For sale: Hospo biz sales prices 40% up on 2021

2nd August 2022 By Staff Reporter | news@foodticker.co.nz | @foodtickernz

The average sales price for hospitality businesses has jumped 40% compared with the same time last year albeit off a low base, according to a report from business broker ABC Business Sales.

Hospitality business sales prices have jumped 40% in the last year, albeit off a low base.

This contrasts with an increase of just 8% over the last 12 months for SME business sales prices in general, according to the firm’s quarterly market intelligence report.

ABC said that the jump for businesses valued at $0-$5m did come off a very low base in 2021 as a result of the pandemic forcing poor trading conditions and closures in the sector.

However, managing director Chris Small said the dramatic increase in sales prices represented a genuine bounce back in confidence for hospitality businesses, rather than demand from vulture buyers looking for fire sale prices.

“The main drivers of demand for hospo businesses include strong return on investment – often more than 50% – as well as positive cashflows from day one,” Small said.

“Plus with the renewed confidence of our borders now being open to all international visitors, the ‘certainty’ of no more lockdowns and potential buyers hearing about many hospo operators experiencing extensive waiting lists and not being able to keep up with demand, the appeal of these businesses is well and truly back on the rise,” he added.

The average sales price for hospitality business at the end of Q2 June 2022 was $284,050, according to the firm. It was $202,774 at the end of Q2 June 2021.

“We are confident these current average prices – in the high $200,000 range – are more reflective of a normal market and will be sustained going forward.”

The overall average sales price for SME businesses – excluding hospitality – at the end of Q2 June 2022 was $794,130.