Inventory is often 15-25% of the total takeover price value of a restaurant. Many entrepreneurs underestimate this, causing them to overpay or face unexpected costs. In this article, you'll learn step-by-step how to calculate the actual value of inventory in a restaurant takeover.
What's included in inventory?
Inventory consists of all physical items you're taking over. This breaks down into different categories:
- Kitchen equipment: ovens, cooktops, fryers, refrigeration, dishwashers
- Furniture: tables, chairs, bar, cabinets
- Dishes and cutlery: plates, glasses, knives, forks
- Other inventory: cash register, sound system, decoration
- Stock: ingredients, beverages, cleaning supplies
⚠️ Note:
Goodwill (brand name, customer base) is NOT inventory. That's valued separately.
Three valuation methods for inventory
There are three ways to value inventory. Each gives a different amount:
- New value: what would it cost to buy everything new?
- Book value: new value minus depreciation
- Market value: what can you get for it if you sell it?
For a takeover, market value is most realistic. Nobody pays new value for used items.
💡 Example market value calculation:
Combi oven 5 years old:
- New value: €8,000
- Age: 5 years (expected lifespan 12 years)
- Condition: well maintained
- Market value: €8,000 × (7/12) × 0.8 = €3,733
The 0.8 factor accounts for wear and tear and that it's secondhand.
Depreciation percentages per category
Different items lose value at different rates. Common depreciation percentages:
- Kitchen equipment: 8-12% per year (lifespan 8-12 years)
- Refrigeration and freezers: 10-15% per year (lifespan 7-10 years)
- Furniture: 10-20% per year (lifespan 5-10 years)
- Dishes and cutlery: 20-33% per year (breakage, wear)
- Electronic devices: 20-33% per year (obsolescence)
💡 Example inventory list restaurant 80 seats:
Estimated market value per category:
- Kitchen equipment: €45,000
- Dining room furniture: €18,000
- Dishes and cutlery: €3,500
- Cash register and systems: €2,500
- Stock: €8,000
Total inventory value: €77,000
Valuing stock: watch out for shelf life
Stock is tricky because it spoils. Make a distinction between:
- Non-perishable products: 90-100% of purchase price
- Fresh products: 50-80% of purchase price (depending on shelf life)
- Beverages: 85-95% of purchase price
- Cleaning/office supplies: 70-85% of purchase price
⚠️ Note:
Count stock only on the takeover date. Not weeks before, or the numbers won't be accurate.
Negotiating inventory value
The asking price is often too high. Negotiation points:
- Condition of equipment: ask for maintenance reports
- Remaining lifespan: how much longer will it last?
- Replacement costs: do you need to replace expensive items soon?
- Energy efficiency: old equipment costs more electricity
💡 Negotiation example:
Seller asks €80,000 for inventory:
- Your valuation: €65,000
- Negotiation: "Fryer needs replacement (€3,000), refrigeration is 8 years old"
- Result: €68,000 (saves €12,000)
Inventory vs. goodwill: make the distinction
Many sellers lump goodwill (brand name, customer base) into inventory. That's not correct:
- Inventory: physical items you can touch
- Goodwill: value of name, location, customer base
- Total takeover price value: inventory + goodwill + possibly stock
Goodwill is often 2-4x annual turnover, depending on profitability and location.
How do you calculate inventory value? (step by step)
Make a complete inventory list
Walk through the entire premises and note everything: kitchen equipment, furniture, dishes, cash register, stock. Don't forget small items (cutlery, glasses, decoration). Ask the seller for a list and check that everything is included.
Determine age and condition per item
Ask for receipts or note the year equipment was made. Check the condition: does everything still work? Are repairs needed? Old equipment has lower value and higher maintenance costs.
Calculate market value per category
Use the formula: New value × (Remaining lifespan / Total lifespan) × Condition factor (0.7-0.9). For stock: add everything up at purchase price and deduct 10-50% depending on shelf life.
✨ Pro tip
Take photos of all equipment with serial numbers during your viewing. That way you can calmly look up prices at home and make a realistic valuation without time pressure.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
Was this article helpful?
Frequently asked questions
Should I hire an appraiser for the inventory?
For takeovers above €200,000 that's wise. An appraiser costs €1,500-3,000 but can save you thousands through realistic valuation. For smaller takeovers you can do it yourself with this method.
What if equipment breaks down shortly after the takeover?
Agree on warranties in the contract. Standard is 'as is', but you can agree that everything must work for at least 3 months. Have large equipment inspected by a technician beforehand.
How do I value the wine stock in a takeover?
Wine is usually taken over at purchase price, unless they're special bottles. Check shelf life and whether bottles were stored properly. Open bottles have no value.
Can I lease inventory instead of taking it over?
Yes, especially for expensive kitchen equipment that can be smarter. You invest less and get new equipment. Downside: higher monthly costs and you don't build your own equity.
What happens to inventory in a bankruptcy?
In bankruptcy, inventory is auctioned by the trustee. Prices are often 30-60% below market value, but you buy without warranties. Check carefully if you can take over everything (some equipment is leased).
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
Know your numbers during an acquisition
During an acquisition, you want to know exactly what recipes cost and what the margins are. KitchenNmbrs documents everything — ready for due diligence. Start your free trial.
Start free trial →