The stone property was built in 1839 as the village school and was converted into a restaurant in 1967. It has been owned by David and Trudy Rothwell for the past 20 years.
Strete - which overlooks the Start Bay and Slapton Ley Nature Reserve - lies on the coastal road between Dartmouth (which is five miles to the north) and Kingsbridge.
The property, which is near the village church, offers a 40-seat ground floor restaurant, three-bedroom owners' accommodation above, and parking to the front.
New owners Benjamin and Jacqueline Handley will offer English and French-style cuisine. Benjamin has worked as executive chef at the George hotel in Hathersage and the Cavendish hotel in Baslow, where Jacqueline served as restaurant manager and head housekeeper before setting up her own child-minding business.
The Exeter office of Christie + Co sold the freehold off an asking price of £445,000.
By Angela Frewin