA, URA, HDB, IRAS, MOM, CPF, ACRA, MUIS, SCDF and SPF.
Below is a checklist of the steps that must be completed before you can open the doors of your restaurant to the public for the first time.
1. Incorporation of Company
You should set up a company to own the restaurant. This will make life easier for you later, particularly when it comes to hiring staff and paying tax, not to mention limiting your own liability in the event that the restaurant proves to be an unsuccessful venture.
There are a number of corporate vehicles which you could set up your restaurant as. However for most restaurants, a simple private limited company could be ideal.
The application to incorporate a company can be made online on the BizFile+ website of the Accounting and Corporate Regulatory Authority (ACRA) for about $300.
2. Identify Your Restaurant’s Premises
You need to identify the premises where your restaurant is to be located. Assuming you don’t already own this premises, you will need to rent it.
Before you sign a lease and take on the obligation of paying rent though, you’ll need to obtain a number of regulatory approvals to make sure you can actually open a restaurant. Therefore, you’ll need a landlord who understands this and will hold the location for you based on a simple letter of intent. This is a letter which indicates the parties’ intention to engage in the rental transaction at a particular rent amount.
Depending on your negotiations with the landlord, the landlord could also need you to put up a deposit. You may need to be prepared to forfeit this deposit should you fail to obtain the necessary approvals. A lawyer can draft a letter of intent for you that carves out an exception to refund the deposit to you if you fail to acquire those approvals. However, the landlord may not necessarily be prepared to sign it.
3. Apply for Planning Permission (If Needed)
Next, you may need to apply for planning permission for your premises to be used as a restaurant. You will need to do so if the premises is being converted to a new use as a restaurant – i.e. it was not previously a restaurant that you are simply taking over.
If the premises was already approved for use as a restaurant, you will need not to apply for planning permission.
4. Comply with the Code of Practice of Environmental Health
Review the Code of Practice of Environmental Health issued by the National Environment Agency (NEA). “Section 3 – Food Retail Outlet” of the Code is the part that applies to restaurants. It concerns the required specifications/layout of restaurants that you’ll need to follow to get the Food Shop Licence (see next point).
You’ll need to agree with your future landlord that you can make any renovations necessary to the premises to comply with this Code before you can start operating your restaurant.
5. Apply for the Food Shop Licence
The Food Shop Licence is the biggest and most important obstacle to opening your restaurant. Getting this licence can take a few weeks or several months depending on how long it takes for you to renovate the premises to the NEA’s satisfaction.
If there was already a restaurant at the premises before you took over, no renovation should be required. However, the previous licence holder will need to write to the NEA to cancel its licence before yours can be issued.
The process of obtaining a Food Shop Licence involves the NEA:
- Carrying out inspections on the premises
- Giving you specific requirements to comply with
- Inviting you to pay the licence fee
- Issuing you the licence
A helpful checklist of all the documents you will need to submit to NEA and the various design and hygiene requirements can be found here. There are quite a lot of documents to be provided and some of them may take you some time to obtain. For example, you’ll need to produce a contract with a pest control company for monthly inspections of your premises for pest infestations.
You can apply for the Food Shop Licence here. Once you have the licence, you can legally open your restaurant. The Food Shop Licence has to be renewed yearly.
6. Sign a Tenancy Agreement
Towards the end of the process of securing the Food Shop Licence, when it becomes clear that the licence will be issued, you should sign a tenancy agreement with your landlord.
It is highly advisable to have a lawyer draft, or at the very least review, a commercial tenancy agreement for your premises. The term of the lease for a restaurant should ordinarily be at least 2 years to allow you sufficient time to recoup your capital expenditure. You should also try to negotiate a right to renew at the same rent for an additional year or two after expiry of the lease.
You should ensure that the lease contains a clause providing that if the property is sold, the sale will be subject to your tenancy. In other words, if the landlord sells the property, the new owner will be bound by the terms of the tenancy agreement.
You should also demand a copy of the landlord’s title to the property to ensure that:
- You are actually dealing with the owner of the property; and
- The landlord is in fact able to grant you the tenancy which you will be paying for.
Ideally, you should also try to include a clause entitling you to terminate the lease should any regulatory approvals you require to operate the restaurant be withdrawn or fail to be renewed. However, the landlord may not agree to this.
7. Review the Property Owner’s Fire Certificate
The owner of the property should have a current fire certificate from the Singapore Civil Defence Force (SCDF) which certifies that the property meets basic fire safety standards. You should demand that a copy of the fire certificate be furnished to you.
These certificates are renewed annually following SCDF inspections. Failure to have one for any building which requires one is an offence for which the owner or occupier can be prosecuted.
The owner may not have a fire certificate if the premises was not used as a restaurant previously. If there is no current fire certificate, insist that the landlord obtain one at its own expense as a precondition to you signing the tenancy agreement.
If the landlord insists that you do so instead, you should factor the time and cost of doing so into your negotiations on the rent. Obtaining a fire certificate can take several months and a temporary fire permit or fire safety certificate can be obtained to cover you in the interim.
Once you start operating, you will need to engage professional specialists to perform industrial cleaning and maintenance of your exhaust ducts and kitchen hoods at least once a year. You can contact the SCDF to learn more about fire safety requirements here.
8. Hire Staff
Any staff you hire will need to have or obtain food hygiene certifications from the NEA. If you need to hire foreign staff, you will need to apply to the Ministry of Manpower (MOM) to obtain work permits for them.
You will also need to register with the Central Provident Fund (CPF) and the Inland Revenue Authority of Singapore (IRAS) so you can submit your staff’s details for the payment of their CPF contributions and the reporting of their income for income tax purposes respectively.
9. Import Food Ingredients
If you need to import any ingredients for your restaurant, you will first need to obtain a general import/export licence, referred to as a Customs Account, from Singapore Customs.
You can then use this licence to apply for Import Licences from the Singapore Food Agency (SFA) to bring specific ingredients (such as meat, fresh vegetables or eggs) into Singapore.
Read our other article for more information on how to import food into Singapore.
10. Apply for a Liquor Licence/Halal Certification (Optional)
Before opening your restaurant, you will need to decide whether you want to serve alcohol or become halal-certified. You don’t have to do either but depending on your restaurant’s location and target market, there may be strategic business benefits in doing one or the other.
For a liquor licence, you will need to apply to the Singapore Police Force (SPF). Learn more about applying for a liquor licence in Singapore in our other article.
For halal certification, you will need to apply to the Majlis Ugama Islam Singapura (MUIS). There are fees to be paid for each one and specific requirements to be observed to obtain and maintain them.
In particular, for halal certification, the process can take over a month and the requirements can have further knock-on financial effects on your business. For example, the range of dishes/cuisines you can serve would be limited to ones that can be made with only halal-certified ingredients.
At least two Muslim staff members must be hired, they must obtain halal training certificates, at least one of them must be given a supervisory position, and these hires are subject to the MUIS’ approval.
The MUIS can also require that laboratory testing be carried out on any of your ingredients and that a cleaning ritual be carried out on the premises by the MUIS or any agent it selects at your cost. These are costs that should be factored into your business plan early on when deciding whether to seek halal certification.
Read our guide on applying for halal certification for your restaurant.
11. Register to Pay Goods & Services Tax (If/When Needed)
If you have gotten this far, and your restaurant is so successful that it is about to generate an annual revenue of S$1 million dollars or more for the first time, you now need to register with the IRAS for the payment of Goods & Services Tax (GST).
Businesses with an annual revenue of less than S$1 million are exempt from GST, which means you won’t need to charge your customers GST either. However once you hit the S$1 million revenue mark, you’ll need to register for GST within 30 days of doing so.
Clearly, the process of opening a restaurant is a regulatory minefield. The time and effort you’ll need to put into the paperwork before a penny ever comes in the door can potentially be quite daunting.
However, getting a lawyer involved early can help a lot. While much of these processes are purely administrative and bureaucratic and involve form-filling and fee-paying, there are certain aspects of it that are a little more customisable and represent higher risk for your business. In particular, the conclusion of your commercial tenancy agreement.
For these aspects, it is crucial to get good legal advice early so that your restaurant venture gets the best start it can.
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