Buying an existing café: the due diligence checklist

Buying a café is one of the most popular ways into small business in New Zealand, and one of the most romantic. You walk in on a sunny Saturday, the place is humming, the coffee’s good, and the owner says they’re “just ready for a change”. It’s easy to picture yourself behind the counter.

This checklist is the unromantic bit. It’s what to verify before the romance costs you your savings. It’s general information — you should use a lawyer and an accountant, as business.govt.nz recommends — but it’ll help you know what to ask for and what to look out for.

Step 1: Are the takings real?

Everything starts with turnover. The listing will quote a weekly or annual figure; your job is to prove it.

Cross-check three sources:

Source	What it shows	What to look for
POS reports	Sales by day, hour, product	Consistency with bank deposits
Business bank statements	Money actually received	Regular card and eftpos deposits
GST returns	Sales declared to Inland Revenue	Should broadly match the other two

If the three tell different stories, ask why. A café where “a lot is cash” and the bank statements don’t support the claimed turnover is a café you should value on what you can verify.

Look at seasonality. Business.govt.nz suggests having an accountant examine the books for seasonal trends and how reliable any forecasts are. Ask for at least twelve months, ideally two years, by month. A café viewed in summer may look very different in July. Our guide to using POS reports explains which reports to request.

Watch for one-offs. A big catering contract, a nearby building site full of hungry workers, or a road closure that sent traffic past the door can all inflate recent takings temporarily.

Step 2: Rebuild the costs yourself

Don’t rely on the seller’s summary of costs. Rebuild them line by line.

• Wages. Who works there, on what terms and hours? Is the owner working 60 unpaid hours a week? If so, you’ll need to pay someone to replace them — or accept those hours yourself. Remember the adult minimum wage rose to $23.95 an hour from 1 April 2026, and default employer KiwiSaver contributions rose to 3.5%.
• Rent and outgoings. From the lease, not the listing.
• Cost of goods. Coffee, milk, food, packaging — ask for supplier statements.
• Repairs and maintenance. Ask what’s been fixed recently and what’s due.
• Other overheads. Power, insurance, POS fees, card fees, accounting, waste.

Then work out what’s really left at the end of the month. That’s what you’re buying.

Step 3: Check the lease as if you were a lender

A café’s value is tied to its location. Ask for the full lease and check:

• Remaining term and rights of renewal
• Rent review dates and method
• Assignment — will the landlord consent to transferring the lease to you, and on what conditions?
• Personal guarantees the landlord may want from you
• Make-good obligations at the end of the lease
• Permitted use — does it cover everything the café does?

Our commercial lease checklist has twenty questions to work through. If the lease is weak, the price should reflect it.

Step 4: Licences, registration and compliance

Food registration. MPI says food service businesses on a template food control plan, based in one council area, register with their local council. Ask for the current registration, the most recent verification report and any issues raised. A poor verification history is worth knowing about before you buy.

Alcohol. If the café holds an on-licence, check who holds it, its conditions and when it’s due for renewal, and what you’ll need to apply for in your own name.

Building and fire. Ask about any outstanding council requirements for the premises.

Step 5: Equipment — who owns what?

Make a full list of equipment and furniture, then establish for each item:

• Is it owned by the business, leased, or on finance with money still owing?
• What’s its age and condition?
• When was it last serviced?

A café sold “with a near-new espresso machine” might have that machine on a rental agreement that doesn’t transfer. Your lawyer can search for registered security interests. If you plan to replace equipment after you buy, note that Inland Revenue excludes second-hand assets sourced from New Zealand from Investment Boost — new equipment may have better tax treatment.

Step 6: People

• Staff agreements. Ask for employment agreements, hours, pay rates and leave balances. Business.govt.nz suggests checking staff retention risks as part of due diligence.
• Holiday pay. Check how it’s been handled. Employment New Zealand says paying holiday pay as you go, at 8% of gross earnings, is only allowed for genuinely irregular work or genuine fixed-term agreements under 12 months. Incorrect holiday pay can mean liabilities.
• The owner’s role. If regulars come for the owner, plan a handover period. The agreement can include the seller staying on for a few weeks and a restraint on them opening nearby.

Going through this with a particular café in mind? It’s worth talking about funding early, while you’re still in due diligence. Start a 60-second enquiry — there’s no credit check to ask.

Step 7: Structure the deal properly

Business.govt.nz suggests the sale agreement should cover the price, payment terms, restraints on the seller competing, staff continuation and a financial due diligence period. From a buyer’s point of view, also make sure:

• The agreement is conditional on finance and on due diligence
• Stock is counted and valued at settlement on an agreed basis
• GST treatment is confirmed — business.govt.nz notes it can be 15% or 0% depending on the circumstances
• Lease assignment is a condition
• There’s a handover plan

Step 8: Plan the money — all of it

The price is only part of the cash you’ll need.

Cost	Notes
Purchase price	Goodwill plus plant and equipment
Stock at valuation	Usually on top of the price
Legal and accounting fees	Due diligence and the agreement
Lease bond or guarantee	If the landlord asks for new security
Working capital	Wages, suppliers and rent for the first months
Early changes	Refresh, equipment, signage

Most café purchases are funded with your own deposit plus a property-secured business loan ($20,000 to $5,000,000), because much of the price is goodwill. Unsecured options — typically $5,000 to $500,000 — can help with working capital once you’re trading. Our page on buying a café or shop explains the funding side in more detail.

Questions to ask the seller face to face

Paperwork tells you a lot, but a conversation fills the gaps. Ask the seller:

• Why are you selling, and why now?
• What would you change if you were staying?
• Which staff are key, and do they know the café is for sale?
• Who are your biggest suppliers, and are any prices about to rise?
• What’s broken, worn out or due for replacement?
• Has anything changed nearby — roadworks, a new competitor, a building being emptied?
• How involved are you day to day, and would you stay on for a handover?
• What does a bad week look like, and how often does it happen?

Listen for answers that don’t match the numbers. A seller who says the café “basically runs itself” while working six days a week behind the machine is telling you something important about what you’re buying.

Ready to make it yours?

If you’ve found the café and your checks are stacking up, start your 60-second enquiry before you go unconditional. There’s no credit check to ask, your details aren’t sent around to a crowd of lenders, and someone who understands hospitality purchases will phone you to talk it through. Please be accurate about the price, your deposit, the café’s verified takings and any property you own — it helps us find the right fit first time.