Six years managing this place, and the owner wants to retire and sell to me at roughly 2.2 times owner earnings including all the equipment. I have £70k and the lease has four years left on it. The alternative is an empty unit on the same street where the fit-out quote came in at £55k. Same street, same customers, very different risks — what would you want to see before signing either one?
The build-your-own plan is more expensive than it looks and I'd push back on it hard. A £55k fit-out quote in this trade tends to land nearer £75-80k once extraction, drainage, three-phase power and the inevitable planning or building control surprise show up. Then add six months of paying rent while you fit out and build a customer base, against a business that already pays you from week one. You'd be spending more money to compete with a café that has your six years of goodwill in it, two doors away.
The extraction quote is the one that ambushes people. Mine came in at more than the entire kitchen fit-out because of where the flue had to run, and that was after planning had already been agreed.
Small food businesses generally change hands at low single-digit multiples of owner earnings, so 2.2x isn't outrageous on its face — the question is what you're buying for it. Strip out the equipment at honest secondhand value and see what's left; that remainder is goodwill, and goodwill in a café is mostly the location and the lease. With only four years to run and no option to renew in your favour, you're paying for a stream of profit that could end the day the landlord decides otherwise. Either negotiate a longer term as a condition of sale, or discount the price by what you'd lose if you had to move.
I bought a shop on the seller's word and the declared takings were about thirty percent above what the statements showed once I finally saw them. My fault entirely — I liked the owner and I didn't want to look suspicious. It cost me two years of overpaying on a loan for goodwill that wasn't there. Being unpleasantly thorough is not an insult, and any decent seller expects it.
You already know the customers, the staff and the cash cycle. Buy it, but only after a solicitor reads the lease and an accountant reads the statements.
@invoice_ivy · 5mo ago · 2 replies
Before you talk about the multiple at all, ask for three years of business bank statements and match them against the declared takings line by line. Not the accounts — the statements, plus the card processor reports and the till Z-reports for a sample of weeks. Then ask what has been run through the business that a new owner wouldn't spend, because that's how a seller inflates owner earnings without technically lying. If they hesitate on any of that, you have your answer and it cost you nothing.
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@seedstart_sim · 5mo ago
Add the lease to that pile and have a solicitor read it, specifically the rent review, the dilapidations clause and whether the landlord has to consent to the assignment. I've seen a sale collapse three weeks out because the landlord wanted a personal guarantee the buyer couldn't give.
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