Leasing to a Ghost Kitchen: Zoning, Food-Premises Inspection and the Lease Terms to Settle Before a Delivery-Only Tenant Moves In

Ontario’s health law does not care whether anyone eats on site. Toronto’s zoning and licensing rules care about little else. A landlord has to read both before handing over the keys.

I’m Arthur Zhao, a real estate Broker in Toronto. Here is the part of a delivery-only kitchen lease that surprises landlords: under Ontario’s health law, it makes no difference whether the unit has a single table. The Health Protection and Promotion Act treats any place where food is prepared, stored, handled or sold as a food premise, dining room or not.

Toronto’s zoning by-law and its business-licensing chapter work the other way round. Both sort food businesses by where the customer eats: seated on the premises, or somewhere else. So the same kitchen is fully regulated as a food premise under provincial law, while its zoning category and its licence class turn on the one thing it does not offer. This article walks through those rules in that order, then sets out what a landlord can check before signing and what has to be handled in the lease.

Health law first: a kitchen with no seats is still a food premise

Section 1 of the HPPA defines a food premise as premises where food or milk is “manufactured, processed, prepared, stored, handled, displayed, distributed, transported, sold or offered for sale.” Nothing in that list depends on seating or on who picks the food up. A delivery-only kitchen meets the definition the moment it starts preparing food.

Two duties follow, and both sit with the operator:

• s.16(1): every person who operates a food premise must maintain and operate it in accordance with the regulations.
• s.16(2): every person who intends to commence operating a food premise must give notice to the medical officer of health of the health unit where it will be located.

O. Reg. 493/17, s.5 says what that notice contains: the person’s name, contact information and the location of the food premise.

The regulation then reaches into the physical space, which is where a landlord’s interest begins. Section 7 of O. Reg. 493/17 requires, among other things, floors that are tight, smooth and non-absorbent in food-preparation rooms, hot and cold running water under pressure where food is prepared or utensils are cleaned, an adequate number of handwashing stations, and refrigerated space adequate for potentially hazardous food. It also prohibits using any food-preparation room for sleeping. Those are fit-out questions, and fit-out is a lease question.

Chapter 545: dine-in and take-out are separate licence categories

Toronto’s Municipal Code Chapter 545 lists the businesses that must take out a licence from the Municipal Licensing and Standards Division. Two entries matter here:

• (72) every person who operates an eating or drinking establishment, defined as premises where food or beverages are prepared or served to patrons for immediate consumption on-site, which may include an incidental take-out service;
• (74) every person who operates a take-out or retail food establishment, defined as premises where food or beverages are prepared and offered to patrons exclusively for consumption off-site (or that offer pre-packaged items exclusively for off-site consumption, unless that service is insignificant to the business).

A kitchen that sells only for pickup and delivery reads naturally under (74). Note the wording of both entries: the licence attaches to the person who operates the establishment, which in a lease is the tenant.

The take-out article of the chapter adds two provisions worth knowing. Under §545-554, the Division may send a take-out establishment’s licence application to the Medical Officer of Health and consider the response in deciding whether to issue, refuse or attach conditions to the licence. Under §545-555, an operator that prepares or serves food must, on request by any person, immediately produce the food safety inspection reports tied to its current inspection notice. As a landlord, you are “any person.” Chapter 545 sets licence fees separately; this article does not quote them.

Zoning: what By-law 569-2013 actually says

Zoning By-law 569-2013 draws the same line as the licensing chapter, but more sharply. According to the City of Toronto’s Chapter 800 definitions (Office Consolidation, 2026):

• (225) Eating Establishment means premises where food or beverages are prepared and offered for sale to patrons for immediate consumption on the premises while they are seated, and which may include an incidental take-out service.
• (845) Take-out Eating Establishment means premises where food or beverages are prepared and offered for sale to patrons for consumption off the premises.

The by-law has no separate definition for a delivery-only or “ghost” kitchen. Reading the text, a kitchen with no seating that sells only for consumption elsewhere sits closer to (845) than to (225), but that is a reading of the definitions, not a ruling the by-law spells out. Which zones permit which of these uses, and whether a specific unit has a site-specific exception, depends on the property. The place to confirm it is the City’s zoning review staff, with a description of the actual operation.

The manufacturing question

Some delivery kitchens look less like a restaurant and more like a production line: several brands cooked from one kitchen, food portioned and packed in volume. That raises a third definition. (460) Manufacturing Use in By-law 569-2013 means the use of premises for “fabricating, processing, assembling, packaging, producing or making goods or commodities,” including their repair.

The definition does not mention food, and it does not say where a busy take-out kitchen ends and food processing begins. If a tenant’s operation is mainly packaging prepared food for resale through other outlets, the manufacturing definition may come into the conversation; if it is cooking orders as they come in for customers to eat elsewhere, the take-out definition is the more natural fit. The by-law does not settle that line directly, so it turns on the facts of the operation. If the tenant’s business plan has any wholesale or multi-site supply element, raise it with the City’s zoning review staff before signing, not after.

HPPA s.15: when a health-unit bill can reach the owner

The operator carries the licensing and food-premise duties. Cost recovery for a health hazard is drafted differently. Under HPPA s.15(1), the expenses a board of health incurs in respect of a health hazard in, on or of any premises may be recovered from the owner or the occupier, or both, by court action.

Subsections (2) and (3) give the board an alternative. If the costs are not paid within sixty days after a demand to the owner or occupier, the board’s secretary may send the municipal clerk a statement of the amount, the name of the owner and the location of the premises. The clerk then enters the amount on the collector’s roll, and it is collected in the same manner as municipal real property taxes.

Subsections (4) and (5) deal with the two parties after the board has been paid. If the occupier paid an amount that, as between the two of them, is the owner’s responsibility, the occupier can recover it from the owner or deduct it from other amounts owed. If the owner paid an amount that is the occupier’s responsibility, the owner can recover it from the occupier or add it to other amounts the occupier owes. The statute does not decide whose responsibility it is between landlord and tenant. A lease can.

What you can check before signing vs what only shows up after opening

Landlord’s checklist for a delivery-only kitchen tenant

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