Finance for buying a restaurant or takeaway

It depends on what you are buying. For a leasehold restaurant or takeaway, lenders want a meaningful contribution from you because there is no building to fall back on, and the amount they will lend is set by how comfortably the profit covers the repayments. For a freehold, our commercial mortgages page puts the usual deposit at 25% to 40%, with loans commonly up to around 70% to 75% of value on good owner-occupied premises. Expect to put in more if you are new to running a restaurant or the business is trading below its best. Our loan to buy a business calculator shows how deposit and repayments interact, and the loan to value glossary entry explains the ratio.

Yes, within limits. Goodwill is the part of the price above the value of the equipment and the lease, paid for the name, the regulars and the takings. Lenders will fund it when the accounts and card statements prove the trade, and they size the loan on profit after a fair wage for the owner, often looking at EBITDA and how many times it covers the repayments. They are more cautious where the trade depends on the current chef or owner, because that goodwill may leave with them. Our guide on how to value a business explains how a fair price is reached.

Most restaurant sales are leasehold. You buy the business, the fixtures and the remaining lease, and the landlord has to consent to the lease being assigned to you. Lenders read the lease closely, including the rent, the next rent review, any break clauses and above all how many years are left. A lender will rarely lend over a longer term than the lease has to run, so a short lease means a shorter loan and higher repayments, or a new lease agreed before completion.

Buying the freehold gives you control of the building and an asset that can support a larger, longer loan, but it needs a bigger deposit and a valuation. Some buyers hold the property in a separate company, which your accountant can advise on. Pubs and hotels follow the same pattern, covered on our pub mortgages and buying a hotel pages.

• VAT on the price. A restaurant sold as a going concern can be outside the scope of VAT if the conditions are met, including that you carry on the same kind of business and are VAT registered or become so. Where the seller has opted to tax the building, you must opt to tax too (HMRC, VAT Notice 700/9).
• The premises licence. To sell alcohol, the premises licence must be transferred to you and the restaurant needs a designated premises supervisor who holds a personal licence (GOV.UK, alcohol licensing).
• Food business registration. A new owner taking over a food business must register with the local authority, at least 28 days before trading (GOV.UK, starting a food business).
• Staff. When a business is bought, employees usually transfer to the new owner on their existing terms under TUPE (GOV.UK, business transfers and TUPE).

Once you own it, VAT becomes a quarterly cost of its own, and our page on restaurant VAT funding covers bills that land in quiet months.

It is harder but not ruled out. Lenders want to know who will run the kitchen and the floor, so first-time buyers often keep an experienced head chef or manager in place, bring in a partner with a track record, or put in a larger deposit. A franchise can help because the brand brings a tested system; see franchise loans. If you would rather open a new site, read getting a loan to start a restaurant and start-up business loans.

A takeaway is usually cheaper to buy, with delivery platform reports doing much of the work card statements do for a restaurant; see takeaway business loans. Cafés are covered in our café business loans guide, and wet-led venues on pub and bar loans. The hospitality business loans hub links every sector page.