Business Valuation Guide
What Is a Restaurant Worth?
Most restaurants sell for 1.5x to 2.8x Seller's Discretionary Earnings, with the midpoint near 2.1x. A restaurant with $250,000 of SDE would typically fall between $375,000 and $700,000.
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Restaurants trade at lower multiples than almost any other category, and the reason is structural rather than unfair. Margins are thin, equipment wears out, and the lease often matters more than the business. A restaurant with a below-market long lease in a strong location can be worth more than one with better food and worse terms.
How to value a restaurant
Start with Seller's Discretionary Earnings (SDE): net profit plus the owner's pay and perks, interest, depreciation and one-time costs.
Then apply the industry multiple. For restaurants that band runs 1.5x to 2.8x, and where a specific business lands inside it is decided by the factors below. Typical SDE margin for this category runs around 10% of revenue, which is a useful sanity check: if your margin is far off that, the multiple moves with it.
Above roughly $1M to $2M of EBITDA the buyer pool changes. Individual buyers give way to private equity platforms and strategic acquirers, and pricing restates onto an EBITDA multiple of 4x to 6.5x rather than a multiple of SDE.
What raises the value of a restaurant
- A long assignable lease at below-market rent
- A trained general manager who runs service without the owner present
- Documented, verifiable sales through a modern POS rather than cash-heavy reporting
- Equipment and hood systems recently replaced and up to code
- A liquor license included and transferable
What lowers it
- Fewer than three years remaining on the lease, or a landlord who must approve assignment
- The owner working the line or the register daily
- Concept dependent on the owner's personal reputation
- Deferred maintenance on refrigeration, HVAC or hood suppression
- Sales trending down over the trailing twelve months
Who buys restaurants
First-time owner-operators, experienced restaurateurs adding a second or third location, and occasionally a buyer purchasing purely for the lease and license rather than the concept.
Selling a restaurant: what to expect
A typical sale runs 6 to 12 months from going to market to closing, assuming your financials are ready when you start. Most restaurant sales turn on the lease rather than the concept. Get the landlord's assignment position in writing before going to market, because a buyer who cannot inherit the lease is not a buyer.
Restaurant valuation: common questions
How much is a restaurant worth?
Most independent restaurants sell for roughly 1.5x to 2.8x Seller's Discretionary Earnings. A restaurant generating $150,000 in SDE would typically be valued between $225,000 and $420,000. Multiples toward the top of that range require a manager in place and a strong assignable lease.
Why do restaurants sell for such low multiples?
Three reasons: margins are thin so small revenue swings wipe out profit, physical assets depreciate fast and need reinvestment, and most independent concepts depend heavily on the owner. Buyers price that risk in.
Does a liquor license increase the sale price?
Usually yes, and sometimes substantially, depending on the state. In jurisdictions where licenses are quota-limited the license can carry standalone market value that is added on top of the earnings-based valuation rather than included in it.
What is the average price of a restaurant?
There is no single average, because price tracks earnings rather than revenue. At the midpoint multiple of 2.1x SDE, restaurants at $500,000 of SDE sell around $1,075,000, and at $1,000,000 of SDE around $2,150,000. Typical SDE margin in this category runs near 10% of revenue, so a restaurant doing $1,000,000 in revenue would often carry about $100,000 of SDE and land near $215,000.
How much can I sell my restaurant for?
Take your Seller's Discretionary Earnings and multiply by 1.5x to 2.8x. Where you land inside that band is decided by owner dependence, customer concentration, recurring revenue and the quality of your books. A restaurant at the top of the range looks materially different from one at the bottom, and most of those differences can be improved in the twelve months before a sale.
What EBITDA multiple do restaurants sell for?
SDE multiples of 1.5x to 2.8x apply to owner-operated restaurants. Once earnings pass roughly $1M to $2M of EBITDA the buyer pool shifts to private equity and strategic acquirers, and pricing restates onto an EBITDA multiple of 4x to 6.5x. The two are not comparable: SDE includes the owner's compensation and EBITDA does not, so the same business shows a higher SDE multiple than EBITDA multiple.
How long does it take to sell a restaurant?
Typically 6 to 12 months from going to market to closing, assuming financials are ready. Most restaurant sales turn on the lease rather than the concept. Get the landlord's assignment position in writing before going to market, because a buyer who cannot inherit the lease is not a buyer.
What is the restaurant valuation formula?
SDE times the industry multiple. For restaurants that multiple is 1.5x to 2.8x, so $250,000 of SDE points to $375,000 to $700,000. Recorded sales of similar businesses serve as a cross-check, and the equipment and inventory value usually sets the floor.
Is there a restaurant valuation calculator?
Yes, at the top of this page. It applies the 1.5x to 2.8x band for restaurants, adjusted for owner hours, margin and years in business, and returns a range rather than one number.
Do I need a restaurant appraisal or a valuation?
To decide whether to sell a restaurant, a market valuation: what a buyer would likely pay. A certified appraisal is usually needed only for divorce, estate, tax, litigation or a buyer's SBA loan, and costs far more.
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Multiples reflect broker transaction data including the BizBuySell Insight Report and aggregated 2024-2025 USA small business sales, and mirror the bands used by the Exit Ready valuation calculator. They are planning estimates, not a formal appraisal, and not investment advice. Market multiples move; this page was last updated 2026-08-19.