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What multiple are you using in the restaurant/bar business to establish sales price?

We are selling a Franchise restaurant/bar that is one of the top five locations in the country for the franchise.

Rav Singh, CCIM

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Answers (7)
Chuck Woolweaver
Franchise Your Business in 60 Days
Palm Beach County, FL

The multiple is 2/3 times owners benefit depending on the industry and the norm in your area. OB includes anything the business pays that benefits the owner, e.g., salary, health insurance, pension plan, dues, memberships, auto lease/insurance, depreciation, travel, seminars, etc

Sep 16, 2009
Fayaz Karim, MBA, CA
Subway Valuations, Business Searches
Orange County, CA


You have many valid answers here but a multiple is just a guideline. REal value is when you can apply some science to the numbers and rate their importance to the valuation questions. I have done many, so check out my website,
Fayaz Karim, MBA, CA

Apr 3, 2009
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Business Alliance Affiliate
Tulsa County, OK

If you are franchised, check with the other franchisees to see what they have done. Some use multiples times net, that has draw backs for the seller because the net can be what the owner wants it to be. Other franchises us multiple times weekly sales

Apr 3, 2009
Terry Kinder
First Choice Business Brokers of Charles
Charleston County, SC


Don't forget to check your UFC/FDD Document to be certain that the Franchise can be sold without right of first refusal first! This can determine more than the price! I agree with Joseph that a multiple will get you in the ballpark, but I don't agree with Glory, as I haven't seen anything going for that high of a multiple this year. Especially with restaurants, it's important to do as many types of valuation as you can, there may be added intrisic values like "it's the only restaurant for 100 miles" or the franchise support is unsurpassed, liquor license, etc... Good Luck!

Apr 3, 2009
Lee Petsas
UBI Business Brokers
Orange County, CA

There are a lot of factors to consider. To get it right it is more detailed then just multiples. What are the sales trends over the last three years? Lease length and rent factors are very important. Any new competition or any under construction? Is the business help run, do you work there or does your entire family work there? What are the franchise terms? Does a buyer have a renewal cost comming in the near future or will the franchisor give the buyer a new 20 year term at the close of escrow?
If you want very ball park figures go from 2 to 3 time true net profit.

Apr 2, 2009
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Watson Commercial Realty, Inc.

You must know what the past 18 months of gross sales were and the trend of these sales. You want to know the trend of food and beverage costs to determine the fluctuation of gross profit. If sales are increasing and food costs are remaining constant as a percentage a 21/2 to 3 time multible of true net sales plus value of liquor liscense is appropriate.

Apr 2, 2009
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California Business Opportunities
Santa Clara County, CA
Premium Broker

Multiples are only one step in the process. The multiple gets you in the "ballpark". There are many other points to consider, such as 1. Are sales steady, rising or declining? 2. What are the terms of the lease? 3. How critical is the present owner to the continued success of the business? One (just one) of the "acid tests" is, what is the cash on cash return on your investment?
This is just the beginning of valuation. Don't concern yourself with knocking down the price, but put you own value on the business and keep that as your primary concern.

Apr 2, 2009

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