Cafe leasing in Australia, what to know before you sign
The lease is the most significant commercial commitment a cafe founder makes, and the one most commonly signed without adequate understanding of what has been agreed to. A lease that looks straightforward on its face can contain clauses that fundamentally change the economics of your business. The time to understand those clauses is before you sign, not after they become a problem.
A free guide from Clever Cafe Company, one of the resources we publish and keep current for cafe founders. See the full platform at clevercafecompany.com.au
Last updated October 2026
Face rent, gross rent, and outgoings, what you really pay
The rent advertised for a commercial premises is almost always the face rent, the base rent before outgoings. The actual occupancy cost includes outgoings. These are your proportional share of rates, building insurance, property management fees, and shared area maintenance. Outgoings typically add 20 to 40 percent to the base rent figure.
Request a schedule of estimated outgoings before signing and model your total occupancy cost against projected revenue. A cafe where total occupancy cost, rent plus outgoings, exceeds 12 to 15 percent of projected revenue is carrying a fixed cost structure that limits its ability to survive trade fluctuations or the ramp up period after opening.
The lease clauses that matter most for cafe tenants
- Bond and advance rent Commercial leases typically require a bond of three to six months rent at signing. This is cash out of your opening budget before you have traded. Model it in your total cost from the beginning.
- Make good obligations The requirement to return the premises to original condition at expiry. Negotiate a clearly defined and photographically documented standard, ambiguous make good obligations are resolved in favour of the landlord.
- Rent review mechanisms How and when rent is reviewed has significant financial implications over a five year lease. Understand whether your lease uses CPI linked increases, fixed percentages, or market reviews, and what the difference means over the full term.
- Fit out contribution Landlords in competitive markets may offer a cash contribution or rent free period to attract tenants. This is negotiable, particularly for longer leases, and can materially reduce your opening capital requirement.
- Permitted use Confirm your intended concept, including any liquor service, extended hours, or outdoor dining, falls within the permitted use clause. A breach of permitted use is a lease default.
- Assignment Can you assign the lease if you sell the business? A lease that restricts assignment significantly reduces the sale value of your business as a going concern.
Retail lease legislation by state
Retail lease legislation gives cafe tenants specific legal protections not available under general commercial lease law, including mandatory disclosure requirements, dispute resolution mechanisms, and protections around outgoings. The legislation that applies depends on your state.
NSW operates under the Retail Leases Act 1994. Victoria uses the Retail Leases Act 2003. Queensland operates under the Retail Shop Leases Act 1994. WA operates under the Commercial Tenancy (Retail Shops) Agreements Act 1985. SA uses the Retail and Commercial Leases Act 1995. You need to know which legislation applies and what protections it provides.
When and how to negotiate
Your strongest negotiating position is before you have indicated strong interest in a specific site. Once you have expressed enthusiasm or begun planning around a premises, your negotiating position is reduced. Keep your options open for as long as viable in the negotiation process.
In the PathwayIn the Pathway, lease negotiation is a dedicated stage, before site commitment. The lease should be reviewed by a specialist commercial lease solicitor before you sign. The cost of legal advice at negotiation is a fraction of the cost of living with a poorly negotiated lease for five years.
The right lease, properly understood before you sign
The Pathway does the heavy lifting on the lease, connecting founders with specialist commercial lease solicitors and leasing advisors at the negotiation stage, with the clause by clause context to negotiate terms that protect the business for the full term.
Clever Cafe sequences each supplier decision to the planning stage where it belongs, so the lease is handled at the point it matters.
We work with a small number of commercial lease solicitors and leasing advisors and introduce them inside the Pathway, at the negotiation stage. Talk to us about partnering
Frequently asked questions
Common questions
Total occupancy cost including outgoings, bond requirements, make good obligations, rent review mechanisms, fit out contribution, permitted use scope, and assignment provisions. All should be reviewed by a specialist commercial lease solicitor before signing.
Outgoings are your proportional share of building ownership and management costs, including council rates, building insurance, property management fees, and common area maintenance. They are separate from face rent and typically add 20 to 40 percent to your effective occupancy cost. Always model total occupancy cost, not face rent alone.
A make good clause requires the tenant to return the premises to original condition at lease expiry. For a cafe fit out, this can be a significant cost. Negotiate a clearly defined and photographically documented standard before signing.
Yes. A specialist commercial lease solicitor's fee at the negotiation stage is a fraction of the cost of living with a poorly negotiated lease. In most cases a good leasing solicitor recovers their fee many times over through the terms they negotiate.
The Pathway is a step by step programme that sequences every decision involved in opening a cafe, and introduces each category at the stage where it becomes relevant. Lease review sits at a dedicated stage before site commitment. It gives first time founders a head office to plan against, in the right order.
Answer four questions, no account needed
Get your lease brief
Answer four quick questions and get a short brief on what to check before you sign.
What do you know about the cost of the space?
Is the bond in your opening budget?
Will you serve alcohol, trade extended hours or offer outdoor seating?
What does the landlord's agent think of your interest in the site?
Your cafe lease brief
Written from our cafe lease guide and reviewed by a Resident Expert.
Keep going
See where this fits in your plan
Create a free Lite account with your email. No card needed.
When you want more than the plan, Pro adds the working tools for your stage, and we keep them current as things change.
Where are you with your cafe?
Pick the path that matches where you are today.
Prefer to talk it through first? Book a free 15 minute call.