A catering license often has more value than the paper prices suggest. During a takeover, the value of the license partly determines what you pay for the business. The value depends on location, type of license and how difficult it is to obtain a new one.
What determines the value of a catering license?
The value of a catering license is determined by scarcity and demand. In busy city centers where no new licenses are issued, an existing license is worth a lot. In areas where new licenses are easy to obtain, the value is lower.
💡 Example:
Restaurant in Amsterdam city center:
- Annual turnover: €800,000
- Profit before interest/depreciation: €120,000
- Valuation: 3-4x profit = €360,000-€480,000
- License value: 30-50% = €108,000-€240,000
Estimated license value: €150,000-€200,000
Different valuation methods
There are three common methods to determine the value of a catering license. Each method provides a different perspective on the value.
- Market value method: Compare with recent sales of similar licenses
- Cost method: What would it cost to obtain a new license?
- Income value method: Percentage of total business value
Market value method
This method looks at what others have recently paid for similar licenses in the area. This is often the most realistic method, but requires that you have access to recent sales figures.
⚠️ Note:
Catering business sale prices are not always made public. Ask your broker or accountant about recent comparable sales in the area.
Cost method calculation
With the cost method, you calculate what it would cost to apply for a new license, including all procedures and waiting time.
- Application costs municipality: €500-€2,000
- Advisory costs (architect, advisor): €5,000-€15,000
- Waiting time and lost turnover: €10,000-€50,000
- Uncertainty (risk of rejection): 20-50% risk surcharge
💡 Cost method example:
Applying for a new license:
- Municipality costs: €1,500
- Advisors: €10,000
- 6 months waiting = €30,000 lost profit
- 30% chance of rejection = €12,450 risk surcharge
Total cost of new license: €53,950
Income value method
This method calculates the license value as a percentage of the total business value. In catering, this percentage is usually between 25% and 50%, depending on the location.
Formula: License value = Total business value × License percentage
- Top locations (city center, busy street): 40-50%
- Good locations (residential areas, entertainment district): 30-40%
- Average locations (outer areas, little competition): 20-30%
Factors that influence the value
Various factors can increase or decrease the value of a catering license. Pay close attention to these when making your calculation.
- Location: City center vs. outer area
- Type of license: Full vs. limited (drinks only/food only)
- Opening hours: Until what time can you stay open?
- Terrace license: How many outdoor seats?
- Municipal policy: Will new licenses be issued?
💡 Terrace license example:
Restaurant with 20 terrace seats:
- Extra turnover per seat per year: €2,000
- 20 seats × €2,000 = €40,000 extra turnover
- Profit 15% = €6,000 extra profit
- Valuation 4x profit = €24,000 extra value
Terrace license increases business value by €24,000
Practical tips for negotiation
Use your calculation as a starting point for negotiation, but remember that the final price is determined by supply and demand.
- Have multiple valuations done using different methods
- Check with the municipality if new licenses will be issued soon
- Ask the seller about the history of the license
- Negotiate separately for license and inventory
⚠️ Note:
A catering license is only valuable if the location is suitable for catering. A license in a poor location can be worthless, despite its paper value.
How do you calculate the value of a catering license?
Determine the total business value
First calculate what the entire catering business is worth. Use the formula: annual profit × 3-5 (depending on type of business). Add up all assets: inventory, goodwill, stock and licenses.
Choose your valuation method
Use the market value method (compare with recent sales), cost method (costs of new license) or income value method (25-50% of business value). Combine multiple methods for a more reliable picture.
Check location factors and restrictions
Investigate municipal policy, opening hours, terrace rights and competition. A license in an area where no new licenses are issued is worth more than in an area with free establishment.
✨ Pro tip
Always ask for the turnover figures from the past 3 years and verify these with the Tax Authority. Many sellers exaggerate the turnover, causing you to overpay for the license.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
What percentage of the purchase price is the license worth?
This varies greatly by location. In top locations, the license can account for 40-50% of the total value. In areas where new licenses are easy to obtain, this is often 20-30%.
Can I negotiate the license value separately?
Yes, this is wise. Split the total price into inventory, goodwill and license. This way you can negotiate each part and get more insight into what you're exactly buying.
What if the municipality will issue new licenses soon?
Then the value of existing licenses will drop significantly. Always check with the municipality what the future policy is. New licenses can make your investment partly worthless.
How do I check if the license is transferable?
Ask the municipality about the conditions for transfer. Some licenses are tied to the person or have restrictions. Always have this checked by a lawyer before you buy.
Is a more expensive license always a better investment?
No, it's about the ratio between price and potential turnover. A cheap license in a poor location can be a worse investment than an expensive license in a top location.
📚 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.
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