Valuation Multiples for a Restaurant

March 4, 2024

The restaurant sector is characterized by local enterprises offering food services to seated patrons. This sector is highly fragmented, with no dominant corporations, leading to intense competition from various sources. Industry reports from IBIS World indicate the presence of approximately 157,000 restaurants nationwide, collectively generating over $208 billion in sales revenue in recent years. The sector's revenue is on an upward trajectory, and with profit margins improving, engaging in restaurant transactions can be profitable. Whether you're looking to enter or exit the restaurant business, understanding the valuation multiples applicable to restaurants is crucial.

Valuing a Restaurant

The process of buying or selling a restaurant necessitates a clear grasp of valuation principles. Obtaining a business valuation can enlighten you on how to appraise a restaurant properly. For buyers, it aids in mastering negotiation tactics and determining a just purchase price. Sellers benefit from valuations by finding an equitable listing price and learning strategies to enhance their restaurant's value.

Our team, specializing in business appraisals, collaborates with numerous restaurants across the country, offering insights and valuation services to help restaurants thrive. We welcome any queries regarding restaurant valuation and encourage starting with a no-cost consultation.

Valuation Multiples for a Restaurant

Experts utilize various valuation techniques for restaurants, with the market approach being a prevalent one. This approach employs valuation multiples, which serve as a benchmark but may vary depending on each restaurant's specifics. It's advisable to seek a personalized business valuation to ascertain the appropriate multiples for your restaurant.

Market Multiples For A Restaurant

Disclaimer: The presented multiples are for educational purposes and should not be considered as valuation advice. For precise valuation inquiries, consult a qualified business valuation professional.

What is a Valuation Multiple?

Valuation multiples are widely used in appraising restaurants, acting as ratios that compare a restaurant's financial metrics to its market value. Appraisers benchmark your restaurant against similar entities recently sold, establishing a value range for your establishment.

For instance, if a restaurant posts $280,000 in discretionary earnings and receives a 2.21x multiple, its estimated value stands at $618,800. Alternatively, a 2.83x multiple would indicate a value of $792,400.

Our expertise in applying valuation multiples aids in accurately determining a restaurant's market value, taking into account each establishment's unique attributes.SDE Multiples for RestaurantsAverage SDE Multiple range: 2.14x – 2.96x

Restaurants typically trade within this SDE multiple range. The multiple applied to the seller's discretionary earnings gives an estimated business value.

For example, a restaurant with $376,000 in discretionary earnings and a 2.58x multiple would be valued at approximately $970,080.SDE multiples are vital for assessing a restaurant's market value, with valuation experts adjusting for expenses not expected to recur under new ownership.

EBITDA Multiples for a Restaurant

Average EBITDA Multiple range: 2.80x – 3.65xThis range represents the average EBITDA multiples at which restaurants transact. Applying these multiples to a restaurant's EBITDA yields its implied business value.

For example, a restaurant with $301,000 EBITDA and a 3.21x multiple would be valued around $966,210.EBITDA multiples offer insights into a restaurant's investment return, facilitating comparisons with similar businesses.

\REV Multiples for a Restaurant

Average REV Multiple range: 0.32x – 0.48xRestaurants trade at these revenue multiples, allowing appraisers to calculate a restaurant's value by applying the multiple to its revenue.

For instance, a restaurant earning $2,200,000 in revenue and trading at a 0.41x multiple would have an approximate value of $902,000.While REV multiples are less commonly used, they still provide a perspective on a restaurant's total revenue generation capabilities.


Utilizing market multiples for restaurants is a common practice to gauge a restaurant's fair market value. Various methods and multiples may be relevant, and a personalized business valuation can clarify the most suitable approaches for your restaurant. Our aim is to identify your restaurant's strengths and areas for improvement, offering guidance on value maximization whether you're buying, expanding, or selling. We're here to assist with your valuation needs and encourage scheduling a complimentary consultation to explore valuation multiples for restaurants.

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