Bakery Business Valuation Benchmarks

Business owners, prospective buyers, and industry investors rely on a diverse set of financial benchmarks to assess the value of a business. We have compiled data from current BizBuySell listings and sold businesses to provide insight into the business for sale market and important benchmarks for pricing and evaluating bakery businesses relative to industry standards.

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Highlights of Bakery Businesses Sold on BizBuySell

Bakeries listed and sold on BizBuySell are comprised primarily of small, locally owned businesses offering baked goods like bread and desserts, often sold alongside coffee and tea. Most of these businesses are independently owned brands, but franchises such as Crumbl Cookies, Le Macaron, and Cinnabon are also routinely sold and included in this report. These businesses include a variety of concepts and locations, from small booths inside of malls and shopping centers, to larger storefronts on main streets.

Bakery Business Transaction Trends

Sales of bakery businesses have been consistent on BizBuySell, with the only slowdown in transactions occurring in 2020, along with all business sale transactions. The median sale price of bakeries sold on BizBuySell has followed the rest of the market, growing through 2021, then modestly retreating as interest rates rose through 2023, with some recovery in 2024. From 2020 to 2024, median sale price has increased 7% from $200k to $213k.

Bakery Business Valuation Multiples

Valuation, or pricing, multiples are financial tools that allow for comparisons between businesses that have different levels of revenue and earnings. They represent the sales price of a business relative to its size and financial performance, and given enough individual business sales data, they represent what the market is willing to pay for a business, given its revenue and earnings.

Valuation Trends

Business values and associated multiples fluctuate over time, influenced by a variety of macroeconomic factors, such as interest rates, inflation, consumer spending, and overall economic growth. Valuation multiples of bakery businesses sold on BizBuySell have increased over the past five years, in step with market-wide valuation gains. Average multiples fell in 2023 due to increasing interest rates and pressure on bakery earnings, like caused by inflation induced cost increases. 2024 saw only a slight improvement in valuation multiples.

Earnings Multiples

Earnings multiples represent the value of a business relative to its owner’s discretionary earnings or "cash flow". Arguably the most important valuation metric - as seller's discretionary earnings will often dictate how much a buyer is able to borrow to finance the business acquisition - most valuations will hinge on a reasonable earnings multiple.

Revenue Multiples

Revenue multiples represent the value of a business relative to its overall sales or revenue. In conjunction with an earnings analysis, revenue multiples are commonly used to value a business based on its sales volume.

How to Interpret These Multiples

Recent Listings vs. Sold Businesses

We calculate and provide valuation multiples from two sources: Current and recent listings of bakery businesses for sale, and our database of "comparable" businesses sold on BizBuySell. Multiples based on listing data are always higher due to owners setting asking prices above what their businesses might typically sell for. This occurs either intentionally as a negotiation strategy, or incidentally due to business owners’ common tendency to overvalue their own businesses.

Multiples based on comparable businesses - "comps" in business broker parlance - are much more useful as they represent the prices at which businesses ultimately get sold. Business brokers and valuation professionals will always turn to local comps when pricing businesses for sale or evaluating businesses for acquisition. We provide both sets of data at the national level to offer general context.

Quartiles, Median, and Average

No two businesses are identical, and as such, valuation multiples exist in a range. We have carved out four common values within this range: Lower quartile represents the value under which the lowest 25% of valuation multiples fell. Upper quartile represents the value above which the highest 25% of multiples fell. Median is the middle of the range, and average is the mean of the set. Mean is almost always higher than the median, driven by a minority of high revenue, high-value businesses sold at multiples above the upper quartile.

Businesses with consistent financial performance, above average revenue and earnings, demonstrable growth potential, low owner involvement, unique competitive advantages, and a seller willing to finance will command a multiple at or above the upper quartile. Lower revenue businesses with thin profit margins, full-time owner involvement, and many direct competitors will trade at or below the lower quartile. Most businesses will fall somewhere in the middle.

Based on this data, half of bakery businesses are valued and sold between 1.57 and 2.71 times their annual seller discretionary earnings, with 25% of exceptional, higher volume bakeries trading above this range, and 25% of smaller, less competitive ones trading below.

Financial Benchmarks

To determine how a business compares in terms of sales volume and financial performance relative to industry peers, it’s necessary to have some insight into industry standards. "Benchmarking" describes the practice of comparing a business’s financial performance to typical industry standards to determine where a business falls relative to other businesses in the same industry. These benchmarks can help guide owners and investors towards appropriate valuation multiples from the range above.

To that end, we have aggregated bakery business financial ranges useful for comparing a given bakery business to its peers in the business for sale market.

Bakery Business Revenue and Earnings Trends

Median revenue of bakery businesses sold on BizBuySell has been remarkably consistent, peaking in 2021 with only modest volatility through 2024. Over the five-year period from 2020 through 2024, median revenue has increased 5% while median discretionary earnings rose 4%.

Earnings Ranges

Discretionary earnings (used interchangeably with the terms "cash flow" and seller's discretionary earnings or SDE) is often the crux of business valuations, so it is important to benchmark it relative to other businesses traded on the market. Below you will find discretionary earnings ranges for bakery businesses sold over the past five years, as well as recent bakery for sale listings.

Revenue Ranges

Revenue volume plays a large role in business valuation, as it measures the size of the potential income opportunity for new ownership. It's not uncommon for buyers to select an earnings multiple range based on overall revenue volume. The table below includes revenue ranges of bakeries sold over the past five years, as well as recently listed bakery businesses.

How Revenue and Earnings Level Affects Business Values

Obviously, higher levels of earnings lead to higher valuations, even given the same multiple. However, valuation multiples also tend to rise with business sales volume. Popular bakeries that generate higher sales (and maintain reasonable profit margins) tend to sell for earnings multiples on the higher end. So, a bakery business generating over $900k in revenue may command an earnings multiple close to 2.7, while smaller bakeries with sales below $300k may trade closer below 1.6 times their discretionary earnings.

This tendency for higher sales volumes to fetch higher valuation multiples is largely driven by the economics of business acquisition financing. Higher volume businesses give buyers more cushion to cover debt service obligations and still have enough left over to pay the new owner a reasonable income.

Food Service Sector Comparisons

For a more complete understanding of the market and valuation standards, consider comparisons within the broader food service sector when benchmarking bakery businesses. The chart and table below include key metrics from sales of popular food service businesses on BizBuySell.

Compared to other businesses in the food service sector, bakeries fall in-line with the average earnings multiple to sales volume ratio. These businesses operate at the middle ground in terms of volume and profitability, and have average labor needs, so tend to get no premium or penalty in valuation relative to the food service sector as a whole.

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