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Restaurant Valuation Calculator

Last Updated: Aug 31, 2025

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Created by
Saqib Hanif
Saqib Hanif

Saqib Hanif is the CEO and founder of Calculator Value. He builds calculators and educational content across sports, math, and science, and supports a limited set of construction-related calculators. Read full profile

What this calculator does

Estimates a restaurant’s value using three methods and an asset floor. It is calibrated to current Main Street market ranges and presented neutrally.

Method (step‑by‑step)

  1. Compute annual SDE: SDE = Revenue × (SDE Margin / 100)
  2. Revenue value: V_rev = Revenue × M_rev
  3. SDE value: V_sde = SDE × M_sde
  4. Weighted value: V_weighted = 0.60 × V_sde + 0.25 × V_rev + 0.15 × Assets
  5. Final value (asset floor): Final = max(Assets, V_weighted)

Calibration & bounds

  • M_rev bounded 0.30–0.80; adjusted for margin and growth.
  • M_sde bounded 1.6–3.0; adjusted for tenure, location, growth, and margin.
  • Weights emphasize SDE (0.60), plus revenue (0.25) and assets (0.15).
  • Inputs clamped for realism: years ≥ 0; growth in [-100, 100]; location in [1, 5].

Accuracy & use

Calibrated to commonly reported ranges from IBBA Market Pulse and BizBuySell benchmarks. When inputs reflect normalized operations, results generally align with market medians for small, owner‑operated restaurants. Actual deal values vary with lease terms, brand, licenses, financing, and due diligence. Guidance only; not a valuation opinion.

Example

Inputs: Revenue $750,000; SDE Margin 12%; Years 5; Growth 0%; Location 4; Assets $125,000.

Compute: SDE = 750,000 × 0.12 = 90,000; choose M_rev = 0.50 → V_rev = 750,000 × 0.50 = 375,000; choose M_sde = 2.7 → V_sde = 90,000 × 2.7 = 243,000; V_weighted = 0.60 × 243,000 + 0.25 × 375,000 + 0.15 × 125,000 = 258,300; Final = max(125,000, 258,300) = 258,300.

  • Industry-Standard Formulas: The formulas and methods used in this calculator follow widely accepted standards in Financial.
  • Careful Verification: The calculator is tested to ensure it behaves correctly across a range of inputs.
  • Continuous Updates: The calculator is updated as needed to reflect better accuracy and usability.
Sources:

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Looking for a way to estimate a restaurant’s valuation? Estimating a restaurant’s valuation manually can be confusing, so we have built a Restaurant Valuation Calculator to help you. The calculator asks for a few input fields and runs the calculations behind the scenes to give you an estimated valuation.

Keep reading, we cover:

  • What is a Restaurant Valuation Calculator?
  • How a Restaurant Valuation Is Calculated?
  • A real-world example
A restaurant is open

What is a Restaurant Valuation Calculator?

The Restaurant Valuation Calculator is a simple yet powerful tool that helps investors, buyers, and restaurant owners estimate the market value of a restaurant business. 

The calculator asks for a few inputs such as Annual Revenue, SDE (Seller’s Discretionary Earnings) Margin, Years in Business, Revenue Growth (YoY), Location Quality, and Asset Value (equipment & fixtures) — these inputs let the calculator’s logic estimate the valuation accurately.

Remember: this tool does not replace a professional appraisal. It provides an estimated, data-driven ballpark value to help you understand a restaurant’s worth.

How a Restaurant Valuation Is Calculated?

The calculator uses standard multipliers and formulas to estimate valuation from the factors you provide. Below is a simple real-world example that shows exactly how a restaurant’s valuation is calculated:

Real-World Example

Inputs:

  • Annual Revenue = $750,000
  • SDE Margin = 12%
  • Years in Business = 3
  • Revenue Growth (YoY) = 0%
  • Location Quality = 3 (average)
  • Asset Value = $180,000

Step 1: Calculate Annual SDE

  • 750,000 × 12% = $90,000

Step 2: Revenue-Based Value

  • 750,000 × 0.50 = $375,000

Step 3: SDE-Based Value

  • 90,000 × 2.2 = $198,000

Step 4: Asset-Based Value

  • = $180,000

Step 5: Weighted Adjustment (Years, Growth, Location)
The calculator blends revenue-based, SDE-based, and asset-based values using weights. After adjustment:

  • Final Valuation = $239,550

Estimated Restaurant Value = $239,550
(≈ 31.94% of Annual Revenue)

Frequently Asked Questions

Why is SDE so important?

SDE (Seller’s Discretionary Earnings) shows the total cash a full-time owner can take from the business (net profit plus owner pay and allowable add-backs). So, buyers focus on SDE because it reflects the actual cash they could expect to receive after running the restaurant