How to Start a Restaurant in Delaware: Restaurant Retailer License at $75, 0.6472% Gross Receipts Tax and the DPH Food Permit

The 2023 Census count is 899 full-service and 846 limited-service restaurants in Delaware, from fine dining in Wilmington to casual beach establishments in Rehoboth and Dewey Beach. If you want to open a restaurant in Delaware, you'll need to navigate a clear set of state and local requirements, including a $75 annual restaurant retailer license from the Division of Revenue, state food safety approval from the Department of Health and Social Services (DHSS), and gross receipts tax reporting at 0.6472% of receipts above the monthly deduction.

This guide walks you through exactly what you need to do, what it costs, what the timeline looks like, and what mistakes to avoid. This is informational content only, not legal or tax advice; consult a Delaware attorney and CPA for your specific situation.

Materials and Setup Requirements You'll Need Before You Start

• Business formation documents (if forming an LLC or corporation).
• Proof of workers' compensation insurance (if you have employees).
• Proposed floor plan and layout for your restaurant space, showing food prep areas, storage, and restrooms.
• Sanitary facilities plan (approved by DHSS before construction or alteration).
• Menu and food items you plan to serve (needed for permit review).
• Lease or proof of building ownership or control.
• Personal identification and any prior business or food safety licenses.
• Estimated opening date and operating hours.
• Municipal zoning or conditional use approval (if required by your city or county).

Step 1: Form Your Business Entity

Before you can apply for a restaurant license, you need to choose a business structure. Delaware allows you to operate as a sole proprietor (using a trade name or DBA), an LLC, or a corporation. If you register as sole proprietor or DBA, you file a trade name registration with the Division of Revenue through the Delaware One Stop portal; the one-time fee is $25, registrations do not expire or renew, and you need an active business license first. If you form an LLC, the filing fee is $110, and your LLC owes a flat annual tax due June 1 each year ($400 under the 2026 change, with the first $400 payment due June 1, 2027; check corp.delaware.gov for the current amount and date). If you form a corporation, the filing fee is $109, and you owe an annual report ($50) and franchise tax by March 1 each year.

To form an entity, use the eCorp Document Upload Service at https://icis.corp.delaware.gov/ecorp2. Most restaurant owners choose an LLC for liability protection and simpler tax treatment, but consult your CPA on the best structure for your situation.

Step 2: Secure Your Restaurant Location and Verify Zoning

Identify the building or space where your restaurant will operate. Verify that the location is zoned to permit a restaurant and that the landlord (if you're leasing) permits food service. Some Delaware municipalities require conditional use permits or special approval for restaurants in certain zones. Contact your city or county planning office to confirm before signing a lease.

Delaware has three counties (New Castle, Kent, and Sussex) and 57 incorporated municipalities. Zoning rules and costs vary; check with your city or county planning department for local requirements and any municipal licensing fees. Beach towns add their own licenses on top of state requirements (for example, Dewey Beach restaurants paid $359 plus $10 per Fire Marshal capacity seat for the 2025-26 license year); check with each town for its current fees.

Step 3: Get DHSS Pre-Approval of Your Sanitary Facilities Plan

Before you build, alter, or equip your restaurant kitchen and food prep areas, you must have your sanitary facilities plan approved by the Delaware Department of Health and Social Services (DHSS), Division of Public Health, Office of Food Protection. No public eating place can operate without DHSS approval of its sanitary facilities and a permit. The Office of Food Protection reviews plans for compliance with the Delaware Food Code (16 DE Admin. Code 4458) and 16 Del. C. 134.

Submit your floor plan and kitchen layout to the Office of Food Protection. The Delaware Code (16 Del. C. 122) lists a plan review fee based on floor area; check with the Office of Food Protection for the amount on your invoice. The Code lists:

• Up to 1,000 square feet: $50
• 1,001 to 5,000 square feet: $100
• 5,001 to 10,000 square feet: $150
• 10,001 to 15,000 square feet: $200
• Over 15,000 square feet: $250

This is a critical step. The state will not issue a public eating place permit until the kitchen and facilities meet code. The pre-permit inspection itself has no fee, but if the Office of Food Protection finds deficiencies during inspection, reinspection fees apply: $50 for a second inspection, $100 for a third, and $150 for each subsequent inspection (unless your operation is a church, school, government agency, or nonprofit, which are exempt from reinspection fees). Once your facilities pass inspection, you can proceed to the permit.

Step 4: Obtain Your Public Eating Place Permit from DHSS

Once your sanitary facilities are approved and pass inspection, you can apply for the public eating place permit from the DHSS Office of Food Protection. The Delaware Code lists a $100 public eating place permit fee; check with the Office of Food Protection for the amount on your invoice. You cannot legally operate a restaurant without this permit; operating without it brings an immediate closure order.

The permit confirms that your facilities and food handling procedures comply with the Delaware Food Code. Contact the Office of Food Protection to confirm current procedures and the exact fee on your invoice, as fees can change.

Step 5: Apply for Your Restaurant Retailer License with the Division of Revenue

Delaware has no state sales tax. Instead, businesses owe a gross receipts tax based on their license category. Restaurants are classified as "restaurant retailers" under 30 Del. C. 2906. The annual restaurant retailer license fee is $75 for your first location; each additional location costs an extra $25. Restaurants do not pay the $15 retail crime fee that applies to general retailers.

Apply for your restaurant retailer license through the Delaware One Stop portal at https://onestop.delaware.gov. You'll need your business entity information and your federal Employer Identification Number (EIN). New businesses file gross receipts tax returns quarterly; if your receipts in the lookback period exceed $1,500,000, you file monthly instead.

Step 6: Understand Your Gross Receipts Tax Obligation

As a restaurant retailer in Delaware, you owe gross receipts tax at a rate of 0.6472% of your gross receipts, calculated after a $100,000 monthly deduction (or $300,000 quarterly if your lookback receipts are $1,500,000 or less). This is not income tax; it applies to your total receipts from food and beverage sales, regardless of profit. For example, if you take in $50,000 in a month, no tax is due (you're below the $100,000 threshold). If you take in $150,000, the tax is 0.6472% of the amount over $100,000, or roughly $324 that month.

File gross receipts tax returns quarterly (or monthly, once you cross the threshold). File through Delaware One Stop or with the Division of Revenue at https://revenue.delaware.gov/. Failure to file or pay on time can result in penalties and interest. Keep detailed records of all sales and deductions.

Step 7: Obtain Alcoholic Beverage Permits (If You Serve Alcohol)

If you plan to serve beer, wine, or spirits, you need an Alcoholic Beverage Control (ABC) license from the Office of the Alcoholic Beverage Control Commissioner. The cost and type depend on what you serve:

• Restaurant all liquor license: $1,000 biennial
• Restaurant beer and wine license: $500 biennial
• Annual overservice fee: $100 (applies to both types)

Ask the Office of the Alcoholic Beverage Control Commissioner about current application steps and timing. Some municipalities, especially beach towns, charge additional local alcohol licenses on top of the state license; confirm this with your city before applying.

Step 8: Secure Insurance and Complete Staffing Compliance

You must carry workers' compensation insurance if you have employees. Delaware minimum wage has been $15.00 per hour since January 1, 2025. The tipped cash wage floor is $2.23 per hour, so ensure your wage practices comply. If you're hiring staff, use an employment lawyer or HR consultant to draft compliant employment agreements, worker classifications, and tax withholding procedures.

Liability insurance is not required by state law but is essential and typically required by your landlord. General liability insurance protects you if a customer is injured or becomes ill at your restaurant.

Step 9: Handle Any Local or Municipal Requirements

Your city or county may require additional licenses or approvals beyond the state restaurant retailer license. Common additional requirements include:

• Building permits and inspections (fire, electrical, plumbing, HVAC).
• Municipal business license (fees and rules vary by town).
• Occupancy or fire marshal approval based on seating capacity.
• Signage or outdoor seating permits.
• Stormwater or wastewater discharge permits (if your municipality requires them).
• Parking or traffic impact study (if required by local ordinance).

Contact your city or county planning, building, and zoning departments early.

Tips to Avoid Common Mistakes

• Don't skip the DHSS plan review. Many owners try to start construction without state approval and end up tearing out equipment that doesn't meet code. Get pre-approval before you build or buy anything.
• Track your gross receipts carefully. Delaware's 0.6472% tax is due every quarter (or month). Underreporting receipts or missing deductions can trigger audits and penalties. Use accounting software and consult a bookkeeper familiar with Delaware restaurants.
• Understand the difference between gross receipts tax and income tax. Gross receipts tax is separate from and in addition to federal and Delaware income taxes. Don't confuse the two.
• Get ABC approval early if you serve alcohol. Approval timing is set by the Office of the Alcoholic Beverage Control Commissioner, so ask about current timing and apply well before your target opening date.
• Check local licensing separately. State licenses do not cover municipal requirements. A restaurant in Wilmington, Dover, Rehoboth, or a beach town may face different and sometimes higher local fees and approval steps. Call ahead.
• Don't hire staff before confirming wage and employment law compliance. Delaware minimum wage is $15/hour, and tipped employees cannot be paid less than $2.23/hour cash. Misclassifying employees or underpaying can bring labor board complaints and back-wage liability.
• Renew your licenses on time. Your restaurant retailer license and ABC license (if applicable) have specific renewal dates. Mark them on your calendar or use accounting software to remind you. Operating on an expired license is illegal.

Timeline and Expected Results

The time from initial planning to opening day depends on:

• How quickly you secure a location and financing.
• Whether your sanitary facilities plan passes inspection on the first review (or requires reinspection).
• The complexity of your local municipal approvals.
• Availability of contractors, equipment, and suppliers.

A typical order of steps looks like this:

• First: Form business entity, secure location, verify zoning.
• Next: Submit sanitary facilities plan to DHSS, begin construction planning.
• Then: DHSS reviews plan, you address any deficiencies, pass inspection.
• After that: Complete construction, obtain public eating place permit and restaurant retailer license.
• Finally: Hire and train staff, conduct soft opening, open to public.

If your location requires local approval or if DHSS inspection finds major issues, expect the timeline to run longer.

Key Takeaways

Opening a restaurant in Delaware requires compliance with state licensing (restaurant retailer license, $75 annually), food safety (DHSS public eating place permit and plan review fees; confirm the amounts with the Office of Food Protection), and gross receipts tax reporting (0.6472% of receipts over $100,000 monthly). If you serve alcohol, add ABC license costs ($500 to $1,000 biennial, plus $100 annual overservice fee). Most locations also face municipal zoning review, building permits, and local licensing. Budget carefully, and verify all local requirements before signing a lease.

Consult a Delaware business attorney and CPA before opening to ensure your business structure, tax setup, employment practices, and compliance strategy are sound. The Office of Food Protection and the Division of Revenue at https://revenue.delaware.gov/ and the Delaware Small Business Development Center at https://delawaresbdc.org/ are good resources as you move forward.

Disclaimer

This article is informational only and does not constitute legal, tax, or business advice. Restaurant licensing, food safety regulations, and business formation requirements vary by location and change periodically. Consult a qualified Delaware attorney for legal advice and a CPA for tax planning. Verify all fees, deadlines, and requirements with the relevant state and local agencies before relying on them for your business decisions.