In-house lawyer, Whitewill Dubai
Have you ever thought about starting your own restaurant business abroad in one of the most developed countries in the world, where the tourist flow is increasing every month? Did you ever wish to introduce your vision of food flavors? Or maybe you always dreamed to implement your ideas in a unique experience of eating?
How about starting your mission in Dubai?
The first thing which you need to know is that the restaurant business in Dubai is covered by the Food Code, which states the requirements to be met.
Secondly, you must choose the type of company, which will run your restaurant business in Dubai. Such a company can be set up on the mainland or in one of the free zones. The difference between those two options will be partial or full ownership (depends on trade license type), as well as a business location. With mainland registration, you would be able to start your restaurant business anywhere in Dubai, and with free zone registration, the location of your restaurant will be on the premises of the free zone. Such free zones as Dubai Airport Free Zone and Dubai Multi Commodities Centre do provide restaurant licenses. However, in most cases, the Limited Liability Company on the mainland is a preferable structure for the restaurant business, due to transparency of exact requirements, speed of incorporation, and, again, freedom concerning the location of the business.
The good news is that the Restaurant and Multi Restaurant Center trade license activities fall under the professional category, meaning the foreign national can hold 100% of the business on the mainland, but still, the local national (sponsor) is required to act as a Legal Service Agent.
How to obtain a license for a restaurant business?
Two types of licenses will be required to set up a restaurant: Trade License and Food License. You will also need No-Objection Certificate from the Dubai Municipality, and (only if required for your business) a Liquor License, Delivery Permit, Ramadan Permit, and Pork Permit (also known as Non-Halal Food Activity).
For the Trade License you will need to apply to the Dubai Department of Economic Development (DED) and get approval from the Department of Tourism, and Commerce Marketing (DTCM). In the Free Zone, you will need to apply for a business license via Free Zone Authority, the process will be similar, however, can include different restrictions imposed by the same Free Zone.
The fees for Trade licenses are calculated by DED based on the legal type, selected activities, and 5% of the rental amount. The average rent for the most popular location from Downtown to Jumeirah can cost anywhere between AED 258 to AED 1,010 per square foot and based on the size of the restaurant can take you to a minimum yearly rent of AED 200,000 (on the minimum requirement of 750 sq. ft). Based on that, we can see that starting fee for Trade License from DED will be around AED 20,000 and above (let’s say, if your rent is AED 300,000, then the Trade License fee will go up to AED 30,000, etc.). Plus, you will need to renew this license every year.
You need to be precise on the activity details of the Trade License.
Current activity options are:
- Restaurant (Professional License type). Includes restaurants equipped with suitable installations to prepare and serve food and snacks inside, as well as various beverages for immediate consumption by the public. Such firms are allowed to sell activity-related materials in non-commercial quantities.
- Floating Restaurant (Commercial License type). Includes ships, boats, or yachts suitably equipped for dining on board, including serving the food and beverages while the ship is anchoring or on an entertainment cruise, such firms are allowed to sell the activity-related materials in non-commercial quantities.
- Restaurant & Mini Store (Commercial License type). Includes restaurants equipped with suitable installations to prepare and serve food and snacks inside. Such firms are allowed also to sell some consumer goods such as fresh, preserved, and canned foodstuff, beverages, dairy, and bakery products as well as newspapers and magazines, the sale of such goods should not predominate the role of the restaurant.
- Multi Restaurant Center (Professional License type). Includes a common area comprising several shops designed and furnished and leased as food vendors and coffee shops, customers may take the food inside such vendors or surrounding a shared common seating area.
Documents required for obtaining Trade License:
- Passport copy and photo of the owner(s)
- Application form with chosen list of activities that the restaurant is going to be engaged in.
- An attractive trade name (think about a few, as some of the names can be already in use). Registration of trade names will cost around AED 620. You should understand that trade name and brand name are not the same thing, hence, these names can be different.
- Local Service Agent or Corporate Agent Agreement with a UAE national. Based on the same agreement, you will be obliged to pay yearly service agent fees, which will be negotiated between you and the Agent.
- Office/Retail space and Tenancy Contract attested by Ejari.
The application will be submitted for initial approval. If any other additional documents are required, you will be contacted accordingly. Extra requirements can be submitted through a reference DED letter to the DTCM in Dubai for final trade license approval.
*Note: You need to get approval from the Food Control Department of Dubai Municipality before getting the final trade license approval.
The Food License will be issued by the Food Safety Department. During the approval process, you will need to submit a copy of the Trade License, meaning, before you apply for Food License, you must already have a Trade License.
At this stage, you will be also asked to submit the Blueprint for your restaurant (detailed information on the interior design and layout of your restaurant). With this Blueprint, the Food Licensing authorities must be able to identify entry and exit passages, dedicated space for food processing, space for storing processed and raw food, windows, and a ventilation system, a kitchen area, an equipment storage facility, restrooms, etc. As per the regulations, the restaurant size should be a minimum of 750 sq. ft. This information and all the requirements are in open use and can be found on www.foodsafe.ae, so you can be prepared in advance and have complete knowledge of all requirements.
The layout must be prepared only by the layout consultant approved by the Food Safety Department, the list of such consultants can be also found by the provided above link. He/she will then scale the layout following the “Equipment Requirements and Specifications” document and submit the layout online via Building Department’s system along with the Layout Assessment Form. The Building Department will evaluate the submission and transfer it to the Safety Department. After the approval by the Safety Department, the submitted documents will be transferred to the Food Inspection System.
If the restaurant will be located outside of the shopping center, the site must be approved by the Planning Department of Dubai Municipality prior to the application for Food License.
The Liquor License will be issued by the Dubai Police General Headquarters (DPGH). You don’t need to apply for a Liquor License if you don’t plan to serve alcohol in your restaurant.
However, if you have decided to do so, you must know that there are specific requirements for the applicant:
In addition to the above requirements for applicants, you will need to provide the DPGH with:
The Liquor License will be valid for 1 year with an option for renewal. Also, based on the size of your restaurant and the number of guests to be served, the DPGH will issue a special quota for the purchase of liquor, which cannot be exceeded by your company.
Other important notes
Now, when you know the above, drafting a strong business plan, will be the most important step. If you don’t know how or what to start with, you can always approach a business consultancy firm with a proven and visible knowledge of the UAE market.
Also, don’t forget, that after you started your business, you will need to register employees with the Ministry of Labour and General Authority for social security, process visas, labor cards, and other legal documents, also, you will need to open a bank account. It is critical to approach and work with strong, well-known consulting specialists located and operating in Dubai, who can help you on all levels and make your business incorporation comfortable and smooth.
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