Restaurants are the most-transacted commercial category in BC — and also the category where buyers most often overpay. The combination of leasehold real estate, transferable permits, equipment, brand goodwill, and operating cash flow makes a restaurant simultaneously easier to acquire than other commercial assets and harder to value correctly.
If you're considering buying a restaurant in BC, here's the buyer's guide most first-time restaurant operators wish they'd had.
Start With Prime Cost
Restaurant economics revolve around prime cost — food + labour as a percentage of revenue. Well-run independent restaurants run prime cost at 55–62%. Above 65% is a red flag. Above 70% means the business is fundamentally broken or the seller's financials are wrong.
Get the prime cost calculation directly from POS reports, supplier invoices, and payroll records. Don't trust the seller's verbal explanation.
Verify Revenue Three Ways
The single biggest mistake new restaurant buyers make is over-relying on the seller's reported revenue. Verify against three independent sources: - POS reports (typically Square, Toast, Lightspeed, or similar) - Bank deposits over 3 years - Supplier invoices (volume of food purchased correlates to revenue)
If these three numbers don't align, the seller has a problem — either undisclosed cash sales or overstated revenue. Both have implications for what you should pay.
Liquor Licence Is a Major Source of Value
BC Food-Primary and Liquor-Primary licences are significant value drivers. - Liquor-Primary licences (bars, pubs, nightclubs) are tightly capped and transfer at premium - Food-Primary licences (full-service restaurants) are more available but still add meaningful value - Transfer requires BC LCRB approval — typically 60–90 days
A restaurant without a liquor licence is a different business than one with. Patio service, late-night hours, and event hosting all depend on licensing. Verify the licence is in good standing and the buyer qualifies.
Lease Deep-Dive Is Non-Negotiable
The lease usually matters more than the business itself for long-term value. Key terms: - Term remaining — 5+ years strongly preferred - Renewal options — exercisable or landlord-discretion? - Rent as % of sales — 10–15% healthy, 18%+ problematic - Demolition clauses — protect against redevelopment termination - Landlord consent on transfer — what's the standard? - Tenant improvement reimbursements — any outstanding obligations?
Don't sign anything without your lawyer reviewing the lease in detail. Restaurant leases have specific quirks that don't appear in general retail leases.
Equipment & Leasehold Inventory
Restaurant equipment typically runs $50K–$300K depending on concept. Verify: - Detailed equipment list with ages and condition - Ownership: yours, the landlord's, or leased to a third party? - Concept-specific gear (pizza ovens, sushi cases, tandoors, etc.) — get a restaurant equipment specialist if you're not familiar with the category - Refrigeration condition — walk-ins, line refrigeration, freezers
Old equipment due for replacement materially affects pricing. Budget $50K–$100K for surprises in any deal over $300K.
Health Authority Status
Pull the inspection records: - Fraser Health, Vancouver Coastal Health, or Island Health depending on location - Open infractions - Food safety training records on file - Water/sewer status for any required upgrades
A restaurant with multiple recent inspection failures is signalling either weak management or building issues. Either is solvable but needs to be priced in.
Staff Retention Matters More Than You Think
Key employees — especially the kitchen lead and front-of-house manager — often carry the operational knowledge that keeps the restaurant running. Losing them during a transition can devastate the business.
Negotiate retention agreements with key staff before closing. Understand the wage structure relative to market. Be honest with yourself: if the staff leaves, can you operate?
Online Reputation Travels With the Brand
Google reviews, Yelp ratings, TripAdvisor scores, and social media following are part of the business value. A 4.5-star restaurant transfers very differently than a 3.2-star restaurant — even if the food is identical, the customer perception trail is hard to reverse.
If you plan to rebrand, you give up that goodwill. Factor that into pricing.
Deal Structure: APA vs. Share Purchase
Most restaurants are sold as Asset Purchase Agreements (APA). The allocation between goodwill, equipment, inventory, and (if applicable) real estate has significant tax implications. Discuss this with your accountant before signing the letter of intent — the allocation can dramatically affect your after-tax cost.
Financing & Liquor Licence Timing
Restaurant financing typically runs 50–65% LTV through credit unions and BDC. Inventory financing separately. The closing timeline coordinates the liquor licence transfer (60–90 days) with the lender's funding date.
Plan for 90–120 days from accepted offer to keys-in-hand. Restaurants rarely close fast.
The Bottom Line
Restaurant acquisitions reward careful verification and specialized representation. The deals that look "easy" or "turnkey" are usually neither — they just look that way until the buyer is in the kitchen at 6am realizing nobody knows the recipes.
See my restaurants for sale page for the full due diligence framework, or contact me confidentially to discuss your goals.
Related Guides
- Restaurants for sale — full service overview - Banquet halls for sale — related hospitality category - Retail spaces — for restaurants in retail context - All commercial real estate services
Surrey & Fraser Valley REALTOR® | JB Elite Group Realty
Terry Sohal has been helping families and investors buy, sell, and invest in real estate across the Fraser Valley for over 30 years. Having lived in Surrey since the early 1990s, she brings deep local knowledge spanning residential and commercial properties. Terry is known for her honest, personal approach and her commitment to putting clients first.