What permits do I need to cancel when closing a restaurant in Houston?

You need to cancel your food service permit with the Houston Health Department, surrender your TABC license to the Texas Alcoholic Beverage Commission, file a final sales tax return with the Texas Comptroller, and close your business registration with the Texas Secretary of State. If you have a Certificate of Occupancy for your space, notify the City of Houston Building and Standards Commission.

How does Houston's commercial real estate market affect restaurant lease negotiations?

Houston has one of the most landlord-favorable commercial lease markets in Texas. The city's lack of zoning and high restaurant density means landlords often have replacement tenants lined up. However, the 2020-2024 restaurant closure wave created more vacancy, giving tenants more negotiating leverage than in prior cycles. A lease buyout in Houston typically costs 3 to 6 months of rent, compared to 6 to 12 months in tighter markets like Austin.

Does Texas have a WARN Act that applies to Houston restaurant closures?

Texas does not have a state WARN Act. The federal WARN Act applies to employers with 100 or more full-time employees, which covers very few independent restaurants. However, if you operate a multi-unit restaurant group in Houston with 100 or more employees across all locations, you may be required to provide 60 days advance notice of a mass layoff or plant closing.

How to Close a Restaurant in Houston, TX

How to close a restaurant in Houston follows Texas state law, but Houston has its own city-level procedures -- including Harris County health department requirements, a distinct commercial real estate market, and TABC administration through a Houston regional office. Houston is also the largest city in Texas without zoning laws, which affects how commercial leases are structured and how landlords respond to closure requests. Here is what Houston restaurant owners need to know.

Final Paycheck Requirements in Texas

Texas law requires that employees who are discharged receive their final paycheck within six days of termination. Employees who resign must receive their final paycheck on the next regular payday. This applies to all Houston restaurants regardless of size.

Texas does not require employers to pay out accrued vacation or PTO upon termination unless the employer's written policy promises it. The Texas Workforce Commission (twc.texas.gov) enforces wage payment laws.

TABC License Surrender in Houston

Texas liquor licenses are administered by the Texas Alcoholic Beverage Commission (tabc.texas.gov). Houston restaurants surrender their license through the TABC's online portal or by contacting the Houston regional TABC office.

TABC licenses are not transferable in most circumstances. If you are selling the business, the buyer must apply for a new license. A change of ownership within the same entity structure requires prior TABC approval.

Houston has a high concentration of TABC-licensed establishments, and the regional office processes a significant volume of closures. Starting the surrender process early -- at least 30 days before your planned closure date -- avoids complications.

Sales Tax Final Return in Texas

Texas requires businesses to file a final sales tax return with the Texas Comptroller (comptroller.texas.gov) when closing. Houston's combined state and local sales tax rate is 8.25 percent (6.25 percent state plus 2 percent city). You must cancel your Texas sales tax permit through the Comptroller's eSystems portal and remit all collected taxes before closing.

Houston Commercial Lease Law

Texas commercial leases have no statutory duty to mitigate, which means Houston landlords can pursue the full remaining rent even if they find a new tenant. In practice, Houston's commercial real estate market is large and active enough that most landlords prefer to negotiate rather than litigate.

Houston's lack of zoning laws means commercial properties are often mixed-use, and landlords may have more flexibility in re-tenanting a space than landlords in zoned markets. This can work in your favor during a lease buyout negotiation -- a landlord who can easily convert your space to a different use has less incentive to hold you to the full remaining term.

If you personally guaranteed your Houston lease, the landlord can pursue you individually for the full remaining balance. The Restaurant Landlord Negotiation guide covers the specific conversation to have before you default.

Texas WARN Act

Texas does not have a state-level WARN Act. The federal WARN Act applies to employers with 100 or more full-time employees. Most independent Houston restaurants do not meet this threshold.

LLC Dissolution in Texas

If you operated your restaurant as a Texas LLC, file a Certificate of Termination with the Texas Secretary of State (sos.state.tx.us) after obtaining tax clearance from the Texas Comptroller. The filing fee is $40. The SOSDirect portal handles online filings.

Houston-Specific Closing Checklist

Notify employees and pay final wages per Texas six-day requirement for discharged employees
File final Texas sales tax return and cancel sales tax permit with the Texas Comptroller
Surrender TABC license through the online portal or Houston regional office
Notify Harris County Public Health of closure and return health permits
File Certificate of Termination with Texas Secretary of State after tax clearance
Cancel City of Houston business licenses and permits
Close business bank accounts after all checks have cleared
Notify vendors and settle outstanding invoices

The Personal Guarantee Question

Houston's commercial lease market is competitive, but Texas law still gives landlords significant leverage. If you have a personal guarantee on your lease and more than 12 months remaining, getting a professional assessment of your exit options before you act is worth the cost. The Full Exit Analysis covers lease exposure, personal guarantee risk, and negotiation strategy in detail.