What Is My Restaurant Actually Worth? A Plain-English Guide.
If you've never sold a business before, this is probably the first question on your mind — and the most misunderstood. Here's how independent restaurants are actually valued, without the finance-textbook language.
Most owners assume their restaurant's value comes from revenue — the bigger the top line, the bigger the number. It's a reasonable guess, and it's usually wrong. Buyers of independent, owner-operated restaurants price the business almost entirely on one figure: Seller's Discretionary Earnings, or SDE.
What SDE actually means
SDE is the total financial benefit you personally get from owning the restaurant in a given year — not just your salary, but everything else that flows to you because you're the owner. That typically includes:
- Your salary or owner's draw
- Net profit after expenses
- Personal expenses run through the business (a portion of the phone bill, a vehicle, family health insurance)
- Interest, depreciation, and other non-cash or one-time items added back
A buyer wants to know: if I stepped into your shoes exactly as they are today, what would this business really put in my pocket each year? That number is SDE.
The multiple: turning SDE into a price
Once SDE is established, buyers apply a multiple to it — typically between 2x and 4x for independent, full-service restaurants. Where a specific restaurant lands in that range depends on things like how long it's been established, whether it has a genuine tourism or destination draw, how transferable it is without the current owner personally present, and how clean the financial records are.
This is directional, not a formal appraisal — but it's the same basic math a broker or buyer will start with.
What this range doesn't include
If you own the building your restaurant sits in, that's typically valued separately from the business itself, using real estate valuation methods rather than SDE multiples. The two get negotiated together at closing, but they're different calculations.
Want your own directional estimate?
Our free calculator uses this exact method — takes about a minute.
Why "clean records" matters more than people expect
Two restaurants with identical SDE can sell for very different prices if one has three years of clean, professionally prepared financials and the other has a shoebox of receipts. Buyers — and their lenders — discount uncertainty. Getting your books in order well before you're ready to sell is one of the highest-leverage things you can do for your eventual price.
The bottom line
Your restaurant's value isn't a mystery, and it isn't just a feeling. It's a calculation — SDE times a defensible multiple, plus or minus a few known adjustments. Knowing that number, even roughly, changes the entire conversation about what comes next.