Buying a Café or Restaurant

Buying a café or restaurant is one of the most common entry points into business ownership in Australia.

It looks exciting. It looks busy. It feels achievable.

But hospitality is also one of the most misunderstood sectors for first time buyers.

At SBX, we regularly see buyers focus on atmosphere and turnover, but overlook the fundamentals that determine whether the business will actually generate sustainable income.

If you are considering buying a café or restaurant, here are the most important areas to assess properly.

Do You Have the Right Experience?

Experience matters more than most buyers realise.

Hospitality is operationally demanding. Stock control, rostering, compliance, supplier negotiations and customer service all require hands on management. Margins are tight and small inefficiencies add up quickly.

If you have direct hospitality experience, you will understand how to manage labour costs, food margins and peak trading pressure.

If you do not, you need either a highly capable manager in place or a clear plan to acquire the operational knowledge quickly.

Many underperforming venues are not bad businesses. They are poorly managed businesses.

1. Does the Profit Actually Stack Up?

Turnover alone means very little. You need to understand true maintainable earnings. That means reviewing full profit and loss statements and assessing whether margins are realistic under normal operating conditions.

Key areas to examine include wage costs as a percentage of revenue, food and beverage cost percentages and rent relative to turnover.

You must also adjust for owner involvement. If the current owner is working excessive hours or underpaying themselves, the profit may not be sustainable once you step in.

The numbers must work commercially, not emotionally.

2. Is the Lease Secure and Commercial?

In hospitality, the lease is critical. Before proceeding, you need clarity on the remaining lease term, options to renew, rent increases and outgoings. A short lease with no options can limit finance and reduce value.

Just as important is landlord approval. Most leases require landlord consent for assignment. The landlord may assess your financial capacity and experience before approving the transfer. If approval is not granted, the deal cannot proceed.

It is essential to understand the landlord's position early in the process and ensure you meet their criteria.

A cooperative landlord makes settlement smooth. An inflexible one can delay or stop a transaction.

3. Are Wage Costs Sustainable?

Labour is typically the largest expense in a café or restaurant. Award rates, penalty rates, superannuation and compliance obligations must be fully accounted for. Review rosters across busy and quiet periods and confirm that staffing levels are commercially viable.

If the business relies heavily on family labour or unpaid overtime, that risk transfers to you.

The venue must generate profit while operating fully compliantly.

4. What Condition Is the Equipment In?

Fit out and equipment can represent a significant portion of value. Coffee machines, refrigeration, kitchen equipment, exhaust systems and grease traps are expensive to replace. If major items are approaching the end of their useful life, that needs to be factored into price and working capital.

Request asset lists and maintenance history. Inspect carefully. Do not assume presentation equals condition.

5. How Owner Dependent Is the Business?

Some venues trade strongly because the owner is present every day and deeply involved.

You need to assess whether systems are documented, whether managers are capable and whether customers are loyal to the brand rather than just the individual.

Lower owner dependency makes transition smoother and reduces operational risk.

6. The Key to Buying It Right

Buying a café or restaurant can be a strong commercial move when approached properly. The key is focusing on fundamentals. Sustainable profit. Secure lease. Landlord approval. Manageable wage structure. Appropriate experience.

7. Looking for Cafés or Restaurants for Sale?

If you are actively considering buying, the first step is seeing what is currently on the market. New hospitality listings do not always stay available for long, particularly well priced venues with secure leases and strong earnings.

Register as a Buyer with SBX Business Brokers to receive the latest café and restaurant listings for sale in your area.