What hospitality investors actually look for in 2026
Australian hospitality is experiencing a paradox: record transaction volumes alongside record insolvencies. In 2025, hotel deals hit $2.7 billion (the strongest year on record) and pub transactions reached $1.717 billion in just nine months — yet one in ten food-and-beverage businesses closed their doors. This simultaneous boom-and-bust is reshaping what makes a venue investable. Investors are not retreating from hospitality; they are becoming ruthlessly selective. The venues attracting capital share common traits: disciplined unit economics, scalable operating models, owned customer data, and technology infrastructure that turns a single venue into a platform. For operators seeking investment or planning an exit, understanding these benchmarks is no longer optional — it is the baseline for being taken seriously.
The EBITDA margins that get investors to the table
The single most scrutinised number in any hospitality investment conversation is EBITDA margin — and the bar is higher than most operators realise. Across Australian hospitality, net profit margins average just 3–5% for restaurants, with the ABS historically showing 63.4% of small restaurants generating less than 2% net profit. EBITDA margins paint a slightly more generous but still sobering picture.
For full-service restaurants, investable EBITDA margins sit in the 10–15% range. Quick-service and fast-casual concepts perform better at 15–25%, while beverage-led venues (bars and pubs) typically land at 12–20% thanks to alcohol's gross margins of 75–80%. Top-performing cafés hover around 12% EBITDA. Anything below 10% is considered stagnant — essentially uninvestable for institutional capital — while margins above 15% signal operational discipline that commands premium multiples.
The cost structure beneath these margins is equally instructive. The ATO's small business benchmarks (updated March 2025) show restaurants with over $2 million turnover running COGS at 32–37%, labour at 27–34%, and rent at 6–9%of revenue. Restaurant & Catering Australia's industry data paints a broadly consistent picture: food COGS at 31.2%, beverage COGS at 30.6%, and occupancy costs at 12.8% (including rates and taxes). The critical composite metric — prime cost (food plus labour) — should land at 55–65% of revenue. Operators pushing above 65% are structurally challenged regardless of top-line growth.
Award wage increases have compressed margins relentlessly: 5.75% in July 2023, 3.75% in 2024, and 3.5% in 2025, compounded by superannuation rising to 12% from July 2025. Average payroll per operation surged 10.9% annually from $95,201 in 2021 to a projected $129,583 in 2024, while headcount barely changed. Meanwhile, food inflation has run at 3.1% year-on-year (February 2026), and the cost of dining out has surged 34% since August 2019 according to the MOBI Price Index. In 2024, 52% of venues raised menu prices by 11–20%, absorbing what they could and passing on the rest.
How investors are valuing Australian hospitality businesses
Valuation multiples in Australian hospitality span a wide range, reflecting the enormous gap between a single-site café and a scalable multi-site platform. For small food-and-beverage transactions under $5 million, EBITDA multiples averaged just 2.31x to 2.72x between 2021 and 2024, according to Strategic Transactions' FY24-25 market update — and the trend has been downward, from a 2.89x average in the three years to 2021. Revenue multiples for these businesses sit at 0.2x to 0.7x annual turnover. Single-site venues typically sell for 1.5x to 4x EBITDA, with premium attached for strong leases, brand equity, and owner-independence.
The picture changes dramatically at scale. Grant Thornton's April 2025 Dealtracker recorded a median EBITDA multiple of 8.3x across all Australian M&A (up from 8.0x, against a long-term average of 8.1x). Well-managed food and beverage companies with differentiated IP, multi-site operations, and growth runway can command 6–7x EBITDA. The extreme end illustrates what "platform premium" means: Guzman y Gomez's June 2024 IPO priced at roughly 38x forward EBITDA (versus Collins Foods at ~10x and Domino's at ~17x), reflecting the market's appetite for high-growth, tech-enabled QSR concepts.
In pub real estate, prime metro yields have dipped below 5%, placing quality pubs alongside medical and childcare assets as quasi-institutional investments. Hotel cap rates compressed 62 basis points to average 6.2% in 2025. QSR net-leased assets have been bid even tighter — McDonald's properties trading below 3%, major brands below 4%. Factors that reliably add 0.5x to 1.5x to any multiple include depth of management team, geographic coverage, brand recognition, revenue predictability, and — increasingly — technology capability.
Who is writing cheques, and where is the capital flowing
The current investment cycle is dominated by a handful of themes: pub consolidation, hotel transactions fuelled by offshore capital, and QSR expansion at scale.
Blackstone has been the standout, acquiring Hamilton Island for approximately $1.2 billion in December 2025 — one of Australia's largest tourism transactions — adding to its $8.9 billion Crown Resorts acquisition in 2022. CVC Capital Partners and PAG co-control Australian Venue Co (240+ pubs and bars), with CVC acquiring a 45% stake in August 2025 in a deal explicitly targeting venue modernisation and digital transformation, valuing the portfolio at roughly $2.1 billion. Redcape Hotel Group (managed by MA Financial) spent over $250 million on pub acquisitions in the trailing twelve months, reporting 21% like-for-like EBITDA growth while aggressively repositioning into Southeast Queensland.
Offshore investors now dominate the hotel market, accounting for 78% of total hotel transaction activity in 2025 Ainvest (up from 27% in 2024), according to CBRE, with Singaporean, Thai, and US capital leading. Family offices and high-net-worth individuals comprised 69% of bid volume, private equity 21%, and institutional investors 10%.
The QSR sector delivered its strongest year of net growth on record in 2025, per GapMaps — 359 openings against just 109 closures (the lowest in a decade). Mexican and chicken categories led: Zambrero added 31 stores, Guzman y Gomez 27, KFC 29, and El Jannah 15. New international entrants, including Wendy's, Popeyes, and Firehouse Subs, entered the market, signalling sustained confidence in Australian consumer demand.
Conversely, investor appetite for mid-market single-site restaurants and cafés remains subdued. The advisory firms active in distressed hospitality — McGrathNicol, KordaMentha, Pitcher Partners — are busier than ever. The collapse of Jon Adgemis' Public Hospitality Group, owing $1.8 billion to creditors (including $123 million to the ATO), illustrated the catastrophic consequences of leveraged hospitality growth without operational rigour.
The risks shaping every investment committee discussion
Three regulatory and macroeconomic headwinds dominate investor risk assessments for 2026.
First, the card surcharge ban, effective 1 October 2026. The RBA's decision to prohibit surcharges on debit and credit card transactions will eliminate an estimated $1.2 billion in annual surcharge revenue nationally. The Australian Restaurant & Café Association warns that 81% of hospitality businesses currently passing on surcharges will absorb a direct P&L hit. While the RBA estimates reduced interchange fees will leave merchants approximately $910 million better off in aggregate, small operators on thin margins will feel the squeeze of absorbing card processing costs (typically 1.5–2% of revenue).
Second, the Closing Loopholes legislation redefines casual employment based on "practical reality" rather than contractual terms, introduces casual conversion rights after six months, and establishes criminal wage theft offences. With 63% of hospitality workers employed on casual or part-time terms, the compliance complexity and potential cost of conversion to permanent status represent a material planning challenge.
Third, the sheer velocity of insolvencies continues to weigh on sentiment. CreditorWatch's Business Risk Index recorded a 9.6% closure rate for food and beverage businesses in the year to mid-2025 — the highest of any industry by a wide margin. ASIC data shows 2,475 accommodation and food service businesses became insolvent in FY24-25, a 57% increase from the prior year. The ATO's aggressive enforcement — issuing 26,702 Director Penalty Notices worth $4.4 billion in FY23-24 — has been the proximate cause for many closures, catching operators with deferred COVID-era tax debts.
Yet distress is creating opportunity. Well-capitalised groups like Redcape, AVC, and Solotel are actively acquiring at favourable terms. The average hospitality business lifespan of just 4.2 years (versus 7.3 years nationally) means a structural churn that continually refreshes the acquisition pipeline for operators with capital and operational capability.
Technology has become a formal line item in due diligence
Investors are no longer treating technology as a "nice to have" — it is a valuation driver with measurable impact. As Wilhelm Weber, CCO of Grand Metropolitan Hotels, stated: "Bad technology decisions can destroy value." His firm maintains a list of unacceptable software and involves technology teams early in acquisition diligence. Over 60% of M&A professionals reported in a 2023 survey that technology issues missed during diligence materially impacted post-close outcomes, with technical debt inflating acquisition costs by 30–50%.
The CVC/PAG acquisition of Australian Venue Co explicitly identified digital transformation as a strategic priority. Lightspeed's 2025 Australian hospitality report found that 47% of operators credit technology with enhanced operational efficiency and 37% now use tech-driven data insights for decision-making, up from 31% in 2023. These are the metrics investors want to see trending upward.
The most consequential technology question investors now ask concerns platform dependency risk — specifically, reliance on third-party aggregators like Uber Eats and DoorDash. Commission rates of 25–35% per order can eliminate all profit on delivery transactions for a business operating at 10–15% EBITDA margins. When 30–40% of a venue's revenue flows through aggregators, investors see both a margin problem and a data problem: the venue loses control of customer relationships. Research shows 43% of customers cannot recall the restaurant name after ordering through a delivery app, effectively destroying brand equity with every transaction.
The financial contrast between aggregator-dependent and direct-ordering venues is stark. Customer reorder rates through third-party platforms average 15–25%, compared to 35–55% through direct channels. Owning customer data increases lifetime value by an estimated 67% through targeted marketing and loyalty programs. Brands using first-party data effectively see up to 2.9x revenue improvement and 1.5x better marketing efficiency, according to BCG research cited by Braze. These are not marginal differences — they fundamentally change the unit economics and investability of a venue.
Why flat-fee ordering platforms are becoming investor infrastructure
The emergence of flat-fee and low-commission ordering platforms represents a structural shift in how technology affects venue economics and, by extension, valuations. The merged Mr Yum/me&u entity (formed in 2024) now serves approximately 6,000 venues across Australia, New Zealand, the UK, and USA, processing over A$2 billion in orders annually — at commission rates of 4.5–10% compared to the 25–35% charged by aggregators. Brisbane-based Bopple charges 3.9–5.9%, while subscription-based platforms like Next Order operate on flat monthly fees entirely independent of order volume.
The margin mathematics are compelling. Moving from a 30% aggregator commission to a 5% platform fee represents a 25 percentage-point margin improvement on every order — for a venue doing $500,000 in annual delivery and takeaway revenue, that equates to roughly $125,000 returned to the P&L, potentially doubling EBITDA for a venue operating at industry-average margins. Crucially, flat-fee models do not penalise growth: unlike commission-based structures, costs remain fixed or near-fixed as revenue scales.
For investors, this changes the risk profile of a venue. A business using owned ordering channels with integrated CRM, loyalty, and analytics capability presents with higher margins, more predictable revenue, richer customer data, and lower platform dependency — every one of which adds to valuation. Aaron Allen & Associates, a specialist restaurant valuation firm, documented how Domino's saw its EBITDA multiples move from low-double-digits to high-teens as it invested in proprietary digital ordering, with the market explicitly rewarding its technology assets. Auxo Capital Advisors notes that heading into 2026, "premium multiples cluster around scaled QSR, fast casual, and coffee concepts with strong loyalty and digital sales."
The retention economics make the investment case even more persuasive. Repeat customers generate approximately 60% of restaurant revenue and spend 67% more than new customers. A 5% improvement in customer retention can boost profits by 25–95%, per Bain & Company's widely cited research. Program members visit 20% more frequently and spend 20% more per visit. Restaurants implementing mobile loyalty apps report an average 23% increase in visit frequency and up to 30% boost in customer lifetime value. These are not theoretical — SevenRooms' Australian customers generated over A$5 million in email marketing revenue between February and May 2024 alone, with targeted emails delivering 2x more revenue per send.
Conclusion: the venues that will attract capital
The investable Australian hospitality venue in 2026 looks fundamentally different from a decade ago. Investors are screening for EBITDA margins above 10% (ideally 12–15%+), prime costs below 65%, strong lease terms, and — critically — a technology stack that generates owned customer data and supports scalable, efficient operations. The venues commanding premium multiples share three characteristics: they own their customer relationships through direct ordering and CRM, they operate with unit economics that absorb cost inflation without margin collapse, and they present as platforms rather than single-site businesses.
The data suggests Australian hospitality is bifurcating into two tiers. On one side, well-capitalised, tech-enabled multi-site operators attracting billions in institutional capital — Blackstone, CVC, Redcape, and offshore family offices are deploying at scale. On the other, undercapitalised single-site operators facing a 9.6% annual closure rate, squeezed by wage inflation, food costs, and the looming surcharge ban. For operators in the middle, the path to investability runs directly through the decisions they make about technology infrastructure: owning versus renting customer relationships, building predictable revenue versus depending on margin-destructive aggregators, and generating the data-driven reporting that institutional capital now expects as standard. The venues that get this right will not just survive the current shakeout — they will define the next generation of Australian hospitality investment.