Selling a restaurant in Canada

Restaurants, cafes and bars are among the more involved small businesses to sell. Next to the usual steps, you have a lease that the buyer needs, permits that do not simply move over, sometimes a liquor licence, a kitchen full of equipment and a team who keep the place running. Here is what to expect and how to prepare.

What buyers look at first

Most restaurant buyers ask the same questions early. Have clear answers ready before you list:

• The lease. How many years are left, including renewal options, the rent and costs, and whether the landlord will consent to an assignment. A short lease can stop a sale.
• Real sales and costs. Monthly sales from your point of sale system, matched to bank deposits and tax returns, plus food cost and labour cost as a share of sales.
• The kitchen and equipment. The age and condition of the hood and fire suppression system, refrigeration, cooking equipment and dishwasher, with service records.
• Licences and permits. Your health operating permit, business licence, any liquor licence and any patio or sign permits.
• Reputation. Reviews, regular customers, catering accounts and delivery app ratings.
• Staff. Who runs the kitchen and the floor, and whether they plan to stay.

Buyers will check these during due diligence, so it helps to gather them now. Our list of documents needed to sell a business is a good start.

Get your numbers clean

Restaurants handle a lot of cash, tips and small purchases, so buyers and lenders look closely at the records. The safest numbers are the ones that match: point of sale reports, bank deposits, supplier invoices, payroll and the sales reported on your tax and GST/HST returns. Buyers generally pay for earnings they can verify, so sales that are not in the books usually add little to the price. If you pay yourself a wage or run personal costs through the business, list them clearly as add-backs with proof.

Many owners stay in the kitchen themselves. If the restaurant depends on you, a buyer will worry about what happens when you leave. Writing down recipes, prep lists, ordering and closing routines helps. See making your business run without you.

The lease is often the deal

A restaurant's location, its built kitchen and its hood and grease trap are hard to replace, so most buyers want to take over your lease. That usually needs the landlord's written consent. Landlords often ask for the buyer's financial information and experience, and some ask for a personal guarantee. Read your lease for the assignment clause, any renewal options, and whether you stay liable after assigning. Talk to the landlord early, with your lawyer. Our guide to the commercial lease when selling covers this step by step.

Liquor licences in British Columbia

If you serve alcohol, the liquor licence is often the slowest piece. In British Columbia, the Liquor and Cannabis Regulation Branch says that when a business changes ownership, the liquor licence must be transferred. The process works like this:

• you, as the current licensee, start the transfer in the Liquor and Cannabis Licensing Portal by entering the buyer's business name and email,
• the buyer needs a CRA business number registered to them and a Business BCeID to use the portal,
• the buyer submits the application with the required forms and the application fee (the branch listed it as $330 when we checked in November 2026),
• new owners provide a personal history summary and a police information or criminal record check,
• an expired licence cannot be transferred, so keep yours renewed and in good standing.

Under the Liquor Control and Licensing Act, only the general manager of the branch can transfer a licence, and you must not try to transfer or deal in it before then. Once the branch receives the application, the buyer may use the licence while the review is finished and is treated as the licensee for that time. The branch says the establishment can stay open during a transfer, and the seller remains responsible for the licence until the branch confirms the application is administratively complete. If the transfer is refused, the branch can suspend the licence, allow a transfer to someone else at arm's length, or cancel it. That is why many purchase agreements make the transfer a condition of closing.

If you sell shares of a company that holds the licence, the licence stays with the company, but the branch has rules about reporting changes to the people behind it, such as directors and officers. Check the current requirements with the branch before you sign. Other provinces have their own liquor regulators, so check where you operate.

Health permits and food safety

In British Columbia, the Food Premises Regulation says you must hold a permit to operate a food service establishment, and that the permit is not transferable. The buyer applies to the local health authority as a new owner. For the purchase of an existing restaurant, Interior Health's application asks for the completed form, floor plans and equipment details, a proposed menu, a food safety plan, a sanitation plan and FOODSAFE or equivalent training. Northern Health asks for applications for an existing establishment at least one month before the planned opening date. Health authorities may inspect before approving the new owner.

The same regulation requires the operator of a food service establishment to hold a FOODSAFE certificate or its equivalent, and when the operator is away, at least one employee on site must hold one. A buyer who is new to food service may need to take the course before closing. Ask your health authority what they need and how long it takes, and give the buyer copies of your recent inspection reports so there are no surprises. Rules and authorities differ in other provinces.

Equipment, inventory and other contracts

In an asset sale, write a list of the equipment included, such as ranges, fryers, walk-in coolers, freezers, the dishwasher, smallwares, furniture and the point of sale hardware. Note anything leased rather than owned, like a dish machine, coffee equipment or a POS system, because those leases need the lessor's consent or must be paid out. Food and drink stock is usually counted on closing day and added to or included in the price. See selling a business with inventory.

Also list the accounts and contracts that keep the restaurant running: suppliers, delivery apps, the website, domain and social accounts, the phone number, reservation system, pest control, grease trap service and hood cleaning. Agree in writing who honours gift cards you have already sold. Our guide to transferring contracts, licences and permits has a checklist. If your restaurant is a franchise, the franchisor's approval comes first; see selling a franchise business. Running a gym, studio or shop instead? See selling a gym or fitness studio or selling a retail store.

Staff

A steady kitchen and floor team adds real value, and buyers will want to know who is staying. Employment law is provincial. In British Columbia, section 97 of the Employment Standards Act says that if all or part of a business is disposed of, an employee's employment is deemed continuous for the purposes of the Act. That can affect vacation and length of service for staff who stay on. Ask your lawyer what you owe on closing, including wages, vacation pay and how tips are handled, and plan when and how to tell the team. Our guide on what to tell employees covers timing and wording.

Tax on the sale

How a restaurant sale is taxed depends on whether you sell assets or shares and how the price is split. In an asset sale, goodwill, equipment and inventory are each treated differently, so agree a fair split in the purchase agreement. See asset sale vs share sale, goodwill when selling and taxes when selling a business.

For GST/HST, the CRA explains that you and the buyer may be able to jointly elect under section 167 of the Excise Tax Act, using Form GST44, so that no GST/HST is payable on the sale. This generally needs the buyer to get at least 90% of the property needed to carry on the business, and if you are a registrant, the buyer must be one too. Provincial sales tax has its own rules. See GST and PST when selling a business.

A simple worked example

These numbers are made up and rounded for illustration only. Your own deal, timing and tax will differ.

Questions to take to your lawyer and accountant

• Will my landlord consent to an assignment, and will I stay liable after it?
• Does my liquor licence need a transfer or a report of changes, and what should the purchase agreement say if approval is delayed?
• What will the buyer need from the health authority, and how long does it take?
• Which equipment is leased, and should I pay those leases out on closing?
• How should we split the price between goodwill, equipment and inventory?
• Can we use the section 167 election for GST/HST, and who files it?
• What do I owe staff on closing, including vacation pay and tips?
• Who honours gift cards and catering deposits already paid?

For more, read what your lawyer and accountant do. Running a bakery instead? See selling a bakery in Canada or selling a coffee shop in Canada. Own a motel or small hotel? See selling a motel in Canada. Run a brewpub, winery or distillery? See selling a winery, brewery or distillery. This guide is general information, not legal or tax advice for your situation. Questions about listing with us go to hello@sellmybusinessdirect.com.