Starting a Restaurant in Australia: The Complete Guide

Australia's restaurant industry generates over $45 billion annually. There's opportunity here. But 60% of new restaurants fail within the first three years. The difference between success and failure often comes down to preparation.

This guide covers everything you need to know before opening a restaurant in Australia - from legal requirements to realistic costs to the decisions that will make or break you.

Important Disclaimer

This guide provides general information only. Requirements vary by state, territory, and local council. Always consult with local authorities, an accountant, and a lawyer before opening a food business.

Step 1: Develop Your Concept

Before permits and leases, you need a clear concept. Answer these questions:

• What cuisine? Be specific. "Italian" is broad. "Southern Italian, handmade pasta" is a concept.
• What's your price point? Fast casual ($15-25), casual dining ($30-50), fine dining ($100+)?
• Who's your target customer? Age, income, dining occasion?
• What makes you different? Why would someone choose you over existing options?
• Service style? Counter service, table service, takeaway focused?

Step 2: Create a Business Plan

A proper business plan forces you to think through every aspect of your business. You'll need it for loans and investors anyway.

Key Sections

• Executive summary: One-page overview of your concept and goals
• Market analysis: Competition, target demographics, location research
• Menu and pricing: Draft menu with food costs calculated
• Operations plan: Staffing, suppliers, daily operations
• Financial projections: 3-year forecasts, break-even analysis
• Funding requirements: How much you need and how you'll use it

Step 3: Choose Your Business Structure

Most restaurants in Australia operate as one of:

Sole Trader: Simplest structure. You're personally liable for debts. Register for an ABN for free.
Partnership: Two or more owners share profits and liability. Need a partnership agreement.
Company (Pty Ltd): Separate legal entity. Limited liability. More compliance requirements. Costs ~$500+ to set up.
Trust: Complex structure, usually for tax or asset protection reasons. Need professional advice.

Most small restaurant owners start as sole traders and incorporate as a company once the business grows. Consult an accountant for your specific situation.

Step 4: Secure Funding

Typical Startup Costs (AU)

• Small café/takeaway: $100,000 - $250,000
• Casual dining (60-80 seats): $300,000 - $600,000
• Full-service restaurant: $500,000 - $1,000,000+

These figures include fit-out, equipment, initial inventory, and working capital. Taking over an existing restaurant with equipment can significantly reduce costs.

Funding Sources

• Personal savings: Most common, no interest, you maintain control
• Bank loans: Need business plan, collateral, often personal guarantee
• Family/friends: Document everything, treat it professionally
• Investors: Give up equity, need solid business plan
• Equipment finance: Spread cost of equipment over time

Step 5: Find Your Location

Location can make or break a restaurant. Consider:

• Foot traffic: Essential for cafés and quick-service, less critical for destination dining
• Parking: Critical in suburban areas
• Nearby businesses: Offices = lunch trade, bars = late night crowd
• Competition: Some competition validates demand; too much saturates the market
• Rent: Should be 6-10% of projected revenue maximum
• Existing fit-out: Taking over a failed restaurant can save $200K+

Lease Considerations

• Lease term (5+5 years common for restaurant fit-out investment)
• Rent reviews (CPI, market, or fixed percentage?)
• Outgoings (council rates, insurance, maintenance)
• Make-good clause (restoration requirements at lease end)
• Assignment rights (can you sell the business with the lease?)

Always have a commercial lawyer review your lease before signing.

Step 6: Required Licenses and Registrations

Federal Requirements

• ABN (Australian Business Number): Free, required for all businesses
• GST Registration: Required if revenue exceeds $75,000/year
• PAYG Withholding: For employee tax obligations
• Superannuation: Must pay super for employees earning $450+/month

State/Territory Food Business Requirements

• Food Business License: Register with your local council
• Food Safety Supervisor: At least one qualified FSS must be on premises
• Food Safety Program: May be required depending on business type

Liquor License (If Serving Alcohol)

Each state has its own liquor licensing authority:

• NSW: Liquor & Gaming NSW
• VIC: Victorian Commission for Gambling and Liquor Regulation
• QLD: Office of Liquor and Gaming Regulation
• WA: Department of Racing, Gaming and Liquor

Application costs range from $500 to $5,000+ depending on license type and state. Process can take 2-6 months.

Council Development Approval

If changing the use of a premises or doing significant renovations, you may need:

• Development Application (DA)
• Building approval
• Occupancy certificate

This process can take 3-12 months and cost $5,000-$50,000+ depending on complexity. Taking over an existing restaurant avoids most of this.

Step 7: Design and Fit-Out

Your kitchen and front-of-house design affects everything: workflow, customer experience, and compliance.

Kitchen Requirements

• Adequate ventilation (commercial exhaust system)
• Separate areas for food preparation, cooking, dishwashing
• Handwashing facilities
• Proper refrigeration with temperature monitoring
• Non-porous, easily cleaned surfaces
• Pest-proof design

Front of House

• Accessible entry and toilets (DDA compliance)
• Adequate seating space (usually 1.3-1.5 sqm per seat)
• Emergency exits and fire safety compliance
• Point of sale system location

Step 8: Equipment and Suppliers

Essential Equipment

• Commercial cooking equipment (ranges, ovens, fryers)
• Refrigeration (reach-ins, walk-ins, prep tables)
• Exhaust system and fire suppression
• Dishwasher (commercial grade)
• Prep tables, shelving, storage
• Smallwares (pots, pans, utensils)
• POS system

Consider used equipment for significant savings - auctions and restaurant closures are good sources.

Finding Suppliers

• Wholesale food distributors (Bidfood, PFD, Campbell's)
• Local produce markets (fresher, support local)
• Specialty suppliers (seafood, meat, cheese)
• Beverage distributors

Step 9: Hiring Staff

Award Rates

Most restaurant staff are covered by the Restaurant Industry Award 2020 or the Hospitality Industry (General) Award. Key points:

• Minimum wage rates by classification level
• Penalty rates (weekends, public holidays, nights)
• Break requirements
• Leave entitlements

Employer Obligations

• Superannuation (currently 11.5% of earnings)
• WorkCover/workers compensation insurance
• PAYG tax withholding
• Fair Work compliance (contracts, payslips)
• Work Health and Safety requirements

Step 10: Insurance

Essential insurance policies for restaurants:

• Public liability: Covers injury to customers/third parties ($10-20M recommended)
• Product liability: Covers food-related illness claims
• Workers compensation: Legally required in all states
• Business insurance: Fire, theft, equipment breakdown
• Loss of income: Covers revenue if you can't trade

Step 11: Systems and Technology

• POS system: Square, Lightspeed, Kounta - handles orders, payments, reporting
• Accounting software: Xero or MYOB for Australian compliance
• Rostering: Deputy, Tanda - handles scheduling and award interpretation
• Reservations: ResDiary, OpenTable, or built-in to your website
• Online ordering: Integrated with your website or third-party apps

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Timeline: What to Expect

Months 1-2: Concept development, business plan, location search
Months 3-4: Secure location, sign lease, begin DA process
Months 4-6: DA approval (if needed), design finalization
Months 6-8: Fit-out construction, equipment ordering
Month 8: License applications, staff hiring, supplier setup
Month 9: Soft opening, menu testing, staff training
Month 10: Grand opening

This is an optimistic timeline. Council approvals and construction delays commonly extend the process by 2-4 months.

Common Mistakes to Avoid

1. Undercapitalization: Most new restaurants need 6 months of operating expenses in reserve. Running out of cash kills more restaurants than bad food.
2. Wrong location: Don't fall in love with a space that doesn't match your concept or budget.
3. Overcomplicating the menu: Start focused. It's easier to add dishes than to maintain quality across 50 items.
4. Ignoring compliance: Fines, closures, and legal issues destroy restaurants. Get the paperwork right.
5. Neglecting marketing: "Build it and they will come" doesn't work. Have a marketing plan from day one.

The Bottom Line

Starting a restaurant in Australia is challenging but achievable. The key is preparation - understanding the requirements, securing adequate funding, and building the right team.

Don't rush. Take the time to develop a solid concept, create a realistic business plan, and ensure you have the capital to weather the inevitable challenges of the first year.

The restaurants that succeed are run by owners who combine passion for food with respect for the business fundamentals. Be one of them.