How to Buy a Restaurant in Australia: A Step-by-Step Guide
This guide is for people who want to buy an existing restaurant business in Australia and want to understand how to do it properly, step by step.
Buying a restaurant is not the same as opening one from scratch. In most cases, you are buying an operating business — with an existing lease, staff, suppliers, systems, and history — both good and bad. The decisions you make before settlement will determine whether the business becomes profitable or turns into a constant struggle.
Many first-time buyers focus on food, location, or weekly takings. In reality, restaurant purchases succeed or fail based on lease terms, labour costs, compliance, and how well the business is set up to run day-to-day. These are the areas that cause financial stress if they are misunderstood or rushed.
This step-by-step guide explains:
- what you are actually buying when you purchase a restaurant business
- how to review financials, leases, and licences
- what to check before signing a contract
- how to prepare for settlement and the first few months of operation
It is written for buyers who want practical guidance, not sales language — whether you are buying your first restaurant, moving from employee to owner, or expanding into another venue.
How to Buy a Restaurant in Australia: A Step-by-Step Guide
Step 1: Decide What Type of Restaurant Buyer You Are
Before you look at listings, you need to understand your own role in the business.
Ask yourself honestly:
- Will I work in the restaurant every day?
- Am I buying a job, or buying an investment?
- Do I already have hospitality experience?
- Can I handle staff shortages and long hours?
In Australia, many restaurants only appear profitable because:
- The owner works unpaid hours
- Family members fill key shifts
- Costs are tightly controlled by hands-on management
If you plan to be an absentee owner, your buying criteria must be much stricter.
Step 2: Understand What “Buying a Restaurant” Actually Means
In most Australian transactions, you are not buying the property.
You are usually buying:
- The business name and goodwill
- Equipment and fit-out
- Intellectual property (menu, branding)
- Customer databases and online accounts (sometimes)
You are not automatically buying:
- The lease (you must apply to the landlord)
- The staff (they may resign)
- Any guarantee of future income
- Any historical reputation (good or bad)
This is why due diligence matters far more than passion.
Step 3: Where Restaurants Are Listed for Sale in Australia
Restaurants are commonly listed through:
- Business brokers
- Commercial real estate agents
- Industry networks
- Private, off-market deals
Listings often highlight:
- “Strong weekly takings”
- “Easy to run”
- “Huge potential”
Treat these as marketing phrases, not facts.
Your job is to confirm whether the numbers work for you, not for the current owner.
Step 4: Analyse the Financials Properly (With Realistic Assumptions)
This is where many buyers make costly mistakes.
You should request:
- Profit & Loss statements (2–3 years if possible)
- BAS statements
- Sales reports (weekly and monthly)
- Supplier invoices (food, rent, utilities)
Look beyond turnover and ask:
- What is the average weekly profit?
- What happens to profit if wages increase?
- How sensitive is the business to rent rises?
- How much cash is tied up in stock?
Confirm GST reporting obligations based on guidance from the Australian Taxation Office, especially if the business has mixed dine-in, takeaway, or delivery income.
If the numbers only work “on paper,” they don’t work.
Step 5: Understand Food Cost, Labour Cost, and Rent Ratios
A healthy restaurant usually sits within rough benchmarks:
- Food cost: 28–35% of sales
- Labour: 30–40% of sales
- Rent + outgoings: ideally under 10–12%
If one of these is out of balance, the business becomes fragile.
Ask yourself:
- Is pricing realistic for the location?
- Are award wages fully applied?
- Are penalty rates being absorbed properly?
Restaurants often collapse when labour costs are underestimated.
Step 6: Inspect the Lease in Detail (This Is Critical)
The lease is often more important than the business itself.
You must review:
- Remaining lease term
- Options to renew
- Rent review structure
- Outgoings and maintenance obligations
- Assignment conditions
Common traps:
- Short remaining lease
- Market rent reviews with no cap
- Personal guarantees required
- Landlord refusal rights
A restaurant with poor lease terms is difficult to finance, sell, or grow.
Never rely on verbal assurances — only what’s written matters.
Step 7: Confirm Licences, Registrations, and Compliance
Restaurants operate under multiple regulatory layers.
Check:
- Council food premises registration
- Liquor licence transferability
- Fire safety compliance
- Grease trap servicing
- Exhaust and ventilation approval
Employment compliance should align with Fair Work Ombudsman standards. Underpayment issues can become your responsibility after purchase.
If anything is non-compliant, factor the cost and time into your decision.
Step 8: Inspect Equipment and Fit-Out Like an Owner, Not a Customer
A clean dining room does not equal a reliable kitchen.
Inspect:
- Refrigeration age and condition
- Ovens, fryers, grills
- Electrical capacity
- Gas compliance certificates
- Exhaust system health
One major equipment failure can cost tens of thousands.
If unsure, pay a technician to inspect before committing.
Step 9: Evaluate the Location Beyond “Foot Traffic”
Location suitability is about customer behaviour, not just visibility.
Consider:
- Lunch vs dinner demand
- Weekend vs weekday trade
- Parking availability
- Nearby competition
- Future developments
Spend time observing:
- Who walks past
- Who actually enters
- How long customers stay
Many restaurants fail because the concept no longer fits the area.
Step 10: Staffing Reality in Australia
Staffing is one of the biggest ongoing risks.
Before buying a restaurant, understand:
- Minimum staff required to trade
- Skill dependency (chefs vs casuals)
- Award rates and penalties
- Staff turnover risk
Never assume staff will stay after settlement.
If the business depends on one key chef, that’s a risk you must price in.
If the business depends on one key chef, that’s a risk you must price in.
Step 11: Systems You Should Have Before Settlement
Strong systems reduce stress and mistakes.
Before taking over, set up:
- Accounting software
- Bank feeds
- Payroll
- Inventory tracking
- Reporting routines
A modern hospitality POS system allows you to:
- Track item-level profitability
- Control labour vs sales
- Monitor wastage
- Understand real margins
This is where platforms like POSApt become practical tools rather than “tech extras.”
Step 12: Contracts, Legal Structure, and Settlement
You’ll typically deal with:
- Contract of Sale of Business
- Lease assignment deed
- Training and handover clauses
- Stock valuation method
- Restraint of trade clauses
Your solicitor should also confirm:
- Business name transfer
- Company or trust setup
- Director obligations via the Australian Securities and Investments Commission
Never rush this stage — pressure tactics are a red flag.
Step 13: Your First 90 Days After Purchase
The first three months define success.
Focus on:
- Stabilising staff
- Maintaining service consistency
- Reviewing suppliers
- Tightening costs
- Understanding customer patterns
Avoid major changes until you fully understand how the business operates.
Fix fundamentals first.
Common Mistakes First-Time Restaurant Buyers Make
Focusing on weekly takings instead of profit
High weekly takings do not necessarily mean a restaurant is a healthy business. Many venues appear busy but struggle once food costs, wages, rent, utilities, and penalty rates are applied correctly. Profit, not turnover, determines whether the business is sustainable.
A common mistake first-time buyers make is relying on reported takings without properly checking how those numbers were generated.
This is where an Australian POS system becomes critical during the buying process. The POS data should be used to verify:
- whether reported sales match bank deposits
- sales breakdown by dine-in, takeaway, delivery, and online platforms
- actual gross profit margins by menu item
- discounting, voids, refunds, and comps
- trading periods that look busy but are unprofitable once labour is applied
If POS reports are missing, incomplete, or cannot be exported, it is a red flag. Without reliable POS data, buyers are effectively trusting headline takings rather than confirmed performance.
Many first-time restaurant buyers discover too late that strong weekly takings masked weak margins and poor cost control. Proper POS checks help prevent buying a business that looks busy but does not make money.
Underestimating labour costs
Some businesses appear profitable only because the owner works unpaid hours or relies on family help. Once proper award wages, superannuation, and penalty rates are factored in, margins can disappear quickly.
Ignoring the lease terms
Short lease periods, unfavourable rent reviews, or strict assignment conditions can limit profitability and make the business difficult to finance or sell later. The lease often matters more than the fit-out.
Rushing the purchase process
Pressure to “move quickly” usually benefits the seller, not the buyer. Skipping due diligence often leads to unexpected costs and operational problems after settlement.
Assuming staff will stay after the settlement
Staff are not automatically committed to a new owner. Losing experienced team members can disrupt service and increase training and recruitment costs immediately.
Believing in future potential without evidence
Phrases like “easy to grow” or “huge upside” are marketing language. Without clear data, realistic pricing, and proven demand, potential alone does not pay bills.
Not allowing enough working capital
Many buyers budget for the purchase price but underestimate the cash needed to operate. Without a buffer for wages, suppliers, and unexpected costs, even good businesses can struggle early.
Making big changes too early
Major changes to menu items, menu pricing, or branding before understanding how the business operates can confuse customers and reduce sales. Stability should come before optimisation.
How Much Money You Really Need to Buy a Restaurant
The cost of buying a restaurant in Australia varies significantly depending on the city, suburb, size of the venue, and lease terms. The figures below are indicative ranges only, based on typical small to mid-sized restaurants in major Australian cities.
These examples assume an existing restaurant business (not property) with basic fit-out included.
Sydney (CBD & Inner Suburbs)
Sydney has the highest entry cost, driven mainly by rent and lease conditions.
- Purchase price: $180,000 – $450,000
- Weekly rent: $2,500 – $6,000+
- Bond & advance rent: $20,000 – $60,000
- Recommended working capital: $60,000 – $120,000
Restaurants in Sydney often look busy but operate on thin margins due to high rent and labour costs. Lease quality matters more than purchase price.
Melbourne (CBD & Inner / Middle Suburbs)
Melbourne offers more variety and slightly lower entry costs, depending on the suburb and concept.
- Purchase price: $120,000 – $350,000
- Weekly rent: $1,800 – $4,500
- Bond & advance rent: $15,000 – $45,000
- Recommended working capital: $50,000 – $100,000
Competition is intense, but well-located venues with reasonable rent can perform consistently if managed tightly.
Brisbane (CBD & Inner Suburbs)
Brisbane generally has lower rent pressure and slightly better margins for some operators.
- Purchase price: $100,000 – $280,000
- Weekly rent: $1,500 – $3,500
- Bond & advance rent: $12,000 – $35,000
- Recommended working capital: $40,000 – $80,000
Seasonality and location play a bigger role, but labour and rent are often more manageable than in Sydney or Melbourne.
Perth (CBD & Key Commercial Areas)
Perth prices vary widely depending on the local economy and foot traffic.
- Purchase price: $90,000 – $260,000
- Weekly rent: $1,400 – $3,200
- Bond & advance rent: $10,000 – $30,000
- Recommended working capital: $35,000 – $75,000
Some venues are very affordable, but buyers should pay close attention to local demand and trading consistency.
Adelaide (CBD & Inner Areas)
Adelaide is often one of the lowest-cost entry points into restaurant ownership.
- Purchase price: $80,000 – $220,000
- Weekly rent: $1,200 – $2,800
- Bond & advance rent: $8,000 – $25,000
- Recommended working capital: $30,000 – $70,000
Lower costs reduce pressure, but population size limits growth potential for some concepts.
Important Notes About These Ranges
These figures assume:
- a small to mid-sized restaurant (30–80 seats)
- no major refit required
- lease terms that are assignable
- no significant compliance issues
If a restaurant requires a refit, has a short lease, or relies heavily on the owner’s unpaid labour, the real cost can be much higher than the headline purchase price.
Due Diligence: What You Must Confirm Before Signing
Financial records match reality
Profit and Loss statements should align with bank statements, BAS, and sales reports, not just summaries prepared for sale. If numbers cannot be verified, assumptions become risks.
Lease terms are assignable and acceptable
Confirm the lease can be transferred to you, has enough remaining term, and includes reasonable rent review clauses and renewal options. A weak lease can limit profitability and resale value.
Licences and registrations are current
Food premises registration, liquor licence (if applicable), and council approvals must be valid or transferable before settlement to avoid trading delays.
Staffing costs reflect award rates
Minimum wages, superannuation, and penalty rates should comply with Fair Work requirements. Underpayment issues can become your responsibility after purchase.
Equipment is operational and compliant
Kitchen equipment, exhaust systems, gas, and electrical installations should be in working order and compliant with safety standards. Replacement costs add up quickly.
Supplier and service contracts are clear
Check whether supplier agreements, utilities, waste, and restaurant maintenance contracts are flexible or locked in after settlement.
No hidden liabilities exist
Confirm there are no unpaid entitlements, disputes, or compliance notices that could transfer to the new owner.
Red Flags That Should Make You Walk Away
Incomplete or inconsistent financials
Missing documents, changing figures, or explanations that rely on verbal assurances rather than evidence are major warning signs.
Short or unfavourable lease terms
Leases with little time remaining, aggressive rent reviews, or limited renewal options can make a business unsustainable.
Pressure to rush the deal
Being pushed to sign quickly often indicates unresolved issues. A strong business will stand up to proper review.
Reliance on unpaid or informal labour
If the business only works because of unpaid family help or undocumented arrangements, margins may collapse after a takeover.
Reluctance to provide information in writing
If important details are avoided or only discussed verbally, assume there is a reason and proceed with caution.
Key licences cannot be transferred
If licences or approvals must be re-applied for without certainty, trading interruptions and income loss are likely.
The business only works for the current owner
If profitability depends entirely on the seller’s personal involvement or long unpaid hours, the risk to a new owner is high.
What to Focus on After You Take Over
The first few months should focus on stability.
Maintaining service quality, keeping staff engaged, and understanding daily numbers are more important than major changes. Most successful buyers observe first, then improve gradually once they understand what truly drives performance.
Clear systems for sales, labour, and costs help new owners make decisions based on facts rather than assumptions.
Bonus Content: Marketing Strategies for Restaurants
Final Thoughts: Buying a Restaurant Is a Business Decision First
Buying a restaurant in Australia is not about finding the “perfect venue” or falling in love with a concept. It is about buying a working system — one that involves people, leases, compliance, costs, and daily decision-making.
Restaurants that succeed after a change of ownership usually do so because the buyer:
- understood what they were really buying
- respected the numbers more than the story
- took time to review leases, labour, and compliance
- prepared systems and cash buffers before settlement
Most problems that new owners face were already present before the purchase. The difference is whether they were identified early or discovered too late.
If you approach the process patiently, ask uncomfortable questions, and are willing to walk away from deals that don’t stack up, buying an existing restaurant can be a practical way to enter hospitality ownership. If rushed or driven by emotion alone, it can quickly become financially and mentally exhausting.
The goal is not to buy a restaurant.
The goal is to buy a business you can realistically operate, sustain, and improve.
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