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Getting ready to open a restaurant in South Dakota? To help you get started with your own restaurant, we put together a comprehensive step-by-step guide for how to open a restaurant in South Dakota.
One of the most critical parts of opening a restaurant is being compliant with local laws. So when you’re opening a restaurant, cafe, bar, or any other food business, you’re going to need to get your licenses and permits in order.
A liquor license, a food facility health permit, a certificate of occupancy — they all have varying (and sometimes overlapping) requirements, so it’s important to know exactly what you need to get to legally open a restaurant in your particular city or county in South Dakota.
What Licenses and Permits are Required to Open a Restaurant in South Dakota?
Like any other state, South Dakota has its own 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 South Dakota include:
- Business License
- Certificate of Occupancy
- Food Handler’s License, also known as Food Service License
- Seller’s Permit
- Liquor License Permit
- Food Facility Health Permit
- Building Health Permit
Below we’ll get into further detail for each of these licenses and permits needed to open a restaurant in South Dakota, what they are and why you need them, how to get them, and how much they cost.
1. Business License in South Dakota
What is it and why do you need it?
A business license is one of the first licenses you’ll need as you start laying the groundwork of your business. Also known as a business tax certificate, it helps your business stay compliant at tax season.
How to get a business license in South Dakota
In South Dakota, business licenses are controlled by the city or county you live in. If you operate a restaurant with multiple locations across cities and counties, it’s important to get a business license for each business in different jurisdictions. To get a business license in South Dakota, you’ll need:
- An EIN
- To choose what classification of business you’ll be (LLC? Sole proprietorship? Partnership?)
- A business name
- An address and phone number,
- A thorough restaurant business plan
- A COI for your business insurance policy
How much does a business license cost in South Dakota?
South Dakota business license costs vary depending the county, type and scope of the business. Business licenses in South Dakota need to be renewed and paid for regularly, so check with your jurisdiction about how often yours will need to be renewed.
No matter where you’re at in your restaurant ownership journey, a business plan will be your north star.
2. Certificate of Occupancy in South Dakota
What is it and why do you need it?
A certificate of occupancy is a document that shows your space is zoned for your type of business, as well as up to code, safe to use, and up to date on its checks and inspections. Not every county will require them for new businesses, and even then, only certain situations require them, including if you’re doing major building work or changing the use of a space from residential to business.
Always get in touch with your local jurisdiction to determine if your project warrants a CoO.
How to get a certificate of occupancy license?
The forms are online, but in order to get the certificate, your business location will need to go through fire inspections, plumbing inspections, electrical inspections, and building inspections. Check your local city or county’s building and safety department.
How much does a certificate of occupancy cost?
Different counties will charge different amounts, and they will also vary by type of business. Fee will vary depending on county.
3. Food Handler’s License in South Dakota
What is it and why do you need it?
A food service license, also known as an employee health permit, allows restaurants, vendors, or any other type of food business to safely sell and serve food onsite. These licenses ensure that every employee knows how to do their part to keep your diners safe from foodborne illness. They’re often referred to as ServSafe, after the company that administers most food handler’s tests, or as a South Dakota Food Handler Card.
How to get a food handler’s license in South Dakota
Every employee who prepares or serves food in South Dakota must get their Food Handler’s license within 30 days of being hired — chefs, cooks, servers, baristas, and bartenders, to name a few. Bussers and general managers may not be required to do so.
And if managers have already gotten their Food Protection Manager Certification, they’re also exempt from getting a South Dakota Food Handler card. Some jurisdictions have their own food safety training programs and standards, so they’re exempt from requiring employees to get a South Dakota Food Handler card.
To get their food handler’s card, employees must pass a test about food safety and preparation with a grade of at least 70% (or higher in some jurisdictions).
How much does a food service license cost in South Dakota?
South Dakota state law requires that the test and license not cost more than $15, in order to make sure anyone working in a restaurant can afford to get certified.
4. Food Seller’s Permit in South Dakota
What is it and why do you need it?
Any business that plans to sell tangible goods that are subject to sales tax needs a seller’s permit. This permit allows them to charge sales tax.
How to get a seller’s permit?
You can register for a permit online through the SBA License and Permits portal.
How much does a food seller’s license cost?
There’s no fee to apply for a seller’s permit, but you may be asked to pay a security deposit to cover unpaid taxes if the business eventually closes.
Here is your beginners checklist to opening a restaurant: from developing a business plan, picking a location, developing your menu, and everything in between.
5. Liquor License in South Dakota
What is it and why do you need it?
This license is required for any type of business to sell and serve alcohol to its patrons. Since alcohol has an incredibly high markup and a long shelf life, it’s often beneficial from a profit standpoint to sell alcohol.
How to get a liquor license in South Dakota
In South Dakota, liquor licenses are issued by the state. You must have a seller’s permit already to be able to apply for a liquor license.
After you’ve applied for a liquor license, you must post a public notice of application on your business’s premises for 30 days. Some cases require the applicant to notify their neighbors or post a notice in the newspaper. They will also need to show that their business is correctly zoned for an alcohol-selling business.
The department does an investigation into the future business and the applicant to see if they qualify. It takes between 30 and 90 days to process a liquor license application, depending on what kind of application it is, so be sure to build this time frame into your countdown to opening. Licenses are renewed on a yearly basis, so you must pay the renewal fee on time or your license will expire until the fee is paid.
How much does a liquor license cost in South Dakota?
A liquor license in South Dakota can cost from $100 - $250. See the full fees associated with different types of liquor licenses in South Dakota here.
6. Catering Business License in South Dakota
In South Dakota, there’s no specific catering license, but caterers need to obtain a liquor license if they’ll be serving alcohol, and food safety certifications like other businesses that handle food.
7. Food Facility Health Permit in South Dakota
What is it and why do you need it?
All restaurants need to have their health permits in order before opening, and they must stick to safe food handling, storage, and preparation practices all throughout their operations. They help prevent foodborne illness in patrons, and ensure worker safety as well.
How to get a food facility health permit?
In South Dakota, health permits are under city and county jurisdiction, so check with your local health department to find out how to apply.
Unlike some liquor licenses, health permits are not transferable. When you start a new restaurant, even if it’s in the space of an existing restaurant, you’ll need to get a new health permit.
When you apply for a health permit, which can often be done online depending on the city, you’ll then need to get an inspection to ensure your space and practices will fit with the South Dakota Health and Safety Code and all applicable ordinances. If your business is determined to be safe to operate, you will receive your health permit.
How much does a food facility health permit cost?
As usual with city and county-based permits, the costs vary.
8. Employee Health Permit in South Dakota
In South Dakota, an employee health permit is the same as a food handler’s license.
What are the legal requirements for opening a restaurant in South Dakota?
In addition to the above licenses and permits, restaurants in South Dakota will need to take care of these legal and administrative tasks before they can make it to opening day.
In order to get many of the permits above, and in order to be able to hire your employees, every business will need an Employer Identification Number, known as an EIN.
Applying for an EIN is easy. It can be done online, via fax, or via mail. Most applicants will likely choose to take the online EIN application option, as it’s much quicker to do than to print and fax or mail an application, but it must be done in one concurrent session, so ensure you have all your paperwork and information at the ready. The application can be found on the IRS website, including all instructions and restrictions.
Here’s a few types of insurance for South Dakota restaurateurs to consider:
- Worker’s compensation insurance, which is mandatory in South Dakota, helps employees who got sick or injured on the job to cover healthcare expenses and lost wages.
- General liability insurance, which helps cover you in case you’re sued because of a customer injury or property damage, among many other types of lawsuits.
- Commercial property insurance, which helps you with repairs of your physical location and the equipment in it, if they get damaged.
- Business income insurance, which can help you recover lost income due to fires, theft, or wind disasters.
What are the financial considerations for new restaurants in South Dakota?
When opening a restaurant in South Dakota you will need to choose the right type of business entity and ownership structure. Then you’ll need to secure funding for your business.
When starting a restaurant, you’ll need to choose what kind of business entity you’ll be building. Choose between an LLC, sole proprietorship, partnership, S corporation, or C corporation.
To learn about the benefits and drawbacks of each approach, read our guide on restaurant business entities.
Different restaurants approach ownership and profit very differently. Some simply have one owner and many employees. Some give investors a stake in the business. Others operate as a co-op, with every employee owning a stake in the business. And a lot of businesses operate somewhere in between, with owners and partners owning the business but all employees getting a little bit of profit share when the business exceeds a predetermined profit threshold.
Figure out which kind of ownership and profit-sharing structure makes sense for your business, and work with a lawyer and accountant to draw up all the necessary paperwork and contracts.
It costs anywhere between $95,000 and 2 million to start a restaurant, and very few people have that kind of money lying around.
Some of the options available to restaurateurs looking to go into business in South Dakota include brick-and-mortar bank loans, alternative loans, SBA loans, merchant cash advances, lines of credit, crowdfunding, and turning to friends or family for financial support. They all vary widely in application requirements, how much you can take out, what kind of collateral you’ll need, the type of repayment and the repayment schedule, and how quickly you can receive funding.
To learn more about each of these options, read more about restaurant financing and loans.
Toast Capital is a fast, simple, flexible funding option for restaurants
Toast has its own program that helps restaurants meet their business goals through access to funding.
Toast Capital is designed to help restaurants gain access to capital to grow their businesses. There’s no compounding interest, application fees, or late fees. They operate using one fixed cost and borrowers pay these loans back with automated repayments that flex with sales. And with this program, you can see money in your bank account within a few business days.
How do you choose a restaurant location in South Dakota?
Choosing the right location for your restaurant is critical. You’ll need to do research on the demographics, market, and competition in your location, as well as on the actual restaurant space and its size, visibility, and history. You could also opt to go location-free by becoming a ghost kitchen.
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. Here’s some additional criteria to focus on when evaluating a restaurant location to decide if it's right for you:
- Target market and ideal customer profile
- Real estate market conditions
- Size of the site
- Previous tenants
Naturally, the location of your restaurant and layout of the space should bring your restaurant idea to life. If you want to open an elegant steakhouse, you might need your own dedicated building. If you want to serve sandwiches or tacos to beach-goers, maybe a food truck will do.
It's important to keep in mind that your location and available square footage will also play a huge role in your kitchen design and restaurant floor plan. If you envision creating a high-volume fast-casual Italian concept with an exposed kitchen, for example, you will need a larger footprint and the ability to knock down walls and install proper ventilation. Some landlords may not let you have this leniency.
What are the operations considerations for new restaurants in South Dakota?
Hiring, Training and Retaining Staff
When hiring employees for your restaurant, ensure that you are complying with local city and county guidelines for state labor laws.
The employees that you hire are true extensions of your restaurant and its brand, making them one of the most important aspects in your restaurant’s success. From front-of-house servers to the chefs, there are dozens of restaurant positions you can hire for.
You have a few options for acquiring new restaurant employees, including referrals, job boards, and career sites.
In order to attract and retain staff, you need to make your restaurant a great place to work. Here are some resources from Toast to help you attract, hire, and retain restaurant employees:
- How to Be a Boss at Restaurant Recruiting
- How to Train New Restaurant Employees
- How to Reduce Restaurant Employee Turnover
Equipment and Technology
Restaurant guests are expecting technology in their dining experience, and according to Toast’s Restaurant Technology Report, 95% of restaurateurs agree that technology improves business efficiency.
As we've learned from the pandemic, restaurant guests don't always want to – and won't always be able to – eat at your restaurant. That's why you need to invest in restaurant equipment and technology that facilitates an off-premise dining experience thats equally as enjoyable as your in-house dining experience. New restaurants should strongly consider investing in the following:
- A cloud-based restaurant point of sale system
- An online-ordering system for restaurants
- Restaurant reporting and analytics
- Simple scheduling and team communication
- A restaurant payroll solution
- Contactless payment options and order-and-pay at the table technology that makes guests feel comfortable
With this restaurant technology powering your business, your ability to grow revenue and establish yourself as a successful restaurant brand will be much easier.
Timeline for Opening a Restaurant: Next Steps
Opening a restaurant is a huge undertaking with dozens of steps, overlapping requirements, and mountains of paperwork. Writing up a solid restaurant business plan and securing funding for your restaurant are some of the first things you’ll need to do so that you can afford all the building blocks of your business, including your licenses and permits.
As you approach opening day, you can also start to peruse your restaurant technology options and find what combination of products and systems make sense to help you set your operation up for success from day one.