Restaurant Valuation Template

Start with the Inputs & Assumptions sheet. You'll need three things: your last two to three years of profit and loss statements, a current equipment list with rough fair market values, and your lease terms — expiration date, monthly rent, and whether it's transferable. Pull your P&L from your accountant or POS system and enter the top-line numbers. Don't use your tax return EBITDA directly; most restaurant owners run personal expenses through the business, and buyers will add those back anyway. The sheet walks you through each normalization item so nothing gets missed.

Once your inputs are set, work through each method sheet. The Income Approach is where most of the action is — review the SDE you calculated, confirm the normalization items look right, then select the SDE multiple range that fits your restaurant. Location quality, lease length, concept transferability, and whether the business can run without you are the main factors. The Market Approach gives you a revenue multiple cross-check. The Asset Approach matters more for restaurants than most people expect — kitchen equipment depreciates slowly, and a well-maintained hood system and walk-in cooler have real liquidation value.

Review the Valuation Summary once all three methods are complete. Pay attention to the range, not just the weighted average — if your income and asset values are close, that's a stable number to bring to a broker. If they're far apart, dig into why. Most restaurant owners use this template six to twelve months before listing so they can clean up the financials, document their supplier relationships, and address any lease issues that would kill a deal. Walking into a broker conversation with a pre-calculated, documented valuation puts you in a much stronger negotiating position than asking the broker to tell you what it's worth.

Restaurants are among the most frequently bought and sold small businesses, but they're also among the hardest to value correctly. The core challenge is that most independent restaurants are deeply owner-dependent — the chef, the relationships with regulars, the supplier terms — and a buyer is essentially paying for future cash flows they'll generate after the current owner leaves. That's why Seller's Discretionary Earnings, not revenue, drives most restaurant valuations. SDE captures what the business actually puts in an owner-operator's pocket each year and normalizes out the personal expenses and below-market owner salaries that make P&Ls misleading.

Independent restaurants typically sell for 1.5x–3x SDE. The low end of that range is a struggling concept with a short lease or high owner-dependence. The high end is a profitable, well-documented business in a strong location with a long, transferable lease and a management team that doesn't rely on the owner to function. Revenue multiples (0.3x–0.7x of annual revenue) are used as a secondary check — a restaurant valued at 4x revenue is probably priced on ego, not earnings, and buyers know it. Bars with liquor licenses in scarce markets can trade above these ranges because the license itself has real scarcity value.

The lease is often the most overlooked value driver in a restaurant sale. A restaurant with five years left on a favorable lease in a high-traffic location is worth more than an identical restaurant with eighteen months left and a landlord who hasn't committed to renewal. Buyers and their lenders scrutinize lease transferability, remaining term, and rent-to-revenue ratio closely. A rent ratio above 10% of revenue is a yellow flag; above 12–15% is a deal-killer for many buyers. This template includes lease inputs so you can see how your rent situation affects your valuation before a buyer's due diligence does it for you.