How Much Is My Restaurant Worth? The 2026 Restaurant Valuation Guide

It's the first question every owner asks when they start thinking about selling: what is my restaurant actually worth? The good news is that restaurant valuation isn't a mystery or a gut feeling — it follows a repeatable formula that buyers, brokers, and lenders all use. Once you understand it, you can estimate your own number, spot what's dragging it down, and walk into a sale with realistic expectations.

This guide breaks down exactly how restaurants are valued in 2026, the three methods buyers actually use, a worked example with real numbers, and the levers that raise — or sink — your final price.

The Short Answer: SDE × a Multiple

Most independent restaurants are valued on a simple equation:

Business Value = Seller's Discretionary Earnings (SDE) × an industry multiple

For typical independent restaurants, that multiple usually lands somewhere between 1.5× and 3× SDE, plus the value of any equipment (FF&E) that conveys with the sale. Where you fall in that range depends on your lease, your books, your location, and how dependent the business is on you personally. We'll unpack all of that below — but first you need to understand SDE, because it's the number everything else is built on.

What Is SDE (Seller's Discretionary Earnings)?

SDE is the total financial benefit a single owner-operator gets from the business in a year. It's not the same as net profit on your tax return — it's higher, because you "add back" expenses that are discretionary or personal to you as the owner.

Start with your net profit, then add back:

• Your owner's salary / draw — a new owner takes this over
• Interest and depreciation — financing and accounting figures, not operating costs
• One-time or personal expenses — your vehicle, personal phone, a one-off legal bill, travel
• Above-market wages paid to family members who won't stay on

The result — your "normalized" earnings — is what a buyer is really purchasing. Clean, well-documented add-backs can legitimately raise your valuation by tens of thousands of dollars, which is why bookkeeping matters so much (more on that below).

The Three Ways Restaurants Are Valued

1. The SDE Multiple (the most common method)

This is the default for profitable, owner-operated restaurants. You calculate SDE, then apply a multiple based on the strength of the business. A turnkey, well-located restaurant with clean books and a long, transferable lease earns a multiple near the top of the range; a business with messy financials, a short lease, or heavy owner dependence earns one near the bottom.

2. Asset-Based Valuation

When a restaurant isn't profitable — or is being sold as a closed space — buyers price it on assets instead of earnings. That means the fair-market value of the equipment, the build-out, the hood and grease trap, walk-ins, and any leasehold improvements. A fully equipped "second-generation" space is worth far more to a buyer than an empty shell, because it saves them a six-figure build-out. If your restaurant isn't making money, asset value is often your floor.

3. Comparable Sales

Just like real estate, restaurants are partly priced by what similar businesses actually sold for nearby. A buyer (or their broker) will look at recent comparable sales — same market, similar size and concept — to sanity-check the multiple. You can do this research too: browse active restaurant listings in your area to see asking prices, and check recently sold restaurants for closed-deal context.

A Worked Example

Let's value a hypothetical neighborhood restaurant:

• Annual revenue: $900,000
• Net profit on the books: $60,000
• Owner's salary added back: +$70,000
• Depreciation + interest added back: +$25,000
• Personal/one-time expenses added back: +$15,000

SDE = $60,000 + $70,000 + $25,000 + $15,000 = $170,000

Now apply a multiple. This restaurant has decent books, a solid location, and a 7-year transferable lease — call it a 2.25× multiple:

Business Value ≈ $170,000 × 2.25 = ~$382,500

If $50,000 of equipment conveys and isn't already baked into the multiple, the asking price might be set around $400,000–$430,000. Notice the revenue ($900k) was never multiplied directly — earnings drive value, not sales. A high-revenue restaurant that barely breaks even can be worth less than a smaller one that's genuinely profitable.

What Raises — and Lowers — Your Valuation

Two restaurants with identical SDE can sell for very different prices. Here's what moves the multiple:

Raises your value

• Clean, verifiable financials — 3 years of P&Ls and tax returns that match your POS
• A long, transferable, below-market lease — arguably the single biggest factor
• Low owner dependence — trained managers and systems so the business runs without you
• Strong, diversified revenue — not reliant on one catering client or one delivery app
• Well-maintained equipment and a recent, clean health inspection
• Brand strength — strong reviews, real social following, repeat customers

Lowers your value

• Cash sales off the books — if you can't prove it, a buyer won't pay for it
• A short or non-transferable lease, or a landlord who won't assign
• Heavy owner dependence — if the business is you, it's harder to sell
• Declining or volatile sales
• Deferred maintenance and aging equipment

Does Real Estate Change the Math?

Yes — and it's important to keep the two separate. If you own the building, you're really selling two things: the business (valued on SDE, as above) and the real estate (valued like commercial property, on its own). Buyers may purchase both, or buy the business and lease the building from you. On ListingLedge, sale listings let you separate business value from property value precisely so buyers understand exactly what they're paying for. Bundling them into one vague number is one of the fastest ways to confuse buyers and stall a deal.

Common Valuation Mistakes

• Pricing on revenue instead of earnings. "We do a million in sales" tells a buyer nothing about profit.
• Inflating add-backs you can't document. Buyers and their lenders will scrutinize every one.
• Emotional pricing. The years of sweat you put in aren't a line item a buyer will pay for.
• Ignoring the lease. A great restaurant with two years left on a non-renewable lease is a hard sell at any price.
• Waiting until you're burned out to clean up the books. Buyers pay for the last 2–3 years of financials — start preparing before you list.

How to Get an Accurate Number

A self-estimate using the formula above gets you in the ballpark. To tighten it up:

• Get your books in order first — three years of clean P&Ls and tax returns, with add-backs documented.
• Pull real comparables from active and sold listings in your market.
• Use ListingLedge's built-in AI valuation tool when you create your listing — it estimates a range from your numbers and market data in minutes.
• Talk to a restaurant broker for anything complex. Their fee is typically paid by the seller, and a good one knows exactly what your local market will bear.

Ready to Find Out What Yours Is Worth?

The best way to test your number is to package your restaurant properly and put it in front of qualified, industry-specific buyers. Create a free listing on ListingLedge — it's built exclusively for hospitality, separates business and property value cleanly, and includes AI tools to help you price, write, and market your sale. No commission, no generic business-broker noise — just buyers who are actually looking for a restaurant like yours.