Route Business Valuation Benchmarks

Business owners, prospective buyers, and industry experts 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 route businesses relative to industry standards.

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Highlights of Route Businesses Sold on BizBuySell

Route businesses listed and sold on BizBuySell include both service and delivery routes. Common types of service routes include pool service and ATM routes, while delivery routes include a variety of bread/food routes, as well as FedEx and other delivery routes.

Route Business Transaction Trends

The median sales price of route businesses has been increasing gradually but consistently for the past five years at an average of about 3% annually. In the five-year period from 2020 through 2024, the median sale price of route businesses increased by 14%.

Route Business Valuation Multiples

Valuation, or pricing, multiples are financial tools that allow for comparisons between businesses that have different levels of sales and financial performance. They represent the sales price of a business relative to its revenue or earnings, 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 routes sold rose with the rest of market following the Covid-19 pandemic and related economic measures, then fell as interest rates rose to combat inflation. In general, valuation multiples of routes are relatively consistent compared to other types of businesses.

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 - business valuations tend to hinge on the 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 route businesses for sale, and our database of "comparable" businesses sold on BizBuySell. Multiples based on listing data are almost 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.

To get timely, local comp data, please see BizBuySell's Valuation Products.

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 route businesses are valued and sold between 0.91 and 2.32 times their annual seller discretionary earnings, with 25% of exceptional, higher volume businesses trading above this range, and 25% of the smaller, less desirable 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 business owners and investors towards appropriate valuation multiples from the range above.

To that end, we have aggregated route business financial ranges useful for comparing a given route business to the broader market.

Route Business Revenue and Earnings Trends

Median reported revenue and seller's discretionary earnings of route businesses sold has remained consistent over the past five years. Median revenue ranges from $300-400k, while owner earnings swing just above or below $100k, with owner profit margin hovering around 30%.

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 similar businesses traded on the business for sale market. Below you will find discretionary earnings ranges of routes sold over the past five years, as well as recent route 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 route businesses sold over the past five years and recent route businesses listed for sale.

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. Routes that generate higher sales (and maintain benchmark profit margins) tend to sell for earnings multiples on the higher end. So, a route business generating over $700k in revenue may command an earnings multiple approaching 2.5, while a smaller route with sales below $110k may trade below 1 time its discretionary earnings.

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

Service Sector Comparisons

For a more complete understanding of the market and valuation standards, consider comparisons within the broader service sector when benchmarking local routes for sale. The chart and table below include key metrics from sales of common service businesses sold on BizBuySell.

While the correlation between revenue and earnings multiple loosely ties sales volume to valuation multiples, there is a spread amongst different types of service business. The quality that stands out most is the level of personal service and/or labor required for each customer. Businesses that can generate more revenue with a simpler business model and lighter service and labor requirements tend to command higher valuation multiples relative to their size.

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