Formula to value a restaurant business based on gross annual income or net annual income?

In General Area - Asked by Felipe A. - Aug 21, 2013
Report Abuse
Answer this Question

Answer(s)

Ehtesham H.
Owner/Investor
Verdun, QC

Ther is no fixed formula, every business has to analyzed by its own .

Aug 22, 2013
Report Abuse
JERRY C.
Corporate Investor
Breckenridge, CO

Restaurants are typically valued at one times gross with acceptable lease or plus the appraised value of the real estate

Aug 22, 2013
Report Abuse
Michael C.
Broker/Agent
San Leandro, CA

Try this link
http://www.bizbuysell.com/buyer_resources/how-to-value-a-business/06/

Aug 22, 2013
Report Abuse
Anthony C.
Santa Barbara, CA

Basic formulas for restaurants:
1.Full-Service Restaurant- about 1/3 of Annual Gross, 2 to 3 x EBITDA (Earnings Before Interest Tax Depreciation and Amortization)
2. Limited Service- 4/10 of Annual Gross, 2-3x EBITDA.
These factors will indicate a value of tangible/operating assets and goodwill. It does not include cash, receivables, inventory and it assumes the business is free of long term debt and short term payables.
The factors will be lower with restaurants showing EBITDA and/or Seller's Discretionary Earnings in the $100,000 or lower range. Important factors to consider are whether there is a liquor license, and whether there is a lease. No business is average and every case should be evaluated by its own merits.
Anthony S. Cangelosi
TEDESCO Appraisal & Valuation
www.tedescovaluation.com

Aug 29, 2013
Report Abuse

Welcome to Answers

LoopNet Answers is where the commercial real estate community shares what they know to help each other out. And it's all for free.

Ask a question to get advice from brokers, investors, professionals and local experts.

Answer questions to raise your visibility as a trusted advisor and build new relationships.

Ask a Question

Post Question