Restaurant Market Report 2011

The restaurant market is broad and can range from café style food operations with turnover below $500,000 p.a. to the largest turnover food and beverage businesses with turnover exceeding $5,000,000 p.a. These businesses are often defined as iconic venues.

The licensing system for on-premises restaurants makes it easy to establish with lower barriers to entry unlike hotels. There are three main factors in determining the value of restaurants:

1. The extent to which the goodwill of a chef or owner influences trade
2. Terms and conditions of the lease including rental affordability, turnover rent and payment of outgoings
3. Location of the business and whether this can easily be replicated

Valuation multiples traditionally have ranged from as low as 1 to 2 years purchase for smaller restaurants with a significant element of personal goodwill from a chef or owner.

Those restaurants categorised as iconic venues often rival hotels for their size and scale of turnover. They are not always associated with a name “chef” but are mostly located in areas with special characteristics, some of which are: