Buying a restaurant: the asking price is never the price that matters
A deal that looks profitable on paper can hide a lease about to expire, a team that walks out with the old owner, or a margin inflated for the sale. Here are the classic pitfalls, the documents to demand before you sign, and a calculator to estimate what your restaurant is worth from its EBITDA.
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Definition
An EBITDA multiple is the most common way to value a restaurant for resale: you multiply EBITDA — what's left after costs, before tax and depreciation — by an industry coefficient, typically 2 to 4x for traditional full-service restaurants. It's never the only factor: location, lease terms and equipment condition weigh just as much.
Indicative value = EBITDA × industry multiple (typically 2–4x for traditional restaurants)
Buying or opening: two different bets
Buying a restaurant means buying a customer base, a team, and a sales history — the question is whether that history is real or dressed up for the sale. Opening from scratch means no hidden liabilities, but no certainty on footfall for the first several months.
The number that settles it is almost always the same: the price of the purchase (goodwill plus lease transfer) against the cost and timeline of building from zero, code compliance included. Due diligence exists to answer exactly that — whether the numbers on offer survive being checked.
The 5 classic pitfalls of buying a restaurant
- Hidden liabilities — supplier debt, pending labor disputes, or an ongoing tax reassessment, none of which come up in conversation.
- Margins inflated for the sale — undeclared cash sales, costs pushed past the closing date, staff temporarily underpaid.
- The lease — a short remaining term, a rent due for review, or a clause that makes the business hard to resell in turn.
- The team that leaves with the old owner — the chef or bar manager who actually carried the menu and the regulars.
- Equipment at end of life — a walk-in, a hood system, kitchen gear due for replacement within the year, never priced into the asking figure.
Before you sign
A list of documents to demand — not a list of intentions.
- 1
The last 3 years of accounts
Full financial statements, not an optimistic forecast built for the sale.
- 2
The commercial lease
Remaining term, current rent and its review clause, termination and assignment terms.
- 3
Spec sheets and real food cost
Recipe by recipe, not a menu average — the only proof the advertised margin actually exists.
- 4
Staff turnover and contracts
Who leaves with the sale, who stays, what contracts and tenure look like.
- 5
Equipment condition
Age, maintenance history, service contracts — price what will need replacing within the year.
Ask for the spec sheets: if none exist, the advertised margin is an opinion, not a fact.
Get a first read on what your restaurant is worth
Two numbers give you a first range: annual revenue and EBITDA as a percentage of revenue. The result stays indicative — location and lease terms carry just as much weight as the math.
Annual EBITDA
72,000 €
Indicative valuation
144,000 € – 288,000 €
Indicative ranges only, depending on location and lease — not an offer.
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In Switzerland: same rigor, different name
The due-diligence process is identical — liabilities, lease, equipment, team. A Swiss business transfer (remise de commerce) is most often valued as an EBITDA multiple too. Talk to your fiduciary before signing a letter of intent: valuation norms shift by canton and sector.
Prove the margin, either side of the deal
Selling or buying, the same question comes back: is the advertised margin real?
Selling: prove your margin
Costed spec sheets and a real, tracked food cost instead of a menu average — the numbers that hold up when a buyer checks them.
Buying: audit before you sign
Recost the target restaurant's real margin from its invoices and menu — before you sign, not after.
Either way, the advertised margin is only as good as the spec sheets behind it.
Buying isn't the only path — see how to open a restaurant to compare. Once the deal is done, the P&L becomes the document you read every week — see how to read a restaurant P&L.
Buying a restaurant FAQ
A first range comes from multiplying EBITDA by an industry coefficient — typically 2 to 4x for a traditional full-service restaurant. That's only a starting point: location, remaining lease term, and equipment condition move the final price significantly.
It's the coefficient applied to EBITDA to get an indicative valuation — EBITDA × multiple. For traditional restaurants it usually sits between 2 and 4x; fine dining or a rare location can push it higher.
The last 3 years of financial statements, the full commercial lease, spec sheets with real food cost recipe by recipe, staff contracts and turnover, and the condition of the equipment. Without spec sheets, the advertised margin is a claim, not proof.
Buying purchases a customer base and existing revenue, at the risk of hidden liabilities. Opening starts clean but with no certainty on footfall for the first months. The number that settles it: the purchase price against the cost and timeline of building from scratch, code compliance included.
By proving the advertised margin is real: costed spec sheets dish by dish, a tracked food cost instead of an estimate, current accounts instead of an optimistic forecast. A buyer who can verify the numbers negotiates less hard than one who doubts them.
Who builds methodusmethodus is built by an operator. Nathaniel Gilliand, École hôtelière de Lausanne graduate, runs restaurants, bars and beach clubs. This is the tool he built to find the margin that was evaporating in his own P&L.
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The margin you can prove, not just claim
Costed spec sheets, real food cost, current accounts — whether you're selling or buying.
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