Valuing/selling a single stand-alone restaurant - thoughts?
Been engaged to sell a single, stand-alone high-end restaurant in a major city with ~10mm of revenue. I've started to do some googling and most reports are focused on franchises, chains, quickserve/fast casual and large restaurant group deals.
Does anyone here have experience with small restaurant deals like this? Do they transact off of revenue? EBITDA? Any key metrics I should be aware of? (ticket times? rev/table? rev/seat?)
Am also not working with the most robust financial information so this looks like it'll be a challenge to even put together something like a DCF.
Appreciate any insight anyone may have, thanks.
If you have EBITDA, a balance sheet and some operating metrics to use for projections, I don't see why you can't use a simple dcf to justify a ballpark valuation. Ultimately it will boil down to the ROI the buyer can make on his investment, which is what the dcf should approximate.
If you are selling to an owner/operator buyer it will most likely driven by owners earnings. Normalization adjustments will be a key item depending on the sophistication of the seller. (Owner's Comp, Rent, Personal Expenses, etc.)
If it is a restaurant group they most likely value it off EBITDA or Revenue metrics.
Once single store restaurants hit a certain level of sales they can't really grow unless they expand. They are limited to the # of tables or whatever. So if it is a mature restaurant I would just capitalize the cash flows with a low long term growth rate. Probably grab some precedent transactions as well to triangulate, there are databases for small businesses. Use the values to come up with a reasonable range.
I don't work in the restaurant business...
Thanks gentlemen. If anyone else has thoughts, happy to read the input.
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