Hospitality businesses are some of the trickiest to value in Perth. Two cafés with identical revenue can sell for very different prices because of foot traffic, lease structure, fitout age, and how dependent the business is on the owner working 60 hours a week.
This guide covers the real multiples, the seven factors that move them most, and the specific things Perth café and restaurant buyers will pull on during due diligence.
Real Perth hospitality multiples
| Type | Annual SDE | Typical multiple | Sale price |
|---|---|---|---|
| Owner-operator café | $80k–$150k | 1.5–2.0× | $120k–$300k |
| Café with manager + team | $150k–$300k | 2.0–2.5× | $300k–$750k |
| Casual restaurant | $200k–$500k | 2.0–3.0× | $400k–$1.5M |
| Higher-end restaurant | $400k–$1M | 2.5–3.5× | $1M–$3.5M |
| Pub/bar (without freehold) | $300k–$1M+ | 2.5–4.0× | $750k–$4M+ |
Note on pubs/hotels: When freehold is included, valuations work differently — the property and the business are typically valued separately, then combined. Speak to a hospitality-specialist broker for those.
Why hospitality multiples are lower than other industries
Compared with trade businesses (3.0×) or service businesses (3.5–4×), hospitality multiples are noticeably lower. The reasons:
- Lease dependency. Most hospitality businesses are completely dependent on premises. If the lease falls over or rent jumps, the business model can collapse.
- Owner-operator dependency. Most cafés and restaurants need an owner physically present. That's "buying a job" risk for the new owner.
- Low margins, working capital intense. Stock turns weekly, staff costs are high, margins are thin. Less buffer for error.
- Reputation risk. One bad review wave, hygiene issue, or social media incident can hurt revenue badly. Buyers price in this fragility.
The 7 factors that move your café/restaurant valuation
1. Lease (the biggest factor)
Lease is everything in hospitality. A café with 5+ years of lease + market-aligned rent is worth substantially more than the same café with 18 months left. Get your lease secured for 3+ years before listing — even if it costs you a small rent increase.
2. Foot traffic and location
Pedestrian count, parking availability, complementary neighbours (gym, office, school), morning vs evening trade. Premium locations command premium multiples.
3. Owner involvement
Café where owner works front of house 50 hours a week = sells low end of range. Café with full-time manager and trained team = top of range. Buyers heavily discount for owner-as-employee scenarios.
4. Profit consistency
Three years of consistent or growing SDE is gold. One spike year (post-renovation, post-marketing campaign) followed by softer years is hard to defend.
5. Concept transferability
Is the business about the food, the chef, the owner's personality, or all of them? Highly chef-dependent businesses are very hard to sell because the buyer can't guarantee the chef stays.
6. Fitout age and condition
Recent quality fitout = no immediate capital expenditure for buyer. Aging fitout = buyer mentally subtracts $50–150k from offer. Document your refurb history.
7. Liquor license + extended hours
Restaurants with proper liquor licenses (especially Restaurant + Tavern combinations) command premium multiples. Late-trade or 24-hour licenses similarly.
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Hospitality due diligence has some industry-specific items. Be ready for:
- Daily takings reconciliation. 12 months of POS data + bank deposits — they need to match. Cash businesses get scrutinised hard.
- Lease and outgoings detail. Total occupancy cost as % of revenue (rule of thumb: under 10% is healthy, over 15% is stress).
- Wages-to-revenue ratio. 25–30% is typical for cafés. 30–35% for restaurants. Above that = margin issues.
- COGS as % of revenue. Food costs typically 28–35%. Higher = pricing or wastage problem.
- Council compliance. Food safety inspections, fire compliance, building approvals, parking compliance.
- Liquor license transferability. Not automatic — must be approved by the WA Department of Local Government, Sport and Cultural Industries.
- Employee award compliance. Hospitality has specific awards. Underpayment audits are common.
- Stock value at settlement. Method must be agreed in the contract.
Things you can do in the 6 months before listing
- Negotiate a lease extension. Even a 2-year extension at slightly higher rent often adds more to sale value than the rent increase costs.
- Hire and stabilise a manager. One you'd genuinely trust to run the place when you're away. Document their role.
- Build SOPs. Recipes, opening procedures, supplier orders, customer service standards. A thick binder beats a fluffy pitch.
- Audit your award compliance. Get your accountant to spot-check. Backpay if needed before a buyer's lawyer finds it.
- Refresh your social media presence. Strong Instagram + healthy Google reviews = buyer confidence in the brand.
- Clean up your books. 3 years of accountant-prepared financials with consistent methodology, including a clean add-back schedule.
Common Perth café/restaurant sale mistakes
- Listing in November–February. Hospitality buyers are busy with their own businesses during peak season. List in March–June.
- Pricing on revenue, not profit. "I'm doing $1M revenue so I should get $1M." No — you should get a multiple of your actual SDE.
- Underestimating chef/staff retention risk. Have honest conversations with key staff about staying through transition. Some may need retention incentives.
- Letting the business decline during sale process. A 6-month sale with declining revenue ends badly. Keep the business sharp until settlement.