You built the menu from scratch. You spent $180K on the fit-out. You’ve got 400 five-star Google reviews. And a buyer just offered you $90,000 for the whole thing.
Welcome to restaurant valuations — where your ego and the market rarely agree.
The uncomfortable truth is that most Australian restaurants are not worth what their owners think. The food is almost irrelevant to the number. What matters is the lease, the licence, and whether the business makes money without you standing at the pass.
Your Lease Is the Business
Here is something that surprises every first-time restaurant seller: buyers are often purchasing your lease, not your restaurant. A 10-year lease in a high-foot-traffic strip with rent at 8% of revenue is worth more than your recipes, your brand, and your fit-out combined.
In most restaurant sales we see, the lease accounts for 40-60% of the total perceived value. A short lease — under 3 years remaining — can make an otherwise profitable restaurant unsaleable.
Landlords know this too. A savvy landlord will sometimes refuse to assign the lease or use the sale as an opportunity to renegotiate terms upward. If your rent-to-revenue ratio creeps above 12-15%, you’re handing your profit margin to the landlord, and a buyer will see that instantly.
Before you even think about selling, talk to your landlord. Secure an extension or renewal option. Without it, you don’t have a business to sell — you have a fit-out and some recipes.
The Liquor Licence Question
In most Australian states, a liquor licence is transferable with the business — but “transferable” doesn’t mean “simple.” In NSW, a licence transfer requires a new application to Liquor & Gaming NSW, including community impact assessments for certain licence types. In Victoria, the VCGLR process can take 8-12 weeks.
A full on-premises liquor licence in a good location adds genuine value — anywhere from $20,000 to $80,000 depending on the state and licence type. In areas where councils have restricted new licence approvals, this premium is higher. If you’re BYO-only, that’s fine, but understand that a buyer converting to licensed premises faces a separate approval process that adds risk and cost.
What the ATO Data Actually Shows
Before we talk sale prices, let’s look at what real restaurant financials look like. The ATO publishes benchmarks based on actual tax return data from Australian restaurants (2023-24):
| Annual Turnover | Cost of Sales / Turnover | Total Expenses / Turnover | Implied Net Margin |
|---|---|---|---|
| $65K - $500K | 32% - 39% (avg 35%) | 79% - 89% (avg 84%) | 11% - 21% |
| $500K - $2M | 32% - 38% (avg 35%) | 84% - 93% (avg 88%) | 7% - 16% |
| $2M+ | 31% - 36% (avg 34%) | 88% - 94% (avg 91%) | 6% - 12% |
The pattern is striking: the bigger the restaurant, the thinner the margin. Labour costs climb from 18-30% of turnover at the small end to 27-34% for $2M+ venues. Rent runs 11-17% for smaller restaurants but drops to 6-9% for larger ones (though the dollar amount is obviously higher).
These are ATO averages across all restaurants. Your actual margins matter more than the benchmark — but if your expenses are significantly outside these ranges, a buyer’s accountant will want to know why.
What Restaurants Actually Sell For
Most independent restaurants operate on net margins of 6-16% at the $500K-$2M turnover range — meaning a restaurant doing $1.2M in revenue might genuinely net $60K-$150K after paying the owner a proper wage. Apply a 3x multiple to $100K and you get $300K. That’s often the ballpark for a well-run, owner-operated restaurant in a decent location.
| Scenario | Typical Sale Price Range |
|---|---|
| Cafe, short lease, owner-operated | $50K - $150K (often walk-in value) |
| Casual dining, good lease, $1M+ revenue | $150K - $400K |
| Licensed restaurant, strong lease, manager-run | $300K - $700K |
| Multi-venue or franchise operation | $500K - $2M+ |
The gap between “walk-in value” and “goodwill value” is critical. Walk-in value is what a buyer pays for the right to take over the fit-out, equipment, and lease — essentially the cost to avoid starting from scratch. It implies the brand and customer base have no transferable value. Many restaurants sell at or near walk-in value, and sellers find this devastating.
Goodwill — the premium above tangible assets — only exists when the business demonstrably generates profit that a new owner can replicate. If you are the chef, the host, and the reason customers come back, there is no transferable goodwill.
The Delivery Platform Trap
If Uber Eats, DoorDash, or Menulog account for more than 30% of your revenue, a buyer will discount your valuation. Here is why:
- Platform commissions of 30-35% crush your margins on those orders
- You don’t own the customer relationship — the platform does
- Algorithms change, and your ranking can drop overnight
- A buyer inheriting platform dependency inherits margin risk
A restaurant doing $1M in revenue with 40% from delivery platforms is not the same business as one doing $800K entirely from dine-in. The $800K restaurant may actually be worth more.
That said, if you’ve built a direct ordering channel — your own website, a loyal phone-order base — that’s a different story. Direct delivery revenue at full margin is valuable.
Seasonal Patterns and What They Reveal
Buyers scrutinise monthly revenue patterns. A restaurant that does $140K in December and $60K in February tells a very different story from one that sits steadily at $90K-$100K year-round. Seasonal volatility isn’t necessarily bad — but it needs to be understood and planned for.
If you’re a coastal venue that makes 50% of annual profit in three summer months, your valuation will reflect that concentration risk. Buyers discount heavily for seasonality because they’re servicing the purchase price across twelve months, not three.
Selling a “Restaurant” vs Selling a “Business”
This distinction matters more than people realise. Most restaurant sales on platforms like Seek Business or BizBuySell are selling the physical operation — the fit-out, lease, and equipment. The buyer is purchasing the shell to run their own concept.
Selling a business — with documented systems, trained staff, supplier agreements, a brand that works without the founder, and repeatable financial performance — is a completely different transaction at a completely different price point. The first sells for walk-in value. The second sells for a goodwill multiple.
Ask yourself honestly: if you left tomorrow and a competent manager took over, would revenue hold steady for six months? If the answer is no, you’re selling a restaurant, not a business.
Who Buys Restaurants?
The buyer pool for hospitality businesses looks different from most other industries. Private equity and corporate acquirers are rarely in the picture for independent venues. Instead, the market skews heavily toward individuals and small operators.
First-time operators make up a large portion of buyers. These are people who have always wanted to run a cafe, bar or restaurant and are looking for a turnkey venue they can step into — fit-out done, suppliers in place, staff trained. They will pay a reasonable premium to skip the 6-12 month startup grind.
Multi-venue operators expanding their portfolio are the most sophisticated buyers in the market. They understand hospitality economics, they negotiate hard, but they can move quickly and will pay fair value for a well-run venue with a strong lease.
Franchise groups acquire independent venues to convert them into franchise locations. If your site fits their footprint requirements and the lease terms work, the brand and menu are irrelevant to them — they are buying the location and the lease.
Chefs wanting their own place are emotionally motivated buyers. They often stretch financially to make a deal work, which can be both an advantage (willingness to pay) and a risk (ability to complete). Vendor finance or earn-out structures can help bridge the gap.
Because the buyer pool is dominated by individuals rather than institutional capital, sale processes tend to be longer and more personal than in other industries. Expect 3-6 months from listing to settlement.
Related Reading
- How Much Is My Business Worth? — a general guide to Australian business valuations
- How to Value Your Business for Sale — the methods and frameworks buyers use
- Preparing Your Business for Sale — what to do 12-24 months before going to market
What to Do Next
If you’re thinking about selling in the next 12-24 months, start with the lease. Then get your last three years of financials cleaned up — properly normalised with an appropriate owner’s salary added back. Remove the personal expenses. Show the real cost of goods and the real labour cost.
Try our valuation calculator for a quick indicative range, or get in touch with our team for a confidential conversation about what your specific venue is worth.