Opening a Restaurant in Kenya as a Foreign Investor

Kenya’s restaurant scene attracts a steady flow of foreign investors, often in partnership with a Kenyan friend or operator who knows the market. The food may be the easy part. Setting up the business correctly means making decisions in the right order: the vehicle, the shareholders, the board, the premises, the licences, the staff and the route for getting profits home. Get the order wrong and you can end up with a signed lease on premises you cannot license, or a partner holding more control than you intended. This guide walks through each stage from a foreign investor’s point of view.

Step 1: Choose the vehicle and the shareholding

Most foreign investors operate a Kenyan restaurant through a locally incorporated private limited company under the Companies Act, 2015. A Kenyan subsidiary is a separate legal person with limited liability, which keeps the foreign parent or individual investors insulated from restaurant-level debts and claims. Registering a branch of a foreign company is possible, but it is rarely used for consumer businesses. Our article on branch or subsidiary taxation explains the tax differences.

Decide early who will own what, and why. If a Kenyan partner is contributing premises, management or relationships, a genuine minority stake documented in a shareholder agreement is usually the cleanest answer. Avoid registering a local person as a shareholder purely to hold shares on your behalf: nominee arrangements must now be disclosed and carry real risks, as our article on nominee shareholders in Kenya explains. Our guide to shareholder agreements and articles of association covers how to lock in control, deadlock and exit terms.

Step 2: Plan the board and the foreign investor’s immigration status

The directors you appoint affect more than governance. If the restaurant will serve alcohol, the board’s residence status can affect the liquor licence. If foreign shareholders will work in the business, they need the right immigration status before they start. Investors usually look at the Class G permit, which is aimed at people investing in a business in Kenya. Foreign managers or chefs employed by the company need their own permits. Our articles on Class G investor permits and Class G and Class D work permits set out the requirements and the evidence immigration officers expect.

Step 3: Consider an investment certificate

The Investment Promotion Act, 2004 allows a foreign investor to apply to the Kenya Investment Authority for an investment certificate (section 3). The application is optional. A foreign investor qualifies where the amount to be invested is at least one hundred thousand United States dollars or its equivalent, and the investment is lawful and beneficial to Kenya (section 4). The certificate lists the licences the project needs, and the holder is entitled to have each of them issued on application within twelve months, subject to their conditions and fees (section 12). For a larger restaurant or a multi-outlet concept, this can smooth the licensing process. Our article on Kenya’s investment promotion framework explains what KenInvest can and cannot do for you.

Step 4: Secure premises you can actually license

Restaurants are usually run from leased premises. Before signing, confirm that the building is approved for restaurant use, that it can take a commercial kitchen with gas, extraction and grease handling, and that the landlord will sign whatever the county and licensing authorities need. Build key approvals into the lease as conditions, negotiate a rent-free fit-out period, and check who pays for structural changes. Our guide to commercial lease agreements in Kenya covers the main terms. If you are thinking of buying land rather than leasing, note the constitutional limits on land ownership by non-citizens, discussed in our article on non-citizen leasehold limits.

Step 5: Licences, staff and tax

A Nairobi restaurant needs a county business permit, public health approval, a liquor licence if it serves alcohol, and workplace registration and fire safety compliance. Under the Tourism Act, 2011, it also needs a Tourism Regulatory Authority licence (section 98 and the Ninth Schedule). Our guide to restaurant licensing in Nairobi sets out each permit and the order to apply in.

Staff employed for three months or more must have a written contract of service under section 9 of the Employment Act, 2007. Hospitality businesses commonly rely on casual and shift workers, and getting their status right matters, because under section 37 a casual employee who works continuously for a month or more is deemed to be on a contract with monthly wages, with the notice and other protections that follow. Register the company with KRA and the statutory schemes for staff deductions before the first payroll, and set up electronic tax invoicing before you open.

Step 6: Plan how money comes in and goes out

Decide how the investment will be funded: share capital, shareholder loans, or a mix. Our article on share capital versus shareholder loans compares the options. The choice affects control, tax and how easily you can take money out later. Profits are normally returned to foreign shareholders as dividends, which attract withholding tax. Our article on dividend repatriation and withholding tax explains how this works and where tax treaties can help.

Frequently asked questions

This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.