Selling a restaurant or café is not like selling most businesses. The value sits in food hygiene records, lease assignments, EPOS data, staff retention and dozens of other details that a good buyer will check before exchanging. This guide walks you through what to prepare, how valuation works and what sellers commonly get wrong.
Contents
What makes a restaurant or café different?
Restaurants and cafés are among the most complex small businesses to sell. Unlike a professional services firm where value lives largely in client relationships and recurring revenue, a hospitality business is built on a combination of physical assets, regulated licences, lease obligations, staff knowledge and fragile customer trust.
A buyer is not just acquiring profit. They are taking on:
A commercial kitchen with equipment that may be owned, leased or financed separately
A premises licence (if alcohol or late-night refreshments are served)
A food business registration and hygiene rating that cannot simply be transferred
Staff who may or may not stay after the sale completes
Supplier accounts, delivery-platform agreements and ongoing commitments
A lease with assignment provisions that the landlord must approve
An EPOS system holding years of trading data that a buyer will want to interrogate
Each of these creates a potential complication. A good buyer will check all of them before agreeing to proceed.
The value is not only in profit. It is also in transferability — whether the business can genuinely continue after completion without the seller. If the chef, the premises licence holder, the most popular staff member or the key supplier relationship all depend on the owner personally, that is a risk that will reduce the price or block the deal altogether.
When is the best time to sell?
The best time to sell a restaurant or café is when:
Accounts are clean and current.Buyers want three years of filed accounts plus recent management figures. Gaps, inconsistencies or large unexplained swings will create questions.
Trading is stable or growing.Selling during a trough or immediately after a bad patch gives buyers leverage. If you know you want to sell in two years, start cleaning records now.
Compliance is in order.A food hygiene rating of 3, 4 or 5 gives buyers confidence. A rating of 1 or 2 — or an outstanding improvement notice — can kill a deal.
Staff and systems are stable.High staff turnover, no documented procedures and an owner who does everything personally are all red flags for a buyer.
The lease has reasonable length remaining.A lease with two years left and no guaranteed renewal right is a problem. Most buyers want meaningful security — typically five years or more remaining after completion.
Risks are disclosed at the right stage.Known issues should be surfaced to the right buyer at the right time, not hidden until late in the process.
If your business does not tick these boxes yet, consider a period of preparation before marketing. Even six to twelve months of tidying records, renewing leases, improving hygiene scores and reducing owner dependency can meaningfully increase the sale price.
How valuation works
There is no single formula for valuing a restaurant or café, but most buyers start with maintainable profit.
Adjusted EBITDA(earnings before interest, tax, depreciation and amortisation) is the most common starting point. The seller's accountant will typically prepare an add-back schedule, which adds back one-off costs, owner benefits and non-recurring items to arrive at a normalised profit figure.
From there, a buyer applies a multiple. The multiple reflects:
Sector risk— hospitality is considered higher risk than many sectors, so multiples tend to be lower
Lease quality— a long, assignable lease adds value; a short or uncertain one reduces it
Owner dependency— the less the business relies on the owner's personal presence, the higher the multiple
Staff quality and retention— whether key staff are likely to stay post-sale
Compliance record— food hygiene rating, licensing history, any outstanding notices
Revenue diversification— dine-in, takeaway, delivery platform, events, catering
Growth potential— is there headroom to grow, or is the business near capacity?
Assets are then added or adjusted. Kitchen equipment owned outright adds value; equipment subject to outstanding finance agreements reduces net asset value.
Goodwill — the intangible value of the brand, reputation, customer base and trading position — is typically the largest component of the sale price for an established hospitality business.
Be cautious about relying on a single valuation number too early. Different buyers will reach different conclusions depending on their own plans for the business.
Financial information to prepare
Prepare the following before speaking to serious buyers:
Profit and loss accounts— ideally three years of filed accounts
Management accounts— current year to date figures
Revenue breakdown— by stream (dine-in, takeaway, delivery platforms, events, etc.)
Gross profit margin— food cost and gross margin percentages
Wage cost percentage— total wage cost as a proportion of revenue
Add-back schedule— one-off costs, owner salary, owner benefits, non-recurring items
VAT returns— to cross-reference against declared turnover
EPOS reports— transaction-level data showing covers, average spend, service times
Delivery platform reports— Just Eat, Deliveroo, Uber Eats revenue and commission
Payroll records— staff numbers, hours, rates, pension contributions
Debt and finance— outstanding loans, asset finance, CBILS/bounce-back loan balances
Stock— value of food and drink stock at the point of sale, and whether included in the price
Working capital position— outstanding creditors and debtors
Recent trading— month-on-month revenue for the past twelve months
Be honest about seasonality.If Christmas trade represents 40% of annual profit, a buyer needs to understand what a normal month looks like. Cherry-picking only the best periods to present will be exposed during due diligence.
Sector-specific checks
These are the checks a serious buyer will carry out that go beyond the standard business sale process. Sellers should prepare for all of them.
Food hygiene rating
The Food Standards Agency (FSA) rating scheme gives premises a score of 0 to 5. A score of 5 means "very good." A score of 0 means "urgent improvement necessary."
Buyers will check:
Current rating
Date of last inspection
Any improvement notices or enforcement action
Whether a re-inspection has been applied for
EHO correspondence
A food business registration cannot be transferred. The buyer must register in their own right with the local authority after completion. However, the trading history and inspection record of the premises travel with the property and will influence the buyer's confidence and negotiating position.
Premises licence (alcohol and late-night refreshments)
If the business sells alcohol or provides late-night refreshments (hot food or drink between 11pm and 5am), it will hold a premises licence under the Licensing Act 2003.
Buyers will check:
Whether the licence is held by the company or personally
The designated premises supervisor (DPS) position
Licence conditions
Complaint or review history
Whether the seller's DPS will need to be removed and replaced on completion
Whether the buyer needs a personal licence of their own
A premises licence held by an individual, not a company, may need a variation or transfer. Take licensing advice early.
EPOS reports
Electronic point of sale data is often the most granular evidence of trading performance. Buyers will want:
Covers per service
Average spend per head
Top-selling items and margins
Time-of-day and day-of-week analysis
Till reconciliation
Staff sales records
Void and discount reports
If your EPOS system cannot produce these reports, that is itself a concern for buyers.
Food and wage cost percentages
Industry benchmarks vary, but buyers will expect food cost (cost of ingredients as a percentage of food revenue) to be in a range consistent with the type of operation. A café may target 25–35%. A fine-dining restaurant may be higher. If your food cost is out of line with sector norms, you should be ready to explain why.
Wage costs are similarly scrutinised. Total wage cost (including employer National Insurance and pension contributions) as a percentage of revenue is a key metric. Buyers will compare this against what they expect to pay themselves and any staff they retain.
Lease assignment
The lease is often the single biggest issue in a restaurant or café sale. The buyer needs the right to use the premises, and the landlord typically has a say.
Prepare:
A copy of the full lease, including all licences and variations
The assignment provisions — does the landlord's consent require a formal licence to assign?
The landlord's likely response — some landlords use assignment as an opportunity to renegotiate rent or demand a new lease on different terms
Any outstanding rent arrears
The rent review position
Whether a rent deposit is held and how it transfers
The repairing obligations — is the property in good order?
Engage your solicitor early. Lease assignment is one of the most common causes of delay in hospitality business sales.
Kitchen equipment
Buyers will want a detailed list of all equipment. For each item, they will want to know:
Whether it is owned outright, leased or subject to a finance agreement
Age and condition
Any outstanding service or repair issues
Whether it is included in the sale price or subject to separate agreement
Do not assume all equipment is included. If catering equipment is financed, the finance must be cleared or novated on completion. Hidden finance is a common surprise in late-stage due diligence.
Supplier accounts
Key supplier relationships may not transfer automatically. Check:
Whether accounts are in the company name or the owner's personal name
Credit terms and any outstanding balances
Whether the supplier will extend the same terms to a new owner
Exclusivity arrangements
Minimum order requirements
Introduce your key suppliers to the buyer during handover — a warm introduction is far more effective than a contact list.
Delivery platform reports
If the business trades on Just Eat, Deliveroo, Uber Eats or similar platforms, buyers will ask for platform-level reports showing:
Monthly revenue and order volume
Average order value
Commission rates
Review scores
Refund and complaint rates
Platform accounts may or may not transfer. Check the platform's business transfer process early.
Staff, contracts and handover
Staff are both an asset and a risk in a hospitality business sale.
Under TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006), employees whose jobs are linked to the business normally transfer to the buyer on their existing terms and conditions. The seller cannot agree with a buyer to change terms as part of the transfer.
Buyers will want to know:
How many staff are employedand on what basis (full-time, part-time, zero hours)
Who are the key people— the chef, the manager, the person who does the books
Who is likely to stay— and what the seller honestly believes about retention
What contracts exist— written contracts, implied terms, probationary periods
What liabilities transfer— accrued holiday, long-service entitlements, tribunal history
Whether the seller will provide a handover period— and for how long
Be honest about staff. If the head chef has already indicated they plan to leave, that should be disclosed at the right stage of the process. Buyers who discover key staff departures after exchange will feel misled.
Confidentiality and data protection
Restaurant and café sales involve large amounts of sensitive information:
Customer contact data (booking systems, loyalty programmes, mailing lists)
Staff names, contracts and pay rates
Supplier pricing and account terms
Financial records and margin data
System access credentials
None of this should be shared indiscriminately.
Stage your disclosure:
Start with a summary — headline revenue, profit range, lease overview, staff headcount
After buyer screening and NDA, release management accounts and EPOS summaries
Full accounts, staff details and supplier terms only after heads of terms are agreed
System access and customer data transfer subject to data protection advice and completion
Where personal data is involved (customer contact details, staff records), take advice from a data protection professional. The UK GDPR places obligations on both parties in a business sale.
Due diligence
Expect a serious buyer to run a thorough due diligence process. This will typically cover:
Financial— accounts, management figures, VAT returns, add-backs, bank statements
Legal— company searches, title, lease, contracts, IP ownership
Tax— VAT position, PAYE, any outstanding liabilities, bounce-back loan position
Operational— EPOS reports, food hygiene records, delivery platform accounts
Staff— employment contracts, TUPE analysis, key-person risk
Assets— equipment list, ownership, finance, condition
Compliance— premises licence, food hygiene, environmental health
Sector-specific— platform agreements, supplier terms, reservation system
Sellers who prepare thoroughly — with a data room containing organised documents — move through due diligence faster and with fewer surprises. Buyers who are kept waiting for basic information grow nervous and are more likely to chip the price or withdraw.
Seller checklist
Use this checklist to confirm you are ready before marketing:
Three years of filed accounts available
Current year management accounts prepared
Revenue breakdown by stream prepared
Food cost and wage cost percentages calculated
Add-back schedule prepared
VAT returns available
EPOS reports extracted and reviewed
Delivery platform reports downloaded
Payroll records organised
Debt and finance schedule prepared
Stock valuation method agreed
Food hygiene rating checked — rating of 3 or above preferred
Premises licence reviewed — DPS position, conditions, transfer process understood
Lease reviewed — assignment provisions, term, arrears, rent review
Equipment list prepared with ownership status for each item
Finance agreements identified and listed
Key supplier accounts reviewed — in company name, credit terms clear
Delivery platform account — transfer process checked
Staff list and contracts reviewed — TUPE position understood
Handover plan drafted
NDA and buyer screening process ready
Data protection advice taken where customer/staff data is involved
FAQs
Does a food hygiene rating transfer with the business?
No. A food business registration is personal to the business operator. The buyer must register with the local authority after completion. However, the inspection record of the premises is publicly visible and will influence buyer confidence.
Does the premises licence transfer automatically?
No. A premises licence transfer requires an application to the licensing authority. If the designated premises supervisor is being changed, a separate DPS variation application is also needed. Take licensing advice early.
Do staff automatically transfer to the buyer?
Under TUPE, employees whose roles are connected to the business generally transfer to the buyer on their existing terms and conditions. This applies to most asset sales of going-concern hospitality businesses, though the position should always be confirmed by a solicitor.
Does the lease transfer automatically?
No. Lease assignment usually requires the landlord's consent. The lease will set out the process. Some landlords use assignment as an opportunity to renegotiate terms or demand a personal guarantee from the buyer. Involve your solicitor at the earliest stage.
Should I share financial information before I have an NDA?
Share a brief trading summary only — headline revenue, profit range, lease term, staff headcount. Detailed accounts, EPOS reports and staff information should not be shared until the buyer has been screened and a non-disclosure agreement is in place.
How long does a restaurant or café sale take?
Typically three to nine months from first marketing to completion, depending on complexity, lease assignment speed, buyer due diligence and solicitor availability. Leasehold transactions tend to take longer than freehold because of the landlord consent process.
Key takeaways
Prepare accounts, management figures and an add-back schedule before marketing.
A food hygiene rating of 3 or above improves buyer confidence; below 3 creates risk.
The premises licence must be transferred — it does not move automatically with the business.
Lease assignment needs landlord consent — start early and involve your solicitor.
EPOS data, delivery platform reports and food and wage cost percentages are all areas buyers will check in detail.
Staff transfer under TUPE in most asset sales — understand the position before you start.
Stage your disclosure carefully and use NDAs before sharing sensitive financial or commercial information.
A clear handover plan, including warm introductions to key suppliers and staff, increases buyer confidence and reduces post-sale risk.
Related resources
Important disclaimer
Buy a Business Ltd is a marketplace, not a broker. Information, guides, checklists and examples on this site are for general guidance only and do not constitute legal, tax, financial, investment, valuation, brokerage or regulated advice.
Buying or selling a business involves risk. You should seek independent professional advice before buying, selling, valuing or financing a business.
Sources and useful references
Food Standards Agency: food business registration
GOV.UK: premises licence
GOV.UK: TUPE
Companies House: Get information about a company
ICO: data sharing due diligence