Ask two owners what their restaurant is worth and you'll usually get two different answers — both wrong, because both are guessing. Buyers and lenders don't price a restaurant off revenue. They price it off a multiple of Seller's Discretionary Earnings (SDE): what the business actually generates for a single owner-operator once you add back your salary, personal expenses run through the books, and one-time costs.
What moves the multiple
Most independent restaurants trade between 2x and 3.5x SDE. Where a specific deal lands inside that range depends on a short list of things buyers actually check:
- Lease term remaining. Three years left on the lease reads very differently than twelve, even at identical earnings.
- Revenue trend. Flat-to-growing SDE over the last three years supports a higher multiple than a single strong year sitting on a declining trend.
- Owner dependency. If the concept runs on your personal relationships or your presence behind the line, buyers discount for the risk of losing that when you leave.
- Documentation quality. Clean, tax-return-backed financials close faster and support the number you're asking for. Financials that don't reconcile invite a lower offer, not the benefit of the doubt.
The math, worked through
A restaurant clearing $140,000 in SDE with a stable five-year lease and three years of consistent numbers might reasonably support a 2.8x–3.2x multiple — roughly $390,000–$450,000. The same $140,000 SDE with eighteen months left on the lease and one unusually strong year likely lands closer to 2x, because a buyer is really pricing the risk, not just last year's number.
Before you set an asking price, get comfortable defending your SDE add-backs line by line — that's where most negotiations actually happen.