Opening a restaurant is hard in and of itself, but doing so in California is especially challenging, according to new research.
A recent study by Restaurant Furniture, which, as its name implies, is an online marketplace that manufactures and sells furniture to restaurants, analyzed the various costs that an entrepreneur would incur in one year to run a restaurant, including rent, licenses and tax rates, to calculate which state was the most expensive to open up shop.
The data was then turned into scores from one to ten, with the highest scores meaning better results. Thus, the lower the total score out of 100, the more expensive it would be to open and maintain a restaurant in that state, researchers explained.
In first place is California due to “a combination of factors,” the study found, including high rent and food service permit costs, as well as high corporate tax rates.
Finishing in a close second is New York; Empire State entrepreneurs pay even more rent than the average California restauranteur and have to fork over $4,352 per year for a liquor license, the second-most in the nation.
The full list of most expensive states to open a restaurant can be viewed in the table below:
| Rank | State | Food service permit cost | Liquor license cost | State sales tax rate | State corp. tax rate | Minimum wage | Rent per sq. foot per year | Score out of 100 |
| 1. | California | $809/year | N/A | 3% | 9% | $16/hr | $45.74 | 28.04 |
| 2. | New York | $280/year | $4,352/year | 5% | 7% | $15/hr* | $69.60 | 28.39 |
| 3. | Colorado | $385/year | $500/year | 8% | 5% | $14.42/hr | $25.95 | 40.02 |
| 4. | Illinois | $450/year | $750/year | 5% | 10% | $14/hr | $28.42 | 40.15 |
| 5. | Arizona | $585/year | $2,000/year | 6% | 7% | $14.35/hr | $24.70 | 40.44 |
| 6. | Alaska | $400/year | $600/year | 8% | 9% | $11.73/hr | $23.28 | 41.88 |
| 7. | New Jersey | $100/year | $1,375/year | 3% | 9% | $15.13/hr* | $25.75 | 45.14 |
| 8. | New Mexico | N/A | $5,525/year | 4% | 8% | $12/hr | $21.59 | 46.66 |
| 9. | Hawaii | $300/year | $300/year | 1% | 6% | $14/hr | $66.72 | 50.05 |
| 10. | Washington | $632/year | $1,600/year | 4% | 0% | $16.28/hr | $25.32 | 52.23 |
NOTE: Nine counties in New York have a minimum wage of $16/hour and the minimum wage for seasonal and small businesses with six or less employees in New Jersey is $13.73/hour
“Generally, the states listed in this top ten present a mix of high living costs, competitive markets and unique challenges contributing to the overall expense of establishing and maintaining a restaurant business,” researchers said.
California and New York are the most difficult for entrepreneurs due to them being two of the most populous and “economically active” states in America, according to Nick Warren, Restaurant Furniture’s Head of E-Commerce.