Restaurant finance: how lenders back a restaurant on covers and margin
We arrange restaurant finance for operators and investors buying, fitting out, refinancing or expanding a restaurant. A restaurant is a trading business, so a lender backs it on its covers, gross margin and the going-concern trade rather than on bricks and mortar. This is commercial finance against the premises and the business, not a regulated mortgage on a home.
Stabilising restaurants
Restaurant finance is the commercial lending that funds a restaurant through purchase, fit-out, refinance or expansion. A restaurant is a trading business, so where a freehold is involved a lender values it as a going concern on its fair maintainable trade, the sustainable EBITDA a competent operator would produce, and where the site is leasehold it lends against the business, the fit-out and the trade rather than the property. Either way, covers and gross margin drive the numbers.
A lender reads the trade through covers and average spend, food and beverage gross margin, the flow-through to EBITDA after payroll, and the rising business-rates and wage costs that squeeze restaurant margins, then sizes the facility on the DSCR the maintainable trade supports. It weighs the tenure closely: an owner-occupier freehold restaurant supports a commercial mortgage against going-concern value, while a leasehold trade is funded through a business loan, asset finance and, where the lease has value, goodwill and trade fixtures. The premises licence and the strength of the operator sit alongside.
Restaurant deals take a few forms. A freehold purchase or refinance is a commercial mortgage; a new opening or a refit is a business loan plus asset finance for the kitchen, fixtures and fit-out; an expansion or second site combines the two, and a VAT loan can bridge the reclaim on an opted freehold. A refinance or remortgage releases equity or replaces costlier debt once the trade is proven.
The market is polarised but active. Average restaurant sold prices grew 9.9% over the year to the 2026 Business Outlook, the strongest of Christie & Co's sectors on keen buyer demand for well-located sites, even as the food-led sector contracted 2.9% over the year on April 2025 employment-cost rises, with British licensed premises down to 98,746 sites by June 2025 (CGA and AlixPartners). A record leisure market underpins demand, with £33.7bn of visitor spend in 2025 (VisitBritain). We package the trade so a lender can price the covers-and-margin risk with confidence.
What we fund
- Freehold restaurant purchases by an owner-operator
- Leasehold restaurant acquisitions and assignments
- Fit-out and refurbishment of a new or existing site
- Refinancing restaurant debt or releasing equity
- Expansion to a second site or a small group
- Kitchen, equipment and fit-out funded on asset finance
Indicative terms
- Loan to valueIndicative ~60 to 70% on a freehold, going-concern basis
- Leasehold tradesBusiness loan plus asset finance against the trade
- BasisCovers, gross margin and fair maintainable trade (EBITDA)
- TermMortgage to 20 or 25 years; business loans shorter
- Debt service coverSized on the DSCR the maintainable trade supports
- Key testsCovers, margin, operator, premises licence, tenure
- ExitTerm refinance once trade is proven, or sale
Indicative only. Terms vary by lender, asset and scheme and are not an offer of finance.
How we arrange restaurant finance
We arrange restaurant finance around the tenure and the trade, and pre-agree the exit. For a freehold purchase or refinance we place a commercial mortgage sized indicatively at around 60 to 70% of going-concern value, on a term typically to 20 or 25 years, amortised by the DSCR the fair maintainable trade supports. For a leasehold trade we arrange a business loan against the covenant and the trade, with asset finance for the kitchen, equipment and fit-out. For a new opening or a refit we combine a business loan and asset finance across the works and the trade build, and for an opted freehold a VAT loan can bridge the reclaim. Once the trade is proven we refinance or remortgage to release equity or replace costlier debt. We frame every figure as indicative and never as an offer or a quoted rate; the terms depend on the covers, the margin, the operator and the tenure, and we run the market to find them.
How a lender underwrites a restaurant
A lender underwrites a restaurant on its trade, not on bricks and mortar alone. On a freehold it works to the fair maintainable trade and a going-concern value; on a leasehold it lends against the business, the fit-out and any goodwill and trade fixtures. It reads covers and average spend, food and beverage gross margin, and the flow-through to EBITDA after payroll and the rising cost base, then sizes the facility on the DSCR. It weighs the operator's record, the premises licence and the location heavily, because a restaurant trade is operator-dependent and can move quickly. Clearing banks, challenger banks, specialist hospitality lenders and asset-finance providers all play here, each with a different appetite by tenure and trade. As an arranger with no exclusive tie, we present the accounts, the covers and the margin to the lenders most comfortable with restaurant risk.
Refinancing or exiting restaurant debt
Restaurant finance is arranged with the exit in view. A business loan or fit-out facility is repaid from the trade or refinanced onto keener term debt once the covers and margin are proven, and a commercial mortgage is refinanced or remortgaged at maturity or when improved trade or lower rates support better terms or an equity release. Well-located restaurants have found strong buyer demand, with average sold prices up 9.9% over the year to the 2026 Business Outlook (Christie & Co), so a proven trade supports both a refinance and a sale. We structure the facility so the route out is credible from the day it is drawn, and size it so a normal swing in covers does not put the trade under pressure.
Finance that suits this asset class
- Commercial mortgagesLong-term debt on a freehold restaurant, sized on going-concern value and DSCR.
- Business loansFunds a leasehold trade, a new opening or working capital against the covenant.
- Asset financeFunds the kitchen, equipment and fit-out.
- RefinancingReplaces existing debt or releases equity from a proven trade.
- VAT loansBridges the VAT reclaim on an opted freehold purchase.
Stabilising restaurants?
A view on fundability within one working day.
What drives a restaurant's numbers
A restaurant is a trading business valued on a going-concern basis, so the economics turn on covers, average spend, the food and labour cost ratios and the fair maintainable EBITDA that flows through. It is a polarised market: Christie & Co recorded restaurant sold prices up 9.9% over the year to its 2026 Business Outlook on keen buyer demand for well-located sites, even as the food-led sector contracted 2.9% under April 2025 employment-cost rises, with British licensed premises down to 98,746 sites by June 2025 (CGA and AlixPartners). A lender weighs the strength and transferability of the trade, the lease terms where leasehold, and the covenant. We model maintainable trade after a realistic kitchen and labour cost base, not a single strong period.
Indicative restaurant finance and structures
Indicatively we arrange restaurant commercial mortgages to around 60 to 70% of going-concern value for a freehold trading restaurant, sized on the debt service cover the maintainable trade supports, with leasehold sites financed on a shorter, more specialist basis against the lease. For a purchase and fit-out we arrange bridging or refurbishment finance across the works and the trade build, then a term refinance once the new trade is proven. These are market-typical, indicative structures and never an offer or a quoted rate; the terms depend on the trade, the tenure and the covenant, and we run the market for the keenest fit.
Frequently asked questions
What is restaurant finance?
Restaurant finance is the commercial lending that funds a restaurant through purchase, fit-out, refinance or expansion, underwritten on the business as much as the building. On a freehold a lender values the trade as a going concern on its fair maintainable trade; on a leasehold it lends against the business, the fit-out and any goodwill. Covers and gross margin drive the numbers. We arrange the commercial mortgage, business loan or asset finance to suit the deal, as an arranger and not a lender.
Can I get a loan to start a restaurant?
Yes, though a start-up is harder than an established trade because there is no track record for a lender to work to. Funding usually comes as a business loan against the operator's experience and forecast, with asset finance for the kitchen and fit-out, and a commercial mortgage only where a freehold is being bought. A lender leans on the strength of the operator, the location and a credible covers-and-margin plan. We package the case and run the lenders most open to a new opening.
What are the 5 C's of finance?
The five C's are character, capacity, capital, collateral and conditions: the operator's track record, the trade's capacity to service debt, the equity going in, the security, and the market conditions. For a restaurant a lender leans hardest on capacity, the DSCR the covers and margin support, and on character, because the trade is operator-dependent. We build a case that speaks to all five.
What are the three types of finance?
In broad terms, restaurant funding falls into debt (a commercial mortgage, business loan or bridging), asset finance (funding the kitchen, equipment and fit-out against the assets themselves) and equity (the operator's own capital or an investor's stake). Most restaurant deals blend debt and asset finance over an equity base. We arrange the debt and asset-finance elements and structure them around the trade and the tenure.
Can you get a commercial mortgage on a restaurant?
Yes, where the restaurant is freehold. A commercial mortgage is sized against going-concern value and the DSCR the fair maintainable trade supports, typically to around 60 to 70% loan to value over a 20 to 25 year term. A leasehold restaurant is funded instead through a business loan and asset finance against the trade and the lease. We run the lenders most comfortable with each tenure to place the finance.
How much deposit do I need to buy a restaurant?
On a freehold, commercial lending is sized indicatively at around 60 to 70% of going-concern value, so a buyer contributes roughly a third of value as deposit and equity, more where the trade is thin or unproven. On a leasehold the funding is against the business and fit-out, so the equity requirement reflects the price of the lease and goodwill. We frame leverage as indicative only and never as an offer.
Stabilising restaurants?
Tell us about the asset and the income plan and we will come back with a view on fundability and likely terms.