Can a Foreigner Open a Restaurant in the Philippines?

Opening a restaurant is one of the most popular business ideas among foreigners moving to the Philippines. The good news is that Philippine law does allow 100% foreign ownership of a restaurant — but only if you meet certain capital thresholds. Here's what you need to know before you sign a lease.

Is a Restaurant Considered "Retail Trade"?

This is the critical threshold question. Under the original Retail Trade Liberalization Act (Republic Act No. 8762), restaurants were listed, alongside sari-sari stores and rolling carts, among the retail activities that qualified foreign retailers could not engage in outside their accredited stores (Section 10). The same law defines retail trade as habitually selling merchandise, commodities, or goods for consumption directly to the general public, and its only restaurant exemption covers restaurants run by a hotel owner or innkeeper as an incidental part of the hotel business (Section 3(1)(c)). A stand-alone restaurant therefore risks being treated as retail trade.

This distinction matters because it determines which capital requirements apply to you as a foreign owner — and the Foreign Investments Act's capital thresholds apply only "except as otherwise provided" under the retail trade law (RA 7042, Section 8, as amended by RA 11647). Confirm the classification of your specific concept before relying on the lower threshold below.

Two Paths to 100% Foreign Ownership

Path 1: Under the Foreign Investments Act (USD 200,000)

The Foreign Investments Act (RA 7042, as amended by RA 11647) allows 100% foreign ownership of a domestic market enterprise that is not otherwise restricted provided you invest a minimum paid-in capital of USD 200,000.

This threshold drops to USD 100,000 for micro and small enterprises that meet any of these conditions:

• Involves advanced technology as certified by the Department of Science and Technology (DOST), or
• Is endorsed as a startup or startup enabler under the Innovative Startup Act (RA 11337), or
• Has a majority-Filipino direct workforce of at least 15 Filipino employees.

This route is available only if your restaurant is not treated as retail trade (see above).

Path 2: Under the Retail Trade Liberalization Act (PHP 25 Million)

If your restaurant is classified as a retail trade enterprise — the more cautious reading for a stand-alone restaurant serving the public — the amended Retail Trade Liberalization Act (RA 11595) sets the minimum paid-up capital at PHP 25 million (roughly USD 440,000), and, if you operate more than one physical store, at least PHP 10 million invested per store. Below PHP 25 million, the 13th Foreign Investment Negative List caps foreign equity in retail trade at 40%.

What If You Have Less Than USD 200,000?

Under List B of the Foreign Investment Negative List (FINL), domestic market enterprises with paid-in capital below USD 200,000 are reserved for Filipino nationals. If your budget falls below this threshold, you have two options:

• 60-40 Joint Venture: Form a corporation where at least 60% of equity is owned by a Filipino partner. You retain up to 40% foreign ownership.
• Filipino Spouse: The Foreign Investments Act has no spouse exception. A Filipino spouse may own the business as a Philippine national, but the foreign spouse's own equity and role remain subject to the same limits and to the Anti-Dummy Law.

Registration Steps for a Foreign-Owned Restaurant

1. SEC Registration — Register your corporation (or partnership) with the Securities and Exchange Commission. Include "food service" or "restaurant operations" in your primary purpose.
2. BSP Inward Remittance — Remit your capital investment through the Philippine banking system and obtain a Certificate of Inward Remittance from the Bangko Sentral ng Pilipinas.
3. Barangay Clearance — Secure clearance from the barangay where your restaurant will operate.
4. Mayor's Permit / Business Permit — Apply at the city or municipal hall for a business permit and pay the corresponding local taxes.
5. BIR Registration — Register with the Bureau of Internal Revenue for your TIN, invoices (which replaced official receipts under the Ease of Paying Taxes Act, RA 11976), and books of accounts.
6. FDA License to Operate — Needed only if you also manufacture, import, or distribute processed or prepackaged food; obtain a License to Operate (LTO) from the Food and Drug Administration for those activities. Food safety in restaurants themselves is the responsibility of the LGU (Food Safety Act, RA 10611, Section 15(c)).
7. Fire Safety Inspection Certificate — Obtain clearance from the Bureau of Fire Protection.
8. Sanitary Permit — Issued by the local health office under the Code on Sanitation (PD 856) after inspection of your kitchen and premises.

The Bottom Line

A foreigner can own a restaurant in the Philippines outright. The real question is whether your investment meets the minimum capital requirements — PHP 25 million if the restaurant is treated as retail trade, or USD 200,000 if it is not. If you fall short, a joint venture with a Filipino partner is the standard alternative.

Either way, getting the corporate structure right from the start saves you from costly restructuring down the line. If you're planning to open a restaurant in the Philippines, talk to us before you commit capital.