The Daily Grind Café Pty Ltd

Two corporate catering accounts generated A$612k of A$900k trailing-12-month revenue. One operates on a rolling 30-day arrangement with no written contract; the other’s agreement expires within 6 months.

The walk-in café is healthy, but most of the earnings — and most of the asking price — rest on two relationships you don’t control and that may not survive a change of owner. If either leaves, the normalised earnings (and the Estimate) fall materially.

• ?Are both catering accounts under written contract? For how long, and is there a change-of-control clause?
• ?What is revenue and gross margin by customer for the last 24 months?
• ?Will the seller warrant that neither account has given notice or signalled intent to leave?
• ?Can a price retention / earn-out be tied to those accounts staying for 12 months post-settlement?

Current lease expires 31 Aug 2027. Assignment requires landlord consent (not to be unreasonably withheld), and there is a change-of-control clause. No option-to-renew has been exercised or secured.

A café is its location. Buying one with ~14 months of tenure and no secured renewal means you could be negotiating from a weak position — or relocating — soon after settlement. This caps the price and the financing.

• ?Will the landlord grant a new lease or renewal, and on what terms, before settlement?
• ?Has the landlord pre-approved assignment to a new owner?
• ?What is the current rent versus market, and when is the next review?

The owner works ~55 hours/week, holds the head-barista role, personally manages both catering relationships and the key supplier accounts. No documented systems, rosters or procedures were provided.

Much of what you’d be buying walks out the door with the seller. Replacing the owner’s hours and relationships is a real, recurring cost the headline earnings don’t show — and a key reason the range is adjusted down.

• ?Will the seller commit to a handover period and introduce the catering and supplier contacts?
• ?What would it cost to hire a manager and head barista to replace the owner’s role?
• ?Is the seller willing to a non-compete within the local area?

Adjustments to owner earnings include a vehicle (A$14k), “one-off” equipment repairs (A$12k) that also appear in the prior year, and travel (A$8k). Together they lift SDE by ~24%.

Add-backs are normal, but recurring “one-offs” and personal-use items can quietly inflate the multiple base. We removed A$34k we couldn’t substantiate; if they’re genuine, the range rises.

• ?Provide supporting invoices for each add-back and confirm which recur.
• ?Reconcile reported earnings to BAS and bank statements for FY24 and FY25.

Google rating fell from 4.6 (218 reviews) to 4.1 over the last year. Recent reviews repeatedly mention slow service and staff changes.

A declining rating can be an early signal of the trading softness that doesn’t show in last year’s accounts yet. Worth pairing with month-by-month walk-in revenue.

• ?Show monthly walk-in (non-catering) revenue for the last 24 months.
• ?What changed in staffing over the past year?

Food business registration is current. The council footpath-trading permit (≈18 outdoor seats) lapses in 4 months and is renewed annually on application.

• ?Confirm the permit will be renewed and transfers to a new operator.
• ?What share of revenue depends on outdoor seating?

No court judgements, no insolvency or external-administration notices against the entity or its sole director (ASIC, AFSA — as at report date). No registered security interests (PPSR) other than an equipment lease disclosed by the seller.

Six casual staff plus the owner; no single key employee beyond the owner (covered in finding 03). Suppliers are substitutable. Payroll and award/superannuation compliance could not be checked — no payroll records supplied.

• ?Provide payroll records and confirm award rates, superannuation and leave entitlements are current.