What Is My Restaurant Worth?

Restaurants are one of the most frequently sold business types — and one of the hardest to value accurately. The range between a struggling single-location and a thriving multi-unit operation is enormous.

Here's how restaurant valuations work and what drives the numbers.

Typical Valuation Ranges

Most independent restaurants sell for 1.5x to 3x SDE. Multi-unit operators with management teams and $1M+ EBITDA can sell for 3x to 5x EBITDA to PE firms or strategic acquirers.

Factors that push toward the higher end:

• Multi-unit operations with consistent unit economics
• Strong brand and loyal customer base
• Franchise affiliation with proven systems
• Catering or off-premise revenue streams
• Long-term lease with favorable terms
• Management team in place (not owner-operated daily)
• Consistent revenue growth

Factors that push toward the lower end:

• Owner works the line or manages daily operations
• Single location with no expansion potential
• Thin margins (below 10% net)
• Short remaining lease
• Heavy dependence on delivery platforms (high commission costs)
• Declining foot traffic or negative review trends

Why Restaurants Are Challenging to Value

Thin margins. The typical restaurant runs 5–10% net margins after owner compensation. Small swings in food costs, labor, or traffic can dramatically change profitability.

Labor intensity. Finding and keeping kitchen and front-of-house staff is an ongoing challenge. Wage inflation has compressed margins further.

Lease dependency. A restaurant's value is tied to its location. If the lease is short-term or the landlord is difficult, the business may not be transferable.

Owner involvement. Many restaurants revolve around the owner — their recipes, their relationships, their presence. That's hard to transfer to a buyer.

What Makes a Restaurant Valuable

Systemized Operations

Restaurants that run on systems — documented recipes, POS-driven inventory management, standardized training programs — are worth more than restaurants that run on the owner's intuition.

Catering and Off-Premise Revenue

Revenue beyond dine-in (catering, meal prep, wholesale, branded products) diversifies income and signals growth potential.

Strong Unit Economics

Buyers focus on four-wall economics: what does each location generate in revenue and profit? Healthy restaurants target 20–25% food cost, 25–30% labor cost, and 8–12% occupancy cost.

Transferable Brand

If customers come for the restaurant — not just the chef — the brand has transfer value. Social media following, online reviews, and community reputation matter.

Liquor License

In states where liquor licenses are limited or expensive, holding a license adds meaningful value to the transaction.

How to Increase Your Restaurant's Value

1. Build a management layer. Hire a GM and/or kitchen manager who can operate without you present. This is the single biggest valuation driver.
2. Document everything. Recipes, prep procedures, vendor lists, training manuals. A buyer needs to replicate what you do.
3. Lock in your lease. Negotiate a minimum of 5 years remaining with renewal options before going to market.
4. Diversify revenue. Add catering, private events, or retail products. Non-dine-in revenue is valued at a premium.
5. Clean up your books. Restaurants are notorious for cash transactions and personal expenses on the P&L. Get 2–3 years of clean financials before selling.
6. Invest in your online presence. Google reviews, Yelp, and Instagram presence directly influence buyer interest.

The Real Estate Factor

If you own the building, you have the same three options as any real estate-heavy business: sell both together, sell the business and lease back the property, or sell them separately. Most restaurant transactions involve a lease, and the lease terms are a critical part of the deal.

Ready to Find Out What Your Restaurant Is Worth?

Browse the valuation multiples guide for current industry data, or schedule a free call for a confidential valuation conversation.