Restaurant Valuation Calculator
Find out what your restaurant is worth. Get a fair market value based on proven valuation methods.
How the Restaurant Valuation Calculator works
Enter annual revenue, profit margins, and key assets. Get your restaurant’s valuation using industry-standard multiples.
Whether selling, buying, or seeking funding, knowing your restaurant’s true value prevents costly mistakes and bad deals.
How it works
Tutorial
Restaurant valuation determines what a restaurant business is worth based on its revenue, profits, assets, and market conditions. Most restaurants sell for 1.5 to 3 times their annual net profit, or 0.3 to 0.5 times annual revenue, depending on profitability and growth potential.
Use the calculator above for instant valuation, or follow this guide to value a restaurant manually.
The Formula
| Method | Formula |
|---|---|
| Revenue Multiple | Annual Revenue × Industry Multiple (0.3 – 0.5) |
| Earnings Multiple | Annual Net Profit × Industry Multiple (1.5 – 3.0) |
| Asset-Based | Equipment Value + Inventory + Goodwill – Liabilities |
| Final Valuation | Average of multiple methods |
Step-by-Step Example
Let’s value a casual dining restaurant.
Step 1: Gather Financial Data
| Metric | Amount |
|---|---|
| Annual Revenue | $850,000 |
| Cost of Goods Sold | $280,000 |
| Operating Expenses | $440,000 |
| Annual Net Profit | $130,000 |
| Profit Margin | 15.3% |
Calculation:$850,000 – $280,000 – $440,000 =$130,000 profit
Step 2: Revenue Multiple Method
Value based on annual sales:
| Component | Value |
|---|---|
| Annual Revenue | $850,000 |
| Industry Multiple (casual dining) | × 0.4 |
| Revenue-Based Value | $340,000 |
Calculation:$850,000 × 0.4 =$340,000
Step 3: Earnings Multiple Method
Value based on profitability:
| Component | Value |
|---|---|
| Annual Net Profit | $130,000 |
| Industry Multiple (15% margin) | × 2.5 |
| Earnings-Based Value | $325,000 |
Calculation:$130,000 × 2.5 =$325,000
Step 4: Asset-Based Method
Value based on physical assets:
| Asset/Liability | Amount |
|---|---|
| Kitchen Equipment | $120,000 |
| Furniture & Fixtures | $35,000 |
| Inventory | $18,000 |
| Goodwill/Brand Value | $100,000 |
| Total Assets | $273,000 |
| Less: Outstanding Debts | -$25,000 |
| Asset-Based Value | $248,000 |
Calculation:$120,000 + $35,000 + $18,000 + $100,000 – $25,000 =$248,000
Step 5: Calculate Average Valuation
| Method | Valuation |
|---|---|
| Revenue Multiple | $340,000 |
| Earnings Multiple | $325,000 |
| Asset-Based | $248,000 |
| Total of All Methods | $913,000 |
| Average Valuation | $304,333 |
Calculation:($340,000 + $325,000 + $248,000) ÷ 3 =$304,333
Step 6: Adjust for Market Factors
| Factor | Adjustment |
|---|---|
| Base Valuation | $304,333 |
| Prime Location Bonus | +$25,000 |
| Established Clientele | +$15,000 |
| Lease Concerns (only 2 years left) | -$20,000 |
| Final Market Value | $324,333 |
Calculation:$304,333 + $25,000 + $15,000 – $20,000 =$324,333
Bottom Line:This restaurant is worth approximately$320,000 to $330,000based on current financials and market conditions.
What This Means
A valuation of $324,333 represents about 2.5 times annual profit, which is reasonable for a profitable restaurant with good margins. Key factors that increase value include consistent profits, a strong location, loyal customers, and a favorable lease. Factors that decrease value include declining sales, short lease terms, outdated equipment, and narrow profit margins. Always have a professional business appraiser verify valuations before making major decisions.
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