What is my restaurant worth? How restaurants are valued in Australia.
A restaurant is usually valued as a multiple of its maintainable earnings, plus stock at value. Maintainable earnings are the profit after adding back one working owner's wage and other owner costs. What moves the price most is whether the restaurant depends on the owner as chef, whether its liquor licence can transfer, the lease, and how steady its covers are. A restaurant that makes little or no real profit is usually priced on its fit-out, equipment and location.
Restaurants cost more to fit out and run than most small businesses, and buyers know it. They'll look closely at the kitchen, the staff and the licence as well as the profit. This guide covers how buyers value a restaurant and what they'll ask to see.
Start with maintainable earnings
Start from net profit before tax and add back what a new owner won't pay:
- One working owner's wage and super, for one owner only.
- Depreciation and interest, often large in restaurants because of the fit-out and kitchen equipment.
- Private expenses run through the business.
- Genuine one-off costs, such as replacing a cool room compressor or a one-time kitchen upgrade.
Then deduct what a buyer will have to pay that you don't. The most common one in restaurants is a partner or family member running the floor or working in the kitchen for less than a market wage. Add-backs explained.
The owner-chef question
This is the biggest difference between valuing a restaurant and valuing most other small businesses. If you're the head chef and the menu is yours, a buyer who isn't a chef will have to employ one, and the restaurant's reputation may not survive the change.
- Maintainable earnings add back one owner's wage. If you work as both chef and manager, a buyer who can only do one of those jobs will have to pay for the other.
- A restaurant that depends on its owner-chef attracts fewer buyers, usually other chefs, and that tends to hold the price back.
- The more your kitchen runs on documented recipes and a trained team, the easier the restaurant is to sell. A longer handover, cooking alongside the buyer or their chef, can help too.
The liquor licence
For a licensed restaurant, the licence is part of what the buyer is paying for. It usually has to be transferred to the buyer, or a new licence issued, through the state's liquor regulator, and the buyer has to be approved.
- Sale contracts for licensed restaurants often make settlement conditional on the licence transfer, so start the process early.
- Check the licence's conditions (trading hours, capacity, and any outdoor areas) match how you actually trade. A buyer will value the restaurant on what the licence allows, not what you've been doing.
- In Victoria, a vendor statement (Section 52) isn't required when the business has a liquor licence, but the licence transfer has its own paperwork. How to sell your business yourself.
What else moves a restaurant's price
The lease
Restaurants carry big fit-outs, so buyers want enough lease term to earn back what they pay. They'll also check the rent against sales, the permitted use, and any "make good" clause that could cost a lot at the end of the lease.
Covers and average spend
Buyers ask how many covers the restaurant does each week, and the average spend per head, split between lunch and dinner and between weeknights and weekends. Booking system reports and point-of-sale data back these figures up.
Wages and roster
Wages are usually a restaurant's biggest cost. Buyers look at the wage cost against sales, how the roster covers busy and quiet shifts, and whether key staff like the head chef or floor manager are likely to stay.
Delivery and takeaway
If part of your trade comes through delivery apps, show it separately and net of the delivery app charges. Buyers will want to know how much of the profit depends on those platforms.
Kitchen, fit-out and compliance
The condition of the kitchen and equipment, exhaust and fire systems, and the grease trap all matter, because a buyer who has to replace them will price it in. Food business registration and any outdoor dining or planning permits (such as approved seating numbers and hours) need to transfer or be reissued.
Reputation
Reviews, a steady base of regulars and a clear identity all help. A restaurant that trades on the owner's personal name is harder to hand over than one that trades on its own.
When a restaurant has little or no profit
If a restaurant makes little or nothing after paying the owner a fair wage, buyers aren't paying for goodwill. The price usually comes down to the value of the fit-out and equipment to someone who wants the site, with the lease and any liquor licence being a big part of the appeal. More on this in our café guide.
A worked example
All figures are illustrative, made up for this example, and are not industry data.
A licensed suburban restaurant trades five dinners and two lunches a week. The owner is the head chef. Their partner runs the floor full-time but is paid only $30,000 a year. Net profit before tax was $70,000.
| Item | Amount |
|---|---|
| Net profit before tax | $70,000 |
| + Owner-chef's wage and super | $85,000 |
| – Shortfall to a market wage for the partner's full-time floor manager role | –$35,000 |
| + Depreciation | $22,000 |
| + Interest on the fit-out loan | $6,000 |
| + One-off exhaust canopy replacement | $9,000 |
| Maintainable earnings (PEBITDA) | $157,000 |
If buyers were paying, say, 1.3 to 1.8 times PEBITDA for a restaurant like this (illustrative), it would be worth about $205,000 to $285,000, plus stock at value. A long lease, a licence that transfers cleanly and a kitchen that runs without the owner would push it up the range. Heavy dependence on the owner-chef would push it down, because fewer buyers can step into that role.
What restaurant buyers will ask for
- Two to three years of profit and loss statements, plus the current year to date
- Point-of-sale and booking reports: covers, average spend, and lunch versus dinner
- The lease, including permitted use and any make-good clause
- The liquor licence and its conditions, and any planning or outdoor dining permits
- The staff roster with roles and hours (no names needed at first)
- An equipment list, and any leased or financed equipment
- Delivery app statements, if you use them
Also see What is my café worth? and What is my takeaway shop worth?
What's your restaurant worth?
Upload your P&L, and add your lease and roster if you have them. AUS Brokers works out your maintainable earnings with the add-backs explained, applies the multiple range for restaurants of your size, and checks comparable restaurants for sale in your state. You can add a buyer-ready profile, with photos, to market it yourself.
An indicative appraisal only. AUS Brokers doesn't provide valuations, and doesn't act for buyers or sellers. Selling in Victoria? Vic Brokers can sell it for you.
Frequently asked questions
How much is a restaurant worth in Australia?
It depends mainly on its maintainable earnings: net profit plus one working owner's wage and other add-backs. That figure is multiplied by what buyers pay for restaurants of that size, and stock is added at value. The lease, the liquor licence, dependence on the owner-chef and the condition of the kitchen all move the price within that range.
Is a restaurant valued on its revenue?
No. Buyers price a restaurant on profit, not turnover, because wages, food costs and rent vary so much between restaurants. Two restaurants with the same turnover can be worth very different amounts.
How is a restaurant valued if the owner is the chef?
One working owner's wage is added back as usual. But if the restaurant depends on the owner's cooking, fewer buyers can step in, and a buyer who isn't a chef will have to employ one. That usually holds the price back. Documented recipes, a trained kitchen team and a longer handover help.
Does the liquor licence transfer with the restaurant?
Usually it has to be transferred to the buyer, or a new licence issued, through the state's liquor regulator, and the buyer must be approved. Contracts often make settlement conditional on it, so start the process early.
What do restaurant buyers look at first?
The profit after one owner's wage, covers and average spend, the lease, the liquor licence, whether the restaurant depends on the owner-chef, and the condition of the kitchen and fit-out.
General information only, not financial, tax or legal advice. Figures in the worked example are illustrative.