(The Center Square) – High costs and strict regulations make Illinois one of the hardest states in which to open a restaurant.
A report by Restaurant Furniture that uses data sourced from the TaxFoundation.org, Tax-rates.org, Dol.gov and Cityfeet.com looks at what each state may cost an entrepreneur looking to run a restaurant there. The report breaks down each state’s total costs to open an eatery by looking at the rent of a commercial space and obtaining licenses. Illinois finished fourth highest behind California, New York and Colorado.
Nick Warren, head of Ecommerce at Restaurant Furniture, said prospective restaurant owners could avoid these states.
“Generally, the states listed in this top 10 present a mix of high living costs, competitive markets, and unique challenges contributing to the overall expense of establishing and maintaining a restaurant business. Prospective restaurant owners should carefully consider these factors and conduct thorough market research before venturing into the culinary landscape of these states,” Warren said.
Illinois had the highest state corporate tax rate out of the 10 most expensive states at 10%, with a 5% state sales tax rate. The study puts Illinois’ annual liquor license fee at $750 and annual food service permit at $450. The yearly rent per square foot in Illinois was at $28.42.
Overall, the Restaurant Furniture study gave Illinois a score of 40.15 out of 100. The minimum wage for the 10 most expensive state ranged from $12 to $15.74. Illinois’ was $13 an hour for the study. On Jan. 1, Illinois’ minimum wage increased to $14 an hour.
State Rep. La Shawn Ford, D-Chicago, explained why some may have a difficult time in Illinois.
“You have several layers of regulations that make it more difficult for people to open restaurants in the state of Illinois,” Ford told The Center Square. “As well as the costs of doing business as it relates to doing business and insurance.”
Ford said when speaking to prospective restaurant owners, many are financially burdened just by the costs involved in attempting to open a restaurant.
“You have so many different departments people have to deal with when trying to open,” Ford said. “There are different departments in different municipalities that have to approve your license. You have to get the builders to approve your license, and that costs a lot of money to bring it up to code.”
If restaurants and businesses thrive, so does the rest of the state, Ford said.
“Restaurants are valuable because they are good for tourism,” Ford said. “It is up to us as a state to relieve some of these regulations or have a system in place to help businesses matriculate through the process.”
