Key Takeaways
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Reconcile point-of-sale reports, bank deposits, supplier invoices and BAS lodgements before relying on a turnover figure.
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Have a solicitor review the lease, including term, options, rent reviews, permitted use and assignment requirements.
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Confirm who owns the coffee machine, cool room and fit-out, and whether any item is under finance or subject to a security interest.
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Check wages against the applicable award and allow for the cost of any hours the owner works.
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Agree the handover, any restraint and the treatment of staff in the contract with your solicitor.
Buying a cafe or takeaway involves checking whether the trading, lease, equipment and staffing arrangements match what has been presented. A well-presented venue can create pressure to commit, and these checks help you assess the business before you sign.
Use them when reviewing any cafe or takeaway listing, and involve your accountant and solicitor early.
Verify the Takings
Ask for profit and loss statements, Business Activity Statement (BAS) lodgements, bank statements and payroll records for several years where available, plus current management accounts. Have your accountant review them.
Reconcile the records against each other. Point-of-sale (POS) reports should align with bank deposits, allowing for timing and card settlement differences, and major purchases such as coffee, milk and food should be reasonable in proportion to the sales claimed.
Visit at different times and on different days to see trading for yourself. Treat any claim of unrecorded cash income with caution, because it cannot be verified and lenders are unlikely to rely on it.
Read the Lease Carefully
Calculate rent and outgoings as a share of verified sales, then consider whether the remaining profit supports the price and your finance. Review the scheduled rent increases as well as the current rent.
Ask your solicitor to check:
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The remaining term and any option periods, including the dates for exercising them.
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The rent review method and when the next review falls.
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Permitted use, including any change you plan to the menu, hours or the sale of alcohol.
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Landlord consent to assignment and any conditions the landlord may attach.
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Make-good obligations at the end of the lease.
Queensland retail shop lease assignments can involve disclosure and advice requirements, with timing rules and exceptions. See the Queensland retail shop lease guidance and have your solicitor identify the steps that apply.
Equipment, Fit-Out and Ownership
Have someone familiar with commercial equipment inspect the coffee machine, grinders, dishwasher, ovens, refrigeration, cool room, exhaust canopy and grease trap. These items can be costly to repair or replace.
Confirm ownership as well as condition. Coffee machines are sometimes supplied under a roaster agreement or finance lease, and other equipment may be subject to a security interest. A Personal Property Securities Register (PPSR) search and an itemised schedule of included, leased and excluded items can help avoid disputes at settlement.
Agree in the contract how stock will be counted and valued, and how gift cards and customer deposits will be treated.
Staff, Wages and Awards
Ask for current rosters, payroll summaries and each employee’s award classification. Check that pay rates, penalty rates and superannuation are applied correctly, with help from an employment adviser where needed.
Consider whether the profit depends on the owner working unpaid or underpaid hours. If it does, include the cost of replacing that labour when you assess the earnings.
The treatment of transferring employees, prior service and accrued entitlements depends on the circumstances and the law. See the Fair Work guidance on transfer of business and have your solicitor confirm the position before you sign.
Location and Trading Pattern
Observe the venue at different times of day and on different days. Note passing trade, parking, nearby competitors and whether the trading hours described match those that produce the reported profit.
Ask for monthly sales figures to see how trade changes through the year. Coastal, suburban and business-park locations can have very different seasonal patterns, so allow working capital for quieter periods.
Licences and Council Approvals
In Queensland, most cafes and takeaway businesses need a food business licence from the local council. A council food business licence does not transfer to a new owner, so plan your application early and confirm the food safety supervisor arrangements.
Ask for recent inspection reports and any notices, and check whether outdoor dining permits apply. If the business sells alcohol, a liquor licence transfer must be addressed with the Office of Liquor and Gaming Regulation. Do not assume an interim authority will be available by a particular date.
Handover and Goodwill
In many cafes, customer relationships depend on the owner. Agree a practical handover in the contract, including who provides training, when it occurs and what it covers, such as recipes, supplier introductions, POS and rostering systems.
Have your solicitor review any restraint of trade and record the transfer of business names, social media accounts, domains and delivery platform accounts where relevant.
Verify Before You Commit
List the questions each check raises and resolve them with your accountant and solicitor within the contract’s timeframes. Be prepared to walk away if the records cannot support the price.
To see which Gold Coast cafes and takeaways are currently for sale, browse the listings or contact Bond Business Brokers.
Common Questions
What if the coffee machine is supplied by a roaster?
Check the supply agreement. It may require minimum purchases, restrict the choice of coffee or require the machine to be returned. Confirm whether the agreement can be transferred and on what terms.
Do staff entitlements transfer when I buy a cafe?
They may. The treatment of prior service and accrued leave depends on the transfer-of-business rules and the contract, so obtain employment advice before agreeing any price adjustment.
Can I change the menu or trading hours after buying?
Check the lease’s permitted use and trading hour provisions, and any licence or council conditions. Some changes may need landlord consent or a new approval.
This article provides general information only. Obtain advice from appropriately qualified advisers about your circumstances before entering into a transaction or relying on tax, legal or regulatory information.