Ice Cream & Frozen Yogurt Shop 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 ice cream and frozen yogurt businesses relative to industry standards.

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Highlights of Ice Cream & Frozen Yogurt Shop Businesses Sold on BizBuySell

Ice cream & frozen yogurt shops listed and sold on BizBuySell are comprised primarily of small, locally owned businesses offering ice cream, frozen yogurt, and soft-serve dessert food service. Most of these businesses are independently owned brands, but franchises such as Baskin-Robbins, Cold Stone, and Yogurtland are also routinely sold and included in this report. These businesses typically offer some version of a self-serve or semi-service concept and provide a space for customers to sit and enjoy their dessert.

Ice Cream & Frozen Yogurt Shop Business Transaction Trends

Sales of ice cream and frozen yogurt shops have been consistent through the pandemic years to today, with only a modest slowdown in 2020. The median sale price of ice cream and frozen yogurt shops sold on BizBuySell has been relatively flat compared to the broader food service sector. From 2020 to 2024, median sales price has increased 9% from $140k to $153k.

Ice Cream & Frozen Yogurt Shop 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 ice cream and frozen yogurt shops had been elevated following the Covid-19 lockdowns, buoyed by market-wide value gains, then tempered in 2023 and 2024 with increased interest rates.

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 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 ice cream and froyo shops 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 ice cream and frozen yogurt shop businesses are valued and sold between 1.5 and 2.8 times their annual seller discretionary earnings, with 25% of exceptional, higher volume shops trading above this range, and 25% of smaller, less competitive shops 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 ice cream shop business financial ranges useful for comparing a given ice cream business to the broader for sale market.

Ice Cream & Frozen Yogurt Shop Revenue and Earnings Trends

Revenue of ice cream and frozen yogurt shops sold on BizBuySell has been growing modestly with some variability year to year. Over the five-year period from 2020 through 2024, median revenue has increased 18%, while ice cream shop owner discretionary earnings decreased 4%. Inflation has led to increased operating costs which likely drive the thinning profit margins.

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 ice cream and froyo shop businesses sold over the past five years, as well as recent ice cream business 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 ice cream and froyo shop businesses sold over the past five years, as well as recently listed ice cream 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 ice cream parlors and frozen yogurt shops that generate higher sales (and maintain reasonable profit margins) tend to sell for earnings multiples on the higher end. So, an ice cream shop generating over $500k in revenue may command an earnings multiple close to 3, while a smaller shop with sales below $230k may trade closer to 1.5 times its 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 return on their investment.

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 ice cream and frozen yogurt businesses. The chart and table below includes key metrics from sales of food service businesses on BizBuySell.

Compared to other businesses in the food service sector, ice cream and frozen yogurt shops tend to get a slight premium in valuations relative to their revenue and earnings volumes. The likely force behind the higher valuation multiples is the relatively low level of service and associated labor expenses required to operate these shops. Unlike a restaurant, ice cream shops often have only modest staff, with many concepts being self-serve having small staff only to ring up customers. This type of simple operational model with low employee count is favored amongst serial business owners and may be worth a slight premium over other types of food service businesses.

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