Grocery Store & Supermarket 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 grocery store and supermarket businesses relative to industry standards.

Jump To:

Highlights of Grocery Store & Supermarket Businesses Sold on BizBuySell

Grocery stores and supermarkets listed and sold on BizBuySell include a variety of concepts, from general grocers and supermarkets with wide-ranging inventories, to specialized food retailers like fish and meat markets. They may also differentiate themselves from the competition by focusing on certain categories of food products, like ethnic or dietary specialty markets.

These businesses are almost exclusively independent, locally owned brands, catering to the specific needs of the local market.

Grocery Store & Supermarket Business Transaction Trends

The median sale price of grocery store and supermarket businesses listed and sold on BizBuySell peaked in 2020, at the height of the Covid-19 pandemic. As these businesses became the central "essential service" and remained open while most small businesses had to close, demand for their goods skyrocketed and many owners took advantage of the opportunity to sell at a high price.

In the years following prices have come back down, and pressured by rising interest rates, have dropped 50% from the 2020 spike.

Supermarket & Grocery Store 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 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.

Average valuation multiples of grocery store and supermarket businesses has been volatile, driven by the effects of the Covid-19 pandemic and ensuing economic turbulence. Over 2023 and 2024, pricing multiples have stabilized around the pre-pandemic averages.

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 business 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 overall sales.

How to Interpret These Multiples

Recent Listings vs. Sold Businesses

We calculate and provide valuation multiples from two sources: Current and recent listings of grocery stores and supermarket businesses for sale, and our database of "comparable" businesses sold on BizBuySell. Multiples based on listing data are generally 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 volume, 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 volume 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 grocery store and supermarket businesses are valued between 1.6 and 3 times their annual seller discretionary earnings, with 25% of exceptional, larger stores trading above this range, and 25% of smaller, less desirable stores trading below.

Financial Benchmarks

To determine how a business compares in terms of revenue and earnings 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 financial ranges useful for comparing an individual supermarket or grocery store business to its peers in the market.

Supermarket & Grocery Store Business Revenue and Earnings Trends

Supermarket and grocery store revenue reported by business owners who sold on BizBuySell peaked in 2020, doubling the median of the previous year. This sales surge was driven by the Covid-19 pandemic which forced many local businesses to close but left essential services like grocery stores open for business.

In the years following the pandemic spike, revenue and earnings have returned to typical levels, and competitive pressure brought profit margins back down.

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 supermarkets and grocery store businesses sold over the past five years, as well as recent for sale listings.

Revenue Ranges

Sales 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. The table below includes revenue ranges of supermarkets and grocery store businesses sold over the past five years, as well as recent for sale listings.

How Revenue and Earnings Level Affects Business Values

Clearly 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 and well-located supermarkets and grocery stores that generate higher sales (and maintain reasonable profit margins) tend to sell for earnings multiples on the higher end. So, a grocery store consistently generating sales over $3MM annually may sell for an earnings multiple close to 3, where a smaller store with sales of $800k would likely sell for an earnings multiple closer to 1.6.

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.

Sector Comparisons

For a more complete understanding of the market and valuation standards, consider comparisons within the broader retail sector when benchmarking retail grocery and supermarket businesses. The chart and table below includes key metrics from sales of select retail businesses on BizBuySell between 2019 and 2023.

More Resources and Tools from BizBuySell

Thinking of buying or selling a business? BizBuySell has the tools, resources, and professionals you need to get down to business.