Sell Your Restaurant Business

After careful consideration, you've decided it's time to sell your restaurant. Preparing to sell a business is a multi-step process, designed to help you attract the best opportunities and get the maximum value of your business. Follow our roadmap on how to sell a restaurant to ensure a successful transaction.

1. Understand Your Restaurant's Value

The first step as you prepare to sell is to understand how much your restaurant business is worth to potential buyers. When valuing a business for sale, it's important to remain objective in order to establish a realistic and competitive selling price. There are several methods for valuing a restaurant, but most buyers and owners will begin by applying pricing multiples to get a market value range.

Market-Based Valuations and Pricing Multiples

Market-based valuations compare like businesses to each other by applying market-specific valuation multiples. These multiples are used to compare restaurants with different levels of sales and profitability, and allow prospective buyers to make informed decisions by providing an easy way to understand relative values.

The metrics used are revenue (gross sales), and earnings (cash flow to the owner). For restaurants with earnings under $1 million, Seller's Discretionary Earnings (SDE) is the most common and relevant cash flow metric to use. Larger operations with professional management may use EBITDA as an earnings metric.

Using an example to illustrate, if a restaurant generating its owner $200,000 in SDE sold for $500,000, we can derive an earnings multiple for that sale of 2.5 ($500,000 / $200,000). A month later, a restaurant earning $300,000 around the corner goes on sale. Its owner might apply the same multiple of 2.5 to get a benchmark value of $750,000. By aggregating many restaurant sales we can derive the average market pricing multiples and use them to benchmark new restaurants that enter the market for sale.

Restaurant Valuation Multiples

Average earnings and revenue multiples for restaurant and food businesses sold on BizBuySell

Category	Avg. Earnings Multiple	Avg. Revenue Multiple
All Food & Restaurant Businesses	2.27	0.42
Bakeries	2.29	0.46
Bars, Pubs, and Taverns	2.85	0.52
Breweries	3.48	0.54
Coffee Shops and Cafes	2.35	0.49
Donut Shops	1.98	0.62
Food Trucks	1.60	0.54
Ice Cream & Frozen Yogurt Shops	2.38	0.54
Juice Bars	2.20	0.46
Restaurants	2.18	0.38

Source: BizBuySell Insight Data
Industry Benchmark Reports:

Select an industry... Bakeries Breweries Bars, Pubs & Taverns Coffee Shops & Cafes Donut Shops Ice Cream & Frozen Yogurt Shops Restaurants

Average Restaurant Earnings Multiples

While restaurant business valuations will generally fall into an average range, each restaurant is valued higher or lower in that range depending on the local market, and the specifics of the business's financials and operation. Just like buying or selling a home, accurate valuations need to compare businesses in the same local market. For owners just starting their exit plan though, it's helpful to look at general market averages to get a starting range.

For restaurants in general, the average earnings multiple is just over 2, and half of restaurants will fall into a range of 1.3 - 2.5. The wide range illustrates just how much local market trends and specific business qualities can impact the ultimate valuation and sales price.

Valuations Based on Sales or Revenue

Restauranteurs aim to sell their establishments for 25-45% of their yearly revenue or gross sales. Good news for prospective sellers: according to BizBuySell's Insight data, trends over the last five years indicate that restaurant sellers have been getting closer to 40%.

For example, if the business is making roughly $600,000 in sales a year, the sales price could be around $240,000. This calculation excludes the costs of doing business—labor, food, equipment, lease, etc.—that takes a dent out of profit. Neglecting to account for profit margin is the shortfall of revenue-based valuations.

Financial Documents You Will Need

In order to determine your asking price, you'll need to assemble the following formal financial records for this year, and the past two-to-three years.

• Income/Profit & Loss Statement – showing gross revenue, costs, and how much your restaurant made or lost each year
• Cash Flow Statement – showing how much money was received and paid out of your business and how business assets changed as a result
• Balance Sheet – showing the value of all tangible assets owned by your business, less the liabilities your restaurant owes
• Seller's discretionary earnings statement – showing how much your business makes after adding back non-recurring and discretionary expenses

2. Enlist The Right Experts

As the business owner, you know your restaurant and its strengths and weaknesses best. At the same time, selling a restaurant successfully is a complex process that requires a specialized skillset. Be sure to assemble a team of experts on whom you can rely to maximize the value you receive for the business you have built.

A Smart Accountant

The value of your restaurant and the price buyers are willing to pay will hinge on its financial performance. You will need accounting and tax records going back about three years, and you should expect serious buyers to go over your documents with a fine-toothed comb during due diligence.

If you don't already have an accountant, it would be wise to engage a CPA to organize all of your records and create auditable financial statements.

An Experienced Attorney

Non-Disclosure agreements, letters of intent, offers to purchase, statements of information, assignments of lease, and buy-sell agreements - these are just some of the contracts you will be creating, receiving, and ultimately penning your signature to. Your lawyer will translate the legalese and ensure it reflects the myriad decisions you will be making, and terms you will negotiate and agree to.

Further, an attorney experienced in business acquisitions will be able to anticipate situations that may create legal liability, and help protect you through the process.

A Dedicated Business Broker

Arguably the most effective player on your team will be an experienced business broker. No one is better suited to navigate the business sale process. Experienced business brokers can help you set an asking price grounded in the local market trends, offer strategic guidance to improve the appeal of your restaurant, find and vet potential buyers, negotiate terms that meet your needs, and ultimately close the deal.

Local brokers spend every day working with restaurant owners, buyers, and other brokers, which means they are closest to the market and understand how to make these transactions happen. And because they generally work on a contingency fee basis, their interests are aligned with yours and will work to negotiate the best terms possible.

3. Plan Your Exit

When selling a restaurant, it doesn't matter if you're passing the business down to a family member, selling your share to a trusted business partner, or listing it on the open market. You'll want to establish an in-depth exit plan that easily illustrates to potential buyers the restaurant's current and potential value. Ideally, you'll want to start planning your exit strategy three years before your desired sell date - though that's not always possible.

Buyers want to see a profitable revenue stream and consistent cash flow. Restaurateurs who have established sound practices that include trained and capable staff, positive cash flow, documented procedures for ordering, inventory, scheduling, etc. will attract more buyers. Once you're gone, having systems and management in place to run the business will be essential in your exit plan strategy.

Time Frame & Market Trends

The time it takes to sell a restaurant varies, and can take anywhere from six months to a year or more - and some restaurants may never sell. You can improve your position by pricing the business realistically, and organizing all your documentation as clearly as possible.

Things are looking up in the restaurant for sale market. There were 2,653 restaurant sales on BizBuySell in 2024. The factors that have the most impact on how long it will take to sell your business are the sale price, cash-flow, rent/lease considerations, and the location.

Prepare the Restaurant for Sale

Once you've established your restaurant's value and selling price, and you have an exit strategy in place, it's time to prepare the restaurant for sale. You'll want to gather all necessary paperwork that includes a comprehensive list of assets, lease agreements, all licenses (e.g., liquor license), copies of health inspections records, sales tax history, etc. You'll also want to identify team members that can take over the day-to-day management of the restaurant. If they need additional training, now's the time. Create manuals to ensure a successful transition.

Consider Valuation Factors as Your Plan Your Exit

As you plan your exit, try to think about the factors that would make your restaurant more or less appealing to a buyer, relative to other restaurants for sale. Following are some of the factors that will make one restaurant more or less valuable than another - and therefore fetch a higher or lower price multiple:

4. Find Buyers

Finding the right buyer for your restaurant starts with putting together an effective marketing strategy. You want to get your restaurant sale in front of as many prospective buyers as possible. Ideally you can drum up enough interest to generate competing offers.

The first step is to establish whether the sale will be held confidentially. Typically, when small businesses are listed for sale, it's standard practice to use discretion to keep business operating as smoothly as possible. This helps maintain value, and prospective buyers prefer sensitive information to be kept confidential. There are exceptions. For instance, if your restaurant is well known and respected, widespread knowledge that the restaurant is for sale may be beneficial. Just be careful not to spook customers, employees, or vendors.

There are a variety of marketing approaches you can take when selling your restaurant. Usually, a combination of tactics will work best to attract a buyer. Local ads to restaurant and industry specific periodicals, professional network referrals, and a listing on popular marketplaces like BizBuySell. Nine out of 10 prospective buyers shop online listings, so that's where you will reach the widest audience.

If you're using a business broker, the marketing strategy will be mostly their responsibility, but don't let your broker keep you in the dark. You should be kept up to speed on where you can find your listing, how many inquiries you have received, and how many serious buyers have expressed interest. You want to be confident that your listing is visible and easy for prospective buyers to discover.

5. Negotiate Terms & Close

The final steps when selling a restaurant come down to negotiating the terms and closing the deal. A successful negotiation comes from a position of strength. Keeping emotions in check, whether you're selling your restaurant on your own or using a business broker, is so important. If you're not using a broker, lean on your accountant or attorney to give you an objective point of view during negotiations.

Be prepared for negotiating by gathering all relevant data available about the restaurant industry. In 2024, there were 2,653 restaurants sold on BizBuySell with 173 median days on the market. The median sale price for restaurants was $215,000 for the last year, suggesting there may be pent up demand for restaurant ownership.

Offering financing options, like financing a portion of the business sale over time with interest or having the restaurant pre-qualified for an SBA loan, can maximize your negotiating position and help you get a better sales price.

Once final terms of the deal have been agreed upon, it's time to prepare for closing the deal. When selecting a time and date for the closing, it's helpful to schedule at the end of the quarter, month, or pay period to simplify any monthly expenses that transfer with the sale. There are many variables to consider for closing the deal, but here's a good checklist of things you'll need to do to close and transfer the restaurant to a new owner.

Selling your restaurant is a complex process, but you can simplify things by taking the time to understand the value your business. Whether you list and market the restaurant on your own, or hire a business broker, you'll be on your way to a smooth transaction and close the sale quickly.