The short answer
A pub is priced on the earnings a buyer can keep, not on takings and not on the building. In practice that means maintainable EBITDA (earnings before interest, tax, depreciation and amortisation) after two charges that owner-run pubs often leave out: a market wage for whoever runs the venue and a market rent for the premises. The price is that figure capitalised at a multiple or an equivalent rate, then adjusted for what the buyer must spend. This page does not quote a market multiple for pubs. The published figures are thin and inconsistent: they come mostly from brokers who do not disclose their data, and they blur wet-led pubs, gaming venues, hotels with rooms and multi-site groups into one range. A valuation has to be built from the venue's own trade. What moves the price is specific to this sector: the lease, the liquor licence and its conditions, and, in states that allow poker machines, the gaming machine entitlements, whose rules differ by state and keep changing. Oliver Group values businesses, not real property. If the pub is sold with its land and building, the freehold needs a registered property valuer.
What the buyer is really paying for: the trade, the lease and the licence
A pub (the trade calls a licensed pub a hotel) changes hands in one of three ways, and each is a different asset. A leasehold going concern is the business, the lease, the liquor licence and the machines. A freehold going concern adds the land and building. A passive freehold is the property alone, leased to an operator, and is priced as a property investment. Published guidance from one hotel finance broker describes a going concern as valued on its net operating profit, and a freehold going concern can be built up from two interests: the operating business, valued after paying a market rent, and the property, valued on the rent it earns. That split decides who does what. Oliver Group values the operating business. The land and building need a registered property valuer (in Queensland, for example, valuers are registered through the Valuers Registration Board of Queensland), and the rent assumed in the business valuation should be agreed with that valuer so the two opinions fit together and nothing is counted twice. Inside the business, the goodwill is the bar, gaming, food and accommodation income the venue can keep earning once the licence, the lease and the entitlements have moved to a buyer the regulators are willing to approve.
Gaming machine entitlements: the asset that changes by state
Whether a pub has poker machines, how many, and on what terms is the largest single source of difference between two venues with similar takings, and the rules are set state by state. In Western Australia poker machines are banned and electronic gaming machines are confined to the casino (WA Government), so a WA pub is valued on bar, food, accommodation and retail earnings alone. In Victoria each poker machine entitlement lets a venue operator run one machine, no premises can hold more than 105, and transfers run through a regulator-hosted market but are determined by the Minister. Entitlements allocated from 2022 run for a 20 year term with premium payments in 2022 and 2032, and profit tax is payable when a post-2022 entitlement is transferred above its allocation price (Victorian Gambling and Casino Control Commission). In Queensland, hotels hold gaming machine operating authorities rather than entitlements, obtained by competitive tender under the Gaming Machine Act 1991, within a statewide cap. In New South Wales the government lowered the state cap on entitlements by more than 3,000 in June 2023, and in August 2026 it announced a reform package that raises the share of traded entitlements forfeited from one in three to one in two, introduces a cap that falls as entitlements leave circulation, and requires facial recognition at gaming room entries from 2028, while leaving account-based play to each venue's discretion. Victoria legislated in 2025 for mandatory pre-commitment through carded play, with implementation delayed. In both states the detail and timetable should be checked at the valuation date. Other states and territories have their own regimes. Three consequences follow. Entitlements in use are already inside the earnings, so adding their market price on top counts them twice; only entitlements not attached to earning machines are a separate asset. Regulatory change is a capital cost and a revenue risk that belongs in scenarios. And any value put on an entitlement needs recent completed transfers in the same state, not last year's headline.
Reading the trade: normalised EBITDA and the evidence a buyer asks for
A pub is several businesses under one licence: bar, gaming, food, accommodation, packaged liquor and functions. Each has its own margin, labour content and risk, so total turnover says little. The ATO's pubs, taverns and bars benchmarks (tax return data for 2023-24, built for comparing a business with its peers, not for valuing it) show thin margins: for venues turning over more than $2.5 million, cost of sales is typically 31 to 42 per cent of turnover, labour 20 to 27 per cent and total expenses 87 to 94 per cent, averaging 91 per cent. On margins like that, small normalising adjustments move value a lot. The big ones are a market wage for the licensee or manager, rent that is not at market (especially where a related entity owns the premises), one-off costs, and gaming income that is not yet stable. Valuers also compare gaming metered win per machine per day with local averages, because a venue's machines are expected to perform like its neighbours' unless there is a reason they do not. The evidence that does the work:
- ·Monthly trading accounts by department (bar, gaming, food, accommodation, packaged liquor, functions) for at least three years, with gross margin for each
- ·Machine-level gaming revenue from the venue or monitoring system, machine count and age, and entitlements or authorities held against machines in use
- ·The entitlement or operating authority register, with conditions, any holding-period deadlines and pending transfers
- ·The lease in full: term and options, rent, review mechanism, outgoings, assignment conditions and make-good
- ·The liquor licence, its conditions including trading hours, and the compliance history
- ·Payroll by role and rostered hours, what the licensee or manager is actually paid, and who holds the approved manager role
- ·Supply agreements with brewers and distributors, including rebates or loans that may not transfer to a buyer
- ·Plant registers with ages, and the timing and cost of the next gaming fleet, kitchen or cellar replacement
Wet-led, gaming-led, food-led and country pubs price differently
A wet-led local lives on beer volume, the cellar and the regulars, so the price turns on trading history and the operator's hours. A gaming-led venue is priced on machine performance and the security of its entitlements, which makes the regulatory scenarios above central rather than peripheral. A food-led pub carries a kitchen: margins are thinner, labour is heavier, and the value depends on whether the kitchen runs without the current chef or owner. A country hotel with rooms adds accommodation income, but also room upkeep, seasonality and refurbishment needs. Multi-site groups add a management team and central costs that a single-site owner never books, and a buyer will test them. None of these categories has a reliable published multiple, which is why normalised earnings, not the label on the door, carry the valuation.
The lease, the licence and the standing deductions
In a leasehold pub the price is set after rent, so anything that moves the rent moves the price. Test the remaining term and options against the period the earnings assumption runs for, then the review mechanism. In Victoria, hotel rent on review has been set by the profits method, which takes the premises' net profit and asks what share a willing tenant would pay as rent; a 2015 Victorian Supreme Court decision, reported by the law firm Hunt & Hunt, held that the method is open under the Retail Leases Act. The practical point is that a pub that trades well can expect its rent to rise, so the forward rent, not today's, belongs in maintainable earnings. Then compare rent with turnover. The ATO's benchmark for pubs, taverns and bars is 6 to 9 per cent of turnover for venues above $2.5 million, and 9 to 14 per cent for those turning over $100,000 to $750,000. Rent well outside the band is an earnings problem, or a related-party arrangement that will not survive the sale. A liquor licence is valued as part of the going concern, not as a stand-alone commodity: it is tied to the premises and the licensee, and a transfer needs regulator approval. In New South Wales, provisional approval of a transfer is usually given within about two weeks of a complete application and confirmation usually within 60 days, so completion is conditional and the buyer's own suitability is part of the deal. Each state has its own regulator and rules. A licensee, approved manager or head chef who leaves with the sale is a key-person risk, and in Victoria, for one, gaming venues must employ staff who hold gaming industry employee licences. A buyer prices the next gaming fleet replacement, any equipment new gaming rules require, refurbishment and deferred maintenance as deductions whatever the depreciation schedule says.
A worked example: normalising a leasehold pub with gaming
Consider a hypothetical leasehold pub in New South Wales with 20 gaming machines, turning over $4.6 million a year: $2.4 million from the bar, $1.3 million from gaming and $0.9 million from food. The owner runs it full time and draws no wage. Reported EBITDA is $620,000. Deduct $140,000 for a market-rate manager including superannuation, add back $25,000 of one-off legal costs and $15,000 of personal expenses paid by the business, and deduct a further $45,000 because the lease is due for review and the rent is expected to rise from $300,000 to $345,000. Normalised EBITDA is $475,000. The rent check: $300,000 is about 6.5 per cent of turnover and $345,000 is 7.5 per cent, both inside the ATO's 6 to 9 per cent benchmark for venues above $2.5 million. No pub multiple is quoted on this page, so use an assumed multiple for illustration of 3.0 to 3.5 times, which gives $1,425,000 to $1,662,500. NSW has announced facial recognition at gaming room entries from 2028 and part of the machine fleet is due for replacement, so suppose the venue needs an assumed $180,000 for both. A buyer prices that as a deduction, and the supportable range becomes $1,245,000 to $1,482,500. Gaming is about 28 per cent of revenue. If gaming revenue fell 10 per cent ($130,000) and, for illustration, all of it came off EBITDA, normalised EBITDA would fall to $345,000, a drop of 27 per cent, and the same assumed multiples would give $1,035,000 to $1,207,500 before the fleet deduction. A fall of under 3 per cent in total revenue has moved the price by more than a quarter. Every figure here is illustrative, not a benchmark.
What a defensible pub valuation file contains
Because the price is built from earnings, the supportable position is won or lost in the evidence. The conclusion is a supportable range with the most supportable position concluded within it, and the file behind it typically holds:
- ·Three to five years of financial statements plus year-to-date trading, reconciled to the bank and to the point-of-sale and gaming systems
- ·A normalisation schedule with evidence for every adjustment, starting with the licensee's market wage and the market rent
- ·The lease in full and, for a freehold going concern, the property valuer's report or rent assumption, so the two opinions agree
- ·The entitlement or operating authority register, its conditions, the holding-period position and recent completed transfers in the same state
- ·Machine-level gaming revenue, with scenarios for the regulatory changes announced in that state
- ·The liquor licence, its conditions and compliance history, and the regulator's transfer requirements
- ·Plant and gaming fleet registers with ages, and the timing and estimated cost of the next replacement
- ·Sensitivity analysis across the assumed capitalisation range
When the number has consequences
A self-assessment using this framework is useful for early thinking; a formal valuation is worth commissioning once the number has consequences someone else can test. Those include a sale, where a defensible price survives a buyer's diligence on the gaming data and the lease; a partner or syndicate exit; family law matters; and CGT events, including small business CGT concession claims under Division 152 of the ITAA 1997, where eligibility can turn on documented market values and on the $6 million maximum net asset value test, which counts connected entities. The market value standard is the price a willing but not anxious buyer and seller would agree (Spencer v Commonwealth, 1907), and the ATO's guidance, Market valuation for tax purposes, is a useful checklist of what a valuation should document. Oliver Group prepares independent valuations only. It is not a tax agent and does not give tax, legal or financial advice, and its reports follow the guidelines of APES 225 Valuation Services. The freehold needs a registered property valuer, and liquor and gaming transfers need your lawyer and the relevant regulator. An engagement that asks for a report written to a predetermined number would be declined. Oliver Group's fees are set by the annual turnover of the business: a Small Business Valuation is $1,495 + GST for turnover under $2 million, a Medium Business Valuation is $2,495 + GST for turnover between $2 million and $10 million, and a Large Business / Start-Up Valuation is $3,495 + GST for turnover over $10 million or for a start-up. A small-business draft is delivered in 2 business days and a medium-business draft in 3 business days; the delivery date for a Large Business / Start-Up Valuation is agreed before commencement. Delivery time starts once payment and all required information have been received. The fee is fixed in writing before work begins and never depends on the concluded value.