Business valuation guide

How to value a hospitality business in Australia

Most leasehold restaurants, bars and venues in Australia sell for 1 to 3.5 times their adjusted profit, plus stock at value. Where yours sits depends on how reliable the trade is, how long the lease runs, whether the liquor licence transfers cleanly, and whether the kitchen and floor run without you.

The short version

Restaurants, bars and venues are priced on adjusted profit: net profit with one working owner’s wage, depreciation, interest and one-off costs added back, multiplied by a range that reflects risk.
Food and liquor stock is usually paid for on top of the price at settlement, at cost.
The lease and the liquor licence can make or break a sale. A short lease or a licence the buyer cannot take over cuts the price, however good the trade.
Buyers test your numbers against point-of-sale reports, supplier invoices and the ATO’s industry benchmarks, and check wage records for award compliance.
A head chef and manager who stay, steady year-round trade and clean books are what move a venue to the top of the range.

Typical multiples

What is a hospitality business worth?

Brokers value restaurants, bars and venues as a multiple of adjusted profit. For owner-run venues that is usually PEBITDA (profit before interest, tax, depreciation and amortisation, with one working owner’s wage added back). For managed venues and groups it is EBITDA, with a market salary for every role. The ranges below are for leasehold businesses.

Indicative multiples for Australian leasehold hospitality businesses, plus stock at value
Type of venue	Typical multiple	What puts it there
Small or owner-chef venue	1.0x to 1.8x	Adjusted profit under about $150,000, the owner running the kitchen or the floor every service, short lease. Price often sits close to the value of the fit-out and equipment.
Established restaurant or bar	1.8x to 2.5x	Three years of steady profit between about $150,000 and $400,000, a head chef or manager in place, five or more years left on the lease including options.
Strong managed venue or small group	2.5x to 3.5x	EBITDA above about $400,000, a full management team, a well-known name, functions or events revenue, and trade that holds up year-round.
Freehold, gaming or accommodation hotels	Case by case	Pubs with gaming machines, freehold venues and accommodation are valued on earnings and property together, usually with a formal valuation.

Selling a cafe? Cafes have their own ranges and checks, such as coffee volumes and supply agreements. See how to value a cafe or coffee shop. For transactions above $2 million, Benchmark Corporate advises on valuation and deal structure.

The method

How to value a hospitality business in four steps

Work out adjusted profit
Start with net profit from your last full financial year, averaged over two or three years if trade moves around. Add back one working owner's wage, depreciation, interest and genuine one-off costs. Use a full year, never a peak season. The business terms glossary explains PEBITDA and add-backs.
Choose a multiple
Start from the table above, then adjust for the lease, location, licence conditions, trading hours, staff stability and the trend in sales.
Add stock at value
Food, beverage and liquor stock is counted at settlement and paid for at cost. Exclude stale or slow-moving stock. More in selling a business that carries stock.
Cross-check the figure
Test it against recent sales of similar venues, the cost of fitting out a new venue and the return a buyer would earn. Check that cost of sales and wages sit near the ATO ranges below.

Worked example

Licensed restaurant and bar, $1.4 million turnover

90 seats, open five nights and weekend lunch, owner on the floor, head chef employed, six years left on the lease. Figures are illustrative.

Worked example of a hospitality business valuation
Net profit per the accounts	$120,000
+ Owner's wage (one working owner)	$75,000
+ Depreciation	$28,000
+ Interest on fit-out loan	$9,000
+ One-off kitchen exhaust replacement	$14,000
Adjusted profit (PEBITDA)	$246,000
Multiple (established venue)	1.7x to 2.2x
Indicative price range	$418,200 to $541,200
Plus stock at value	about $15,000

Return check: at $467,400 (1.9x), a buyer who steps into the owner's role keeps $171,000 a year before tax, a 37% return on the price. Hospitality buyers expect a high return for the hours and risk involved.

Valuation methods

Which valuation method suits a hospitality business?

For leasehold restaurants, bars and venues, a multiple of adjusted profit is the method buyers, brokers and lenders use. The others act as checks or suit larger and freehold businesses.

Method	How it works	Use for a hospitality business
Multiple of adjusted profit	Adjusted profit × an industry multiple.	The main method for owner-run restaurants, bars and takeaway venues.
EBITDA multiple	Earnings before interest, tax, depreciation and amortisation × a multiple, with a market salary for every role.	Fully managed venues and multi-site groups.
Revenue multiple	Annual turnover × a multiple.	A rough cross-check only. Two venues with the same turnover can earn very different profits once rent and wages are paid.
Discounted cash flow	Forecast cash flows discounted back to today.	Hotels and accommodation with forward bookings, and larger groups.
Asset value	Second-hand value of fit-out, kitchen equipment and stock.	Sets the floor. A venue making little profit often sells close to this figure.

For the general principles behind every method, see our guide on how to value a business.

Industry benchmarks

How much profit does a restaurant or bar make?

The ATO publishes benchmarks for restaurants and for pubs, taverns and bars based on tax return data. Average total expenses run at 84% to 91% of turnover, depending on size, which leaves roughly 9% to 16% for the owner before tax and before paying themselves. Larger venues earn a lower percentage but more dollars.

ATO small business benchmarks, 2023–24 financial year (ratio to annual turnover)
Industry and turnover	Cost of sales	Labour	Rent	Total expenses
Restaurants, $65,000 to $500,000	32% to 39%	18% to 30%	11% to 17%	79% to 89% (avg 84%)
Restaurants, $500,001 to $2 million	32% to 38%	23% to 32%	8% to 12%	84% to 93% (avg 88%)
Restaurants, over $2 million	31% to 36%	27% to 34%	6% to 9%	88% to 94% (avg 91%)
Pubs, taverns and bars, $100,000 to $750,000	34% to 46%	18% to 28%	9% to 14%	78% to 90% (avg 84%)
Pubs, taverns and bars, $750,001 to $2.5 million	33% to 41%	23% to 32%	6% to 10%	86% to 93% (avg 89%)
Pubs, taverns and bars, over $2.5 million	31% to 42%	20% to 27%	6% to 9%	87% to 94% (avg 91%)

What a buyer reads into these numbers. Cost of sales above the range points to waste, theft, poor pricing or unrecorded sales. Rent above the range limits what any buyer can pay. Labour well below the range usually means the owner is working unpaid shifts, or that wages may not meet the award, which a buyer’s accountant will check.

Buyer checklist

What buyers pay more for

Two venues with the same profit can sell for very different prices. These are the items buyers and their advisers check in due diligence, and where the multiple is won or lost.

Trade and numbers

Two to three years of accounts that match the BAS and point-of-sale reports
Sales split by food, beverage and functions
Food and beverage costs tracked separately, close to the ATO ranges
Steady weekly trade, not one strong season carrying the year
Booking platform data showing covers and repeat guests

Licence and premises

A liquor licence that can transfer, with a clean compliance record
Approved trading hours, capacity and any outdoor dining permit
Five or more years left on the lease, including options
Rent within the ATO range for your turnover
A compliant kitchen, exhaust and grease trap, with service records

Team and reputation

A head chef and manager who plan to stay
Staff paid correctly under the relevant award, with full time and pay records
Recipes, ordering and opening procedures written down
Strong Google and booking platform reviews
Forward function and event bookings

More on the lease side: selling a business with a lease. On what goodwill is made of: the types of business goodwill.

Before you sell

How to lift your venue's value

Value comes from two things: more provable profit, and less risk for the buyer. Every extra $20,000 of provable profit adds $30,000 to $50,000 to the price at typical venue multiples, so a few points of margin make a real difference.

Grow covers and spend

Build functions and events. Private dining, set menus and events add high-margin, booked revenue.
Develop the beverage list. Drinks usually earn a higher margin than food.
Fill quiet sessions. Lunch specials or early sittings lift weekly trade.
Use online bookings. They capture guest data and show buyers a loyal customer base.

Protect margin

Engineer the menu. Cost every dish, reprice or drop the weak ones.
Track food and beverage costs weekly. Catch waste and price rises early.
Roster to trade. Match staff hours to bookings and point-of-sale data.
Review suppliers. Compare produce, liquor and linen contracts before you sell.

Reduce the buyer's risk

Put a team in place. A head chef and manager who run service without you.
Extend the lease or exercise an option before going to market.
Check wage compliance. Review pay against the award with your accountant or Fair Work resources.
Put every sale through the books. Unrecorded cash cannot be valued. Our business health check covers the rest.

Common mistakes

Mistakes that cost hospitality sellers

Most hospitality sales that fall over do so on price, lease or licence. A venue priced above what the numbers support sits on the market, and trade often slips while it waits.

See what buyers are looking at in hospitality businesses for sale right now.

Pricing on turnover. Buyers pay for profit after rent and wages, not for sales.
Using peak-season figures. Buyers average the full year, so the price falls in negotiation.
Counting unrecorded cash. It cannot be verified, so buyers and lenders ignore it.
Ignoring wage compliance. Underpayments found in due diligence can stall or sink a sale.
Going to market with a short lease. Under three years left makes finance hard and cuts the buyer pool.
Being the head chef with no successor. If the food leaves with you, so does much of the value.

Know your number

Find out what your hospitality business is worth

Our hospitality brokers value venues against real sales data from 27+ years of business sales. Confidential and no obligation.

FAQs

Hospitality business valuation: common questions

What multiple do restaurants sell for in Australia?

Most leasehold restaurants and bars sell for 1 to 3.5 times adjusted profit, plus stock at value. An established venue with a head chef or manager and a good lease usually sells for around 1.8 to 2.5 times. Freehold, gaming and accommodation hotels are valued case by case.

Can a liquor licence be transferred to the buyer?

Usually, yes, but the transfer needs approval from the state liquor regulator, which checks the buyer’s suitability and may require approved manager or responsible service qualifications. Allow time for approval and make the sale conditional on it. Any conditions or compliance history on the licence will be reviewed by the buyer.

Is stock included in the sale price?

Usually not. Most venues sell for a price plus stock at value (SAV), with food, beverage and liquor counted at settlement and paid at cost. Some smaller venues sell walk-in walk-out (WIWO), where stock is included. The contract states which applies.

How does the lease affect the value of a restaurant?

A lot. Buyers and lenders generally want five or more years remaining including options, rent within the ATO range for the turnover, and a landlord who will assign the lease. A short lease, high rent or a relocation clause reduces the multiple and the number of buyers who can get finance.

What happens to value if the head chef leaves?

It usually falls, because buyers are paying for the food and reputation the chef creates. Documented recipes, a trained second chef and an agreement for the head chef to stay through the handover all protect the price. When the owner is the chef, a longer handover is often part of the deal.

Are cafes valued the same way as restaurants?

The method is the same, but buyers check different things, such as weekly coffee volumes and coffee supply agreements, and day trade carries different costs to evening trade. See how to value a cafe or coffee shop.

How long does it take to sell a hospitality business?

Typically 3 to 12 months from listing to settlement. Lease assignment, liquor licence transfer and buyer finance usually set the pace. See how long it takes to sell a business and how to sell a restaurant.

Do I need a formal valuation or an appraisal?

For a sale, a broker’s appraisal of market value is usually enough to set the asking price. A formal valuation is needed for family law, partnership disputes, tax or stamp duty purposes. See the difference between a valuation and an appraisal.

Selling a hospitality business

Keep reading

How to sell a restaurant in AustraliaThe sale process, step by step.
How to value a cafe or coffee shopRanges and checks for day-trade venues.
When buyer demand peaksTiming your listing.
Selling confidentiallyKeeping staff and guests unaware until settlement.
Selling a business with BenchmarkHow our brokers take a venue to market.

Other industries

Valuation guides by industry

Business valuations near you

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This guide is general information, not financial, legal or tax advice. Every business is different, so speak to a broker, valuer or accountant before setting a price.

Sources: ATO small business benchmarks for restaurants and pubs, taverns and bars (2023–24 data); Business Queensland, valuing a business to buy or sell; business.gov.au, sell your business; Fair Work Ombudsman. Checked 11 October 2026.