How to start your own restaurant in South Africa
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How could you start your own restaurant?
It’s could be easy for some South African entrepreneurs to enter the food and beverage industry because of the low cost of equipment and the need for few skills.
Have you enjoyed tasty braai meat at your local shisa nyama or bought some fat cake on your way to work? These food businesses are everywhere and are thriving. The informal food industry is full of opportunities but is competitive too.
There The South African Black Entrepreneur Forum surveyed township entrepreneurs countrywide in 2013. Most township small business owners were somehow involved with the food and beverage industry because we all need food every day, and it's great to eat and socialise.
There are more food businesses than agriculture, clothing, textiles, manufacturing, and engineering businesses.
The food and beverage industry also has a formal sector that usually serves its customers from strip malls and shopping malls.
Peter, the owner of 1904 restaurant and About Time Coffee shop, gave us his thoughts by answering questions about restauranteering in South Africa?
Read Peter’s tips and more about starting a restaurant.
How did you start your own business?
“I have always worked for myself after completion of my studies which were in the hotel and catering trade.”
What personal qualities do you need to start a small business?
“Enthusiasm, dedication and commitment!”
Did you have an informal start to your career?
“No, I worked as a student, but went straight into my own business.”
What challenges have you experienced regarding starting your restaurant business?
“Finance is always a concern but good planning assists there. Long working hours and a slightly strained personal life.”
What challenges do you currently experience running your restaurant?
“At the moment, it is a medical issue for me – diabetes – only recently diagnosed. Covid has put a strain on things, but we are through that, hopefully.”
Why did you choose to have a restaurant business?
“It was the field I studied in and enjoyed - have had a few other businesses but always come back to the entertainment game.”
What are the benefits of having your own small business?
“Control over your own destiny. Financial freedom if done correctly and the satisfaction of knowing that you made it possible.”
Are there disadvantages of having a small business compared to full-time employment?
“Yes. Long hours! Nothing comes easily. A lot more responsibility for your staff and family. Financial insecurity in the early days.”
What advice do you have for startings a restaurant in South Africa?
“You need to have the passion and commitment – knowledge of the industry and understanding of the various laws and legislations.”
How did you fund your business at the start?
“Initial restaurant was family funded and thereafter my own startup capital – Banks are difficult!”
Learn more about small business funding
Read what you need to know about business loans or other lending options.
What makes South Africa great for starting a small business?
“You can succeed, and there is great scope for growth in a lot of industries.”
Is it worth it to have your own small business in South Africa?
“In this day and age, I would highly recommend it as employment in the corporate sector is at an all-time low."
What security tips do you have to secure your restaurant?
“Be observant at all times and have equipment in place for these events!”
Peter shared some interesting thoughts about starting a restaurant that might inspire you to follow a similar path. Read on if you are keen to start your own restaurant and want to know more?
Learn more about starting a restaurant
What does the law say about restaurants? Don’t stress because it’s not that difficult. You'll see when you spend enough time understanding all these legal words and requirements. Get some good advice from friends, family and other restaurant owners. Also, don’t forget to get good financial and legal advice too.
We all need food to live, but food quality can make us sick or keep us healthy. That’s why there are legal aspects when starting your own restaurant.
Health and safety
It’s no surprise that you need to comply with health and safety permits and licenses for selling tobacco and liquor. You also need to obtain a zoning permit that restricts the restaurant's location.
The big question - how do you start as an underdog?
Where will you have the restaurant?
Make sure you start the restaurant at the right place to comply with zoning, road and public access and parking.
You need to ensure enough fire extinguishers with proper demarcations on the floor. The local Fire Department must inspect your premises to see if you comply.
Registering a restaurant
There are a few types of businesses to choose from that could serve your needs:
1. Sole proprietor
This is the most basic form of a business. Inform the South African Revenue Service (SARS) if necessary. If the business fails, creditors will recover their debt from your assets.
These consist of 2-20 people who contractually agree to do business together, split profits, contribute individually, and are liable for debts.
3. Company: Pty (Ltd)
Most entrepreneurs choose this one. You need to register it and the company name with the Companies and Intellectual Property Commission (CIPC) and provide an annual return.
You need to register the company with SARS, but don't worry if you have already registered with CIPC.
If your business is quite large, you’ll have to register with Value Added Tax (VAT), Pay As You Earn (PAYE), Compensation for Occupational Injuries and Diseases Act (COIDA), and Unemployment Insurance Fund (UIF). You will only have to register with SARS as a VAT vendor when the annual income (turnover) is R1 million or more.
What about your employees?
You’ll need to register your employees with SARS for Pay as You Earn (PAYE) and UIF. Register your business with the Skills Development Levy (SDL) only if monthly salaries exceed R500 000 per month. If you have one or more full-time employees, register with the Department of Labour and the COIDA to protect them.
Trading and health requirements
Your restaurant needs to have a valid business or trade license and a Certificate of Acceptability for Food Premises. Make sure you arrange for correct health inspections. If you allow smoking in your restaurant, you must comply with the Tobacco Products Control Act.
Comply with consumer protection
If you provide services or goods, you must comply with the Consumer Protection Act 68 of 2008, ensuring fair, accessible, and sustainable trading.
What about the music?
Get the vibe just right in your restaurant. You can apply for a TV license. If you will play music, get a licence from either the South African Music Performance Rights Association (SAMPRO) or the Southern African Music Rights Organisation (SAMRO).
Do you want to know more about how you could start a business?
Find out more about starting a business in South Africa now.
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Now you know a lot about starting your own restaurant. So, does having it interest you? Whatever you choose, you can make your dreams happen.