Buying a Restaurant or Business in Los Cabos: The Foreigner's Guide

At least once a month, a buyer sits across from me and says: "I had the best meal of my life last night and the owner told me he is thinking about selling. Can I buy a restaurant in Cabo?" The answer is yes — foreigners can own businesses in Mexico. But the path from tourist dining at sunset to operator sweating payroll on a Wednesday in August is longer and harder than most people imagine.

The Legal Framework: How Foreigners Own Businesses

Mexico's Foreign Investment Law (Ley de Inversión Extranjera) allows foreigners to own 100% of most business types. Restaurants, bars, retail, tourism services, real estate services, and most professional services are unrestricted. A few sectors — broadcasting, gasoline retail, certain agricultural activities — require majority Mexican ownership, but food and hospitality are wide open.

The standard vehicle for foreign business ownership is the S.A. de C.V. (Sociedad Anónima de Capital Variable), Mexico's equivalent of a corporation with variable capital. You need at minimum two shareholders, a board of directors, and a registered Mexican address. The S.A. de C.V. is a separate legal entity that owns the business, its assets, and its contracts. For details on Mexican corporate structures, see our Mexican corporation guide.

Setting up an S.A. de C.V. through a Mexican attorney and notario takes 4–8 weeks and costs $2,000–$5,000 for legal fees, notario formalization, registration with the Registro Público de la Propiedad y del Comercio (public registry), and SAT registration for tax obligations. You will also need:

• RFC (tax ID): Both the corporation and you personally need RFC registration with SAT
• Mexican bank account: The corporation needs a Mexican business bank account for payroll, tax payments, and vendor payments
• Registered office: A physical Mexican address — many attorneys offer registered agent services

Visa Requirements: You Cannot Run a Business on a Tourist Visa

This is the point where many dreamers hit a wall. Mexico's tourist visa (FMM) explicitly prohibits remunerated activities, which includes managing a business you own. To legally operate a business, you need:

Temporary Resident Visa with Work Permit (Residente Temporal con permiso de trabajo):

• Valid for 1–4 years (renewable)
• Requires proof of income: approximately $2,600 USD/month or $43,000 USD in savings/investments (thresholds are set by INM and adjusted periodically)
• Application starts at the Mexican consulate in your country of residence, then completes at INM in Mexico
• Processing time: 4–8 weeks from initial application to card in hand

Alternatively, you can be a shareholder in the S.A. de C.V. without a work permit — receiving dividends but not drawing a salary or managing daily operations. In practice, this means hiring a Mexican general manager to run the day-to-day while you serve as an investor/board member. This structure works for passive investors but not for anyone who wants to actually run the kitchen, manage the staff, or greet guests.

For details on visa options, see our Mexico residency visa guide.

The Permit Stack: What You Actually Need

Opening or operating a restaurant in Los Cabos requires a stack of permits from multiple government agencies. Budget 2–4 months and $3,000–$10,000 for the full process:

• Licencia de Uso de Suelo: Zoning/land use permit from the municipal government confirming the property is zoned for commercial/restaurant use
• Licencia Municipal de Funcionamiento: The municipal operating license — renewed annually
• COFEPRIS health permit: Federal health and sanitation certification for food handling establishments. Requires kitchen inspections, food safety protocols, and staff health certificates (tarjeta de salud)
• Licencia de Alcoholes: State alcohol license, issued by Baja California Sur. This is often the most difficult and expensive permit — alcohol licenses are limited in number and can cost $5,000–$15,000 depending on availability and type (beer/wine vs. full spirits)
• Protección Civil: Safety and fire inspection certification
• IMSS registration: Social security enrollment for your employees — mandatory from day one
• Aviso de funcionamiento (COFEPRIS): Operating notice filed with the federal health authority

The critical hiring: a Mexican attorney who has walked this exact permit path in Los Cabos municipality. The requirements differ from state to state and even between municipalities within BCS. Do not use a generalist attorney from Mexico City.

What It Costs to Buy an Existing Business

Buying an existing restaurant is almost always smarter than building from scratch. You get an established location, equipment, permits (which can be transferred), staff, and hopefully, a customer base. Here are the price ranges for Los Cabos in 2026:

• Small taquería or casual eatery: $30,000–$80,000 for the business (lease assignment, equipment, inventory, goodwill). Monthly rent: $1,000–$3,000.
• Mid-range restaurant with liquor license: $100,000–$300,000. This is the sweet spot — established foot traffic, functioning kitchen, transferable permits, trained staff. Monthly rent: $3,000–$8,000.
• Upscale restaurant in prime location (Marina, Medano, Corridor): $300,000–$1,000,000+. Premium locations with ocean views, strong brand recognition, and high-season revenue of $50,000–$200,000/month. Monthly rent: $8,000–$25,000+.

Important: these are business prices only. If the real estate is included in the sale (the owner owns the building), add $500K–$5M+ depending on location. Most restaurant transactions in Cabo are leasehold — you are buying the business and assuming the lease, not purchasing the building.

The Seasonality Trap: Why 30%+ Fail

This is the section most business buyers do not want to read, so I will be direct.

Los Cabos tourism is heavily seasonal. November through April is peak season — hotels run 80–95% occupancy, restaurants fill every night, and revenue is strong. May through October is low season — hotel occupancy drops to 40–60%, restaurant foot traffic falls 40–60%, and many establishments operate at a loss.

The math that works on a December napkin — "if we do $100K/month in peak, we'll be fine" — does not account for the reality that you will do $30K–$50K/month for six months of the year while still paying rent, staff, utilities, insurance, and permits. Mexican labor law makes it extremely difficult and expensive to lay off staff during slow months (indemnización — severance — typically equals 3 months' salary plus 20 days per year of service). You cannot simply "close for summer" and reopen — your lease runs, your permits require continuous compliance, and your best staff will find other jobs.

The restaurants that survive the seasonal cycle share these characteristics:

• Enough working capital to cover 12–18 months of operating expenses including a full low season at breakeven or loss
• A bilingual owner or general manager on-site full time — not managing from Phoenix
• A concept that attracts both tourists (peak) and local residents/expats (year-round)
• Tight cost controls and realistic financial projections that model the 40–60% revenue drop from May to October

Mexican Labor Law: What Every Business Owner Must Know

This is the area where most foreign business owners make their most expensive mistakes. Mexican labor law is employee-friendly — dramatically more so than US employment law — and the consequences of getting it wrong are severe.

• IMSS (social security): Mandatory enrollment for all employees from day one. The employer contribution runs approximately 25–30% on top of the employee's gross salary. This is not optional and penalties for non-compliance include criminal liability.
• Aguinaldo (Christmas bonus): Mandatory annual payment of at least 15 days' salary to every employee, paid before December 20. No exceptions.
• Vacaciones (vacation days): Mexico's 2023 labor reform expanded minimum vacation from 6 to 12 days in the first year, increasing by 2 days per year. Plus a 25% vacation premium (prima vacacional) on top of vacation pay.
• PTU (profit sharing): 10% of the company's taxable profit must be distributed to employees annually. This can be a significant hit in profitable years.
• Severance: Firing an employee without causa justificada (legally justified cause — documented, procedurally correct) triggers indemnización of 3 months' salary + 20 days per year of service + accrued benefits. A manager earning $2,000/month who has worked for you for 3 years could cost $12,000+ to terminate.

For a deeper dive on hiring and compliance, see our hiring staff guide, which covers IMSS, payroll structure, and compliance requirements that apply equally to businesses and household employees.

A Smarter Approach: Real Estate + Business Partnership

Many of the most successful foreign-owned restaurants in Los Cabos follow a hybrid model: the foreigner owns the real estate (through a fideicomiso) and partners with a Mexican operator for the business. This structure offers several advantages:

• The real estate appreciates as a standalone asset regardless of business performance
• The Mexican partner navigates labor law, permits, and vendor relationships natively
• If the business fails, the real estate retains its value and can be leased to the next operator
• The visa requirements are simpler — you can be a passive investor/landlord without a work permit

I have seen this model work exceptionally well in San Jose del Cabo's Art District, downtown Cabo near the Marina, and Todos Santos. The foreign owner provides the capital and the vision; the Mexican partner provides the operational expertise and cultural fluency. The profits split 50/50 or 60/40 depending on capital contribution.

If you are seriously evaluating a business purchase in Los Cabos, my strongest recommendation is: live here for 6–12 months first. Rent a property, eat at every restaurant, talk to other foreign business owners, learn the rhythms of the market, and build relationships with the people who will become your staff, suppliers, and regulars. The owners who succeed are the ones who understood the community before they signed the papers.