Buying a café can be an exciting opportunity, whether you’re drawn to the industry for business potential or a passion for great coffee. With over 55,000 cafés and restaurants across Australia, and industry revenues rebounding post-COVID—reaching a combined revenue with restaurants and takeaway services of more than $65 billion in 2024 – it’s an appealing venture. But before you pour your first espresso, it’s crucial to navigate the legal complexities involved. From securing a lease to reviewing contracts and ensuring compliance with local regulations, buying a café requires careful legal due diligence. Here’s what every prospective café owner needs to know to protect their investment and avoid costly mistakes.
Understanding the Café Industry in 2025
Australia’s café scene remains one of the most dynamic in the world. With a strong coffee culture and increasing consumer demand for unique, high-quality experiences, cafes are not just places to grab a drink – they are social and cultural hubs.
However, competition is fierce. Success depends on more than great coffee and friendly service; location, business strategy, and legal preparation all play crucial roles.
Preparing for Café Ownership
Are You Ready to Buy a Café?
Before diving into contracts and financials, ask yourself:
- Do I have hospitality experience? Managing a café involves more than making coffee. It requires knowledge of operations, staffing, and customer service.
- Am I prepared for the workload? Early mornings, long hours, and physically demanding work are part of the lifestyle.
- What is my management style? While some owners take a hands-on approach, others prefer hiring managers. Understanding your role is essential for business success.
- Have I developed a business plan? A solid plan outlining your market, budget, and growth strategy is crucial, particularly if you’re seeking financing.
The Legal Side of Buying a Café
Licences and Council Approvals
Every café in NSW must meet legal requirements, including obtaining specific permits and licences:
| Licence/Permit | Purpose | Renewal Period |
| Food Business Registration | Required for all food businesses | Annual |
| Food Safety
Supervisor Certificate |
Ensures compliance with food safety laws | Every 5 years |
| Trade Waste Permit | Required for waste disposal compliance | Annual |
| Outdoor Dining Permit
(if applicable) |
Allows seating on footpaths/public spaces | Varies by council |
Due Diligence: What to Check Before You Buy
Buying a café requires a thorough review of financials, leases, and operational aspects.
Financial Review
- Analyse Business Activity Statements (BAS) for accurate financial reporting.
- Assess weekly sales trends to identify peak and slow periods.
- Examine staff wages and superannuation payments to ensure compliance.
- Review supplier contracts to confirm pricing and payment terms.
Equipment and Assets
- Verify ownership of expensive items like the espresso machine (often leased).
- Check maintenance records for key equipment.
- Assess the condition and expected lifespan of major appliances.
Lease Agreement Review
The lease is often one of the most critical aspects of your investment. Pay close attention to:
- Lease duration and renewal options
- Rent increases and review mechanisms
- Make-good obligations (restoring the premises upon exit)
- Relocation or demolition clauses
- Conditions for lease transfer
Employees and Workplace Obligations
- Check staff contracts and existing award conditions.
- Review long service leave entitlements for employees with extended tenure.
- Understand payroll liabilities and superannuation obligations.
- Assess the existing team culture and any training requirements.
Digital Presence and Branding
In today’s market, a café’s online presence is crucial. Ensure:
- Ownership of social media accounts and login details.
- Control of website domains and online ordering platforms.
- Customer database transfer is included in the sale agreement.
Red Flags to Watch Out for When Buying a Café
Not every café for sale is a good investment. Be cautious of these warning signs:
- Declining Sales Trends: If revenue has been dropping, investigate why. It could be due to poor management, increased competition, or a shifting customer base.
- High Staff Turnover: A revolving door of employees can indicate management issues, poor working conditions, or wage disputes.
- Unfavourable Lease Terms: Short lease durations, high rent increases, or restrictive clauses can impact long-term profitability.
- Unpaid Debts and Liabilities: Check for outstanding supplier invoices, tax debts, or pending legal claims against the business.
- Equipment in Poor Condition: If major appliances require immediate replacement, it could lead to unexpected costs.
- Negative Online Reviews: Consistently bad reviews may signal customer dissatisfaction with service, quality, or pricing.
- Lack of Proper Financial Records: If the owner cannot provide clear financial statements, be wary of hidden financial troubles.
- Pending Council or Regulatory Issues: Check for past health and safety violations, compliance fines, or pending investigations.
- A Sudden Sale Without Explanation: If the owner is in a rush to sell, ask why. There may be underlying issues they want to offload.
Location, Foot Traffic & Market Positioning
The right location can make or break a café. Key factors to assess include:
- Daily foot traffic and peak hours
- Nearby businesses and their synergy with your café
- Proximity to public transport and available parking
- Local demographics and spending habits
- Competition in the area
Protecting Your Investment
Legal Safeguards
Before signing a contract, ensure:
- Restraint of trade clauses prevent the seller from opening a competing café nearby.
- Intellectual property rights (logos, recipes, branding) are properly transferred.
- Warranties on financial statements protect against undisclosed debts.
- Comprehensive lease transfer agreements avoid unexpected disputes.
Essential Insurance Policies
To safeguard your investment, consider:
- Public liability insurance for customer and third-party injuries.
- Business interruption coverage to protect against revenue loss.
- Property and equipment insurance for damage or theft.
- Workers’ compensation insurance to meet employee safety obligations.
- Food contamination coverage to handle unexpected food safety issues.
The Transition Process: Setting Yourself Up for Success
Once the sale is finalised, a smooth transition is key:
- Supplier relationships: Set up accounts and negotiate new contracts if needed.
- Utility and service transfers: Ensure electricity, water, and internet are in your name.
- Staff communication: Hold meetings to introduce yourself and outline expectations.
- Inventory management: Review stock levels and place initial orders.
- Marketing strategy: Announce the change in ownership and any rebranding plans.
Long-Term Growth Strategies
After settling in, consider opportunities for expansion:
- Adding new menu items or seasonal specials.
- Offering catering services or takeaway options.
- Expanding seating capacity or optimising the layout.
- Strengthening digital marketing and loyalty programs.
Frequently Asked Questions About Buying a Café in NSW
What legal challenges come with running a café?
Beyond daily operations, you must comply with health regulations, council permits, and lease terms. Our expert Conveyancing Lawyers can help you navigate these legal requirements from the start, ensuring smooth ownership and ongoing compliance.
What should I ask the seller before buying a café?
Key questions include:
- Is the lease in good standing?
- Have all council approvals been obtained?
- Any past disputes with the landlord or authorities?
Our experienced Central Coast Conveyancing Lawyers will use this information for due diligence and to secure your legal position.
Do I need a conveyancing lawyer to buy a café in NSW?
Absolutely. Unlike standard property transactions, café purchases involve lease transfers, business licenses, and employee entitlements. At Conveyancing@Erina, we ensure everything is legally sound and in your best interest.
Who handles due diligence when buying a café?
A Conveyancing Lawyer leads the process, working with accountants, food safety consultants, and equipment specialists to assess risks and protect your investment.
What’s more important than financials when buying a café?
Lease terms and council approvals. A strong lease with fair terms and proper approvals ensures long-term viability—our Conveyancing Lawyers Central Coast will scrutinise these details to prevent future headaches.
Final Thoughts: Making an Informed Decision
Buying a café in NSW is an exciting venture, but success requires more than passion. By understanding the financial, legal, and operational aspects, you can make informed decisions that protect your investment and set your business up for long-term success.
As a business owner, conveyancing shouldn’t add to the stress of setting up a business. That is why our expert team at Conveyancing@Erina will ensure your café purchase is legally sound and strategically beneficial. Our services include:
- Due diligence on financials, contracts, and leases
- Negotiating sale agreements and lease transfers
- Ensuring compliance with licences and permits
- Advising on employment and workplace obligations
- Handling intellectual property and branding concerns
We work alongside your accountant and business advisors to safeguard your investment and help you make informed decisions.
If you’re considering buying a café, reach out our expert team at Conveyancing@Erina today. With the right preparation and professional support, your café ownership dream can become a reality.
