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

In General Area - Asked by Gino O. - Aug 21, 2013
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Ehtesham H.
Verdun, QC

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

Aug 22, 2013
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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
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Michael C.
San Leandro, CA

Try this link

Aug 22, 2013
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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

Aug 29, 2013
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