A cafe in Australia typically sells for $100,000 to $450,000, based on a Seller’s Discretionary Earnings multiple of 1.5x to 2.5x. The biggest variable isn’t your coffee quality or your Instagram following — it’s your lease. A cafe with three years left on a retail tenancy and no options is worth a fraction of the same cafe with seven years plus two five-year options.
That said, there’s a lot more to the number than your lease, and most owners who haven’t sold a business before get this badly wrong (in the optimistic direction).
What Buyers Are Actually Buying
When someone buys your cafe, they’re buying a stream of future income plus the right to use your space. The income stream is what your SDE or normalised EBITDA tells them. The right to use the space is your lease.
A buyer is not paying for:
- Your fit-out cost (depreciated to almost nothing in the market’s eyes)
- Your brand (unless you’ve franchised it or it drives measurable repeat visits)
- Your personal relationships with the barista suppliers or the roaster
- The ten years you’ve put into it
They are paying for what the business will generate after you leave. That’s the number that matters.
I spoke recently with a business broker in Melbourne who told me about a cafe that had been trading for fourteen years, was well-known in its suburb, and had a loyal following. The owner wanted $650,000. The cafe was netting $95,000 in SDE. The lease had eighteen months left with no options. The final sale price was $140,000. The owner was devastated. The buyer knew exactly what he was doing.
The Numbers: Typical Cafe Valuation Multiples in Australia
Most Australian cafes sell within these bands:
SDE of $50,000 to $100,000: Sell for $75,000 to $200,000 (1.5x to 2x SDE). These are typically smaller, owner-operator businesses where the buyer is essentially purchasing a job with some goodwill.
SDE of $100,000 to $200,000: Sell for $180,000 to $400,000 (1.8x to 2.2x SDE). This is the most common bracket for established suburban cafes with decent lease positions.
SDE of $200,000 to $400,000: Sell for $350,000 to $800,000 (1.75x to 2.5x SDE). Cafes at this level usually have a manager in place, strong systems, and a lease with genuine longevity. A strategic buyer might pay a touch above 2.5x if the location is irreplaceable.
Above $400,000 SDE: Rare for standalone cafes. At this level, buyers are typically purchasing a brand or a multi-site operation, and the conversation starts looking more like a proper M&A process than a business broker listing.
Revenue multiples are also used, typically in the range of 0.3x to 0.6x annual turnover, but these are rough guides. Don’t anchor on revenue. A cafe doing $1.2 million with 8% net margins and an owner working six days a week is not worth $600,000.
The SDE Calculation (Where Owners Get Confused)
SDE stands for Seller’s Discretionary Earnings. For a cafe, it looks like this:
Net profit after tax: $45,000
Add back: owner’s wage/drawings: $80,000
Add back: depreciation: $18,000
Add back: one-off expenses (eg. fit-out repair): $12,000
SDE: $155,000
That $155,000 is what a buyer uses to size the deal. At 2x, the cafe is worth $310,000.
Where owners go wrong is treating revenue as profit, or forgetting to add back a market-rate owner’s salary before applying the multiple. If you’re working in the cafe six days a week and drawing $40,000, the calculation needs to reflect what it would cost to replace you with a manager — typically $65,000 to $85,000 in today’s market. If replacing you would cost $75,000 and you’re drawing $40,000, only the $40,000 goes back into SDE, not the $75,000. The business can only support what it actually pays.
For a more detailed breakdown of what gets added back and what doesn’t, read our guide on EBITDA add-backs when selling a business.
Your Lease Is Doing More Work Than You Think
In hospitality, the lease isn’t just a cost — it’s the asset. Without a transferable lease with enough runway, there is no business to sell. Full stop.
Buyers look for:
- Minimum 3-5 years remaining (ideally 5+ years plus options)
- Rent below 10% of revenue (some tolerance to 12-13% for premium locations)
- Assignability — the landlord must agree to transfer the lease to a new owner
- No demolition or redevelopment clauses that could eject a buyer mid-term
If your lease has less than three years left and no options, your cafe is effectively unsaleable at a fair multiple. Not impossible to sell, but you’re negotiating from a position of weakness, and buyers know it. In that situation, a sale might happen — but at a price that reflects the risk the buyer is taking on.
The first thing you should do, ideally twelve to eighteen months before you want to sell, is speak to your landlord about securing an extension or exercising your option early. Landlords are often willing to negotiate, particularly if you’ve been a reliable tenant. Read more about the full preparation process in our 12-month pre-sale checklist.
What Drags Cafe Values Down
A few things I see consistently across cafe sales that kill or reduce the price:
Owner dependency. If you’re the head barista, the opening person, and the one who knows every regular by name, buyers will discount heavily for the risk that your customers leave when you do. The fix is training staff, building systems, and stepping back from daily operations before you list.
Unrecorded cash. This one is frustrating because it’s self-inflicted. If a portion of your takings never hit the POS — and there are plenty of cafes where this has happened (I’ll leave it there) — you can’t include that income in your SDE. You can only sell on what’s verifiable. Buyers and their accountants will look at your GST returns and BAS data. It has to reconcile.
Short-term or verbal roaster/supplier agreements. Buyers want certainty. If your coffee arrangement is a handshake deal with a roaster who’ll walk if ownership changes, that’s a risk. Document your supplier agreements before listing.
Declining revenue trend. A cafe that peaked three years ago and has been drifting down in revenue is a hard sell. Even if the current SDE looks okay, a buyer will see the trend and price it in. Better to spend a year stabilising or growing the numbers before going to market.
The “Cafe 3 Rules”: Location, Lease, Labour
There’s an informal framework brokers use when they’re assessing a cafe quickly. Location, lease, labour — the three variables that determine whether a cafe is actually worth buying.
Location means foot traffic and demographics. A breakfast-and-lunch cafe on a commuter route or near an office precinct is structurally more valuable than the same cafe on a quiet residential street. That’s not a reflection on your food — it’s a reflection on the structural advantage of the position.
Lease we’ve covered. It’s the foundation. Without it, you have nothing to sell but equipment and goodwill, and equipment depreciates fast.
Labour means: does the business run without you? A cafe where the owner is also the head barista, the buyer, and the bookkeeper is a high-risk acquisition. A cafe where there’s a trained team, a cafe manager, and systems for ordering, rostering, and cash handling is a business. Buyers pay more for the latter.
What Buyers Are Willing to Pay More For
On the upside, there are things that push cafes above the standard multiple:
- Wholesale coffee revenue — if you’re supplying beans to local businesses or offices, that’s recurring income with different economics to retail trade
- Manager-run operations — a buyer who doesn’t need to be behind the machine is paying for a return on investment, not buying themselves a job
- Catering contracts — recurring, predictable revenue attached to corporate accounts or venues
- Strong branding with genuine IP — rare, but a cafe with a recognisable identity and merchandise revenue can attract a brand premium
Tax Before You Sell
The tax implications of selling a cafe deserve their own article (and we’ve written one). In short, the sale proceeds are typically treated as a capital gain. If you’ve owned the business for more than twelve months, you’re eligible for the 50% CGT discount. Depending on your structure and turnover, you may also qualify for small business CGT concessions — including the 15-year exemption or the retirement exemption — which can dramatically reduce your tax bill. Read the full breakdown in our tax on selling a business guide.
This is not something to figure out after you’ve signed the contract. Get your accountant and advisor talking before you agree to a price.
Getting a Proper Valuation
If you want a sense of what your cafe is worth without committing to a full sales process, start with our business valuation calculator. It’ll give you a range based on your earnings, industry, and lease position.
If you’re ready to think seriously about a sale — whether that’s in six months or two years — we’d encourage a conversation before you engage a business broker. The way you structure the sale, who you approach, and how you prepare the numbers can make a $100,000 to $200,000 difference in your final outcome. Get in touch here.
The good cafes sell. The well-prepared ones sell for what they’re actually worth.