By Dominique Maddox, CBI, CFE | EATS Broker — Dallas Restaurant Broker
Most restaurant owners I talk to have a number in their head. Sometimes it’s $500,000. Sometimes it’s $1.2 million. Sometimes it’s whatever they need to fund their retirement. The problem? That number usually has nothing to do with what a buyer will actually pay — or what a lender will actually finance.
If you’re thinking about selling your restaurant in Dallas, Houston, Austin, or anywhere in Texas, understanding how restaurant valuation works is the single most important thing you can do before you call a broker, talk to a buyer, or list your business. This post will walk you through exactly how it’s done.
Restaurant Valuation Is Not the Same as Real Estate
The first thing I tell every restaurant owner who calls EATS Broker is this: your restaurant is not valued like your house. You don’t price it based on what the place down the street sold for. You price it based on what your business actually earns, specifically, your Seller’s Discretionary Earnings (SDE).
SDE is the profit a business generates for a single owner-operator. It starts with your net income and adds back: owner’s salary, depreciation, amortization, one-time expenses, and any personal expenses run through the business. This gives buyers and lenders a true picture of what the restaurant produces in cash flow.
In Texas, most independent restaurant transactions are priced at 1.5x to 3x SDE, depending on the strength of the financials, the lease terms, location, brand recognition, and transferability. Franchise resales often command a tighter range because the brand adds credibility but the underlying SDE calculation is the same.
Restaurant Broker Tip: Buyers don’t buy your revenue. They buy your profit. A restaurant doing $2M in annual sales with $40K in SDE is worth far less than one doing $800K in sales with $200K in SDE. Cash flow is king.
The Four Factors That Drive Your Restaurant’s Value
After 15+ years in restaurant brokerage, here are the factors I see move the needle most on restaurant valuations across the Dallas/Fort Worth, Houston, and Austin markets:
- Financial Performance: 2–3 years of consistent P&L statements and tax returns showing stable or growing SDE. Erratic numbers raise red flags. Declining trends reduce your multiple significantly.
- Lease Terms: Your lease can make or break a deal. Buyers and SBA lenders need at least 5 years of remaining term (with options) to justify purchasing. A short lease with no renewal options dramatically reduces your buyer pool in markets like Frisco, Plano, and The Woodlands.
- Transferability: Can this restaurant operate without you? If you’re the head chef, the bartender, and the bookkeeper, buyers are nervous. The more systems you have in place, the better your value and the faster it sells.
- Concept and Location: Strong second-generation concepts in high-traffic corridors in cities like Sugar Land, Katy, Cedar Park, or San Antonio hold value well. Niche or declining concepts in weak locations are harder to price and harder to move.
One thing that surprises sellers: the condition of your equipment matters. Buyers will walk the kitchen before they sign anything. Deferred maintenance and broken equipment are either renegotiated out of the price or kill the deal entirely.
Franchise Resales Are Valued Differently and Buyers Know It
About 70% of the transactions I close at EATS Broker are franchise resales: Papa John’s, Firehouse Subs, Jimmy John’s, Marco’s Pizza, Schlotzsky’s, and others. Franchise resales have a unique valuation dynamic that generic business brokers often get wrong.
In a franchise resale, the value of the brand is baked into the multiple but the buyer also inherits franchise obligations: royalty fees, remodel requirements, franchise approval, and potential territory restrictions. A buyer who qualifies for the franchise, secures the lease assignment, and can get SBA financing is a very specific profile.
That’s why working with a broker who holds the Certified Franchise Executive (CFE) designation makes a material difference. I’m one of the few restaurant brokers in the nation who holds both the CFE and the Certified Business Intermediary (CBI) — which means I can speak the language of the franchisor, the lender, and the buyer simultaneously. That alignment is what gets franchise deals closed.
Restaurant Broker Tip: If your franchise requires a remodel before any buyer can be approved, that cost should be factored into your pricing from day one. Sellers who ignore this are often blindsided 45 days into due diligence — causing deals to fall apart.
Why Your Restaurant’s Value and What You’ll Net Are Two Different Numbers
Here’s an honest conversation most sellers don’t have early enough. Your restaurant might be valued at $400,000 but what you actually walk away with depends on several variables:
- Broker commission (typically 8–12% for transactions under $1M)
- Outstanding SBA loan payoffs or equipment financing
- Lease assignment fees or landlord requirements
- Prorated inventory value at closing
- Closing attorney fees and state transfer fees
At EATS Broker, we break this down with every seller before they list — because sellers who understand their net proceeds going in are far better negotiators, and far less likely to blow up a deal at the closing table. Our model has no upfront fees, no listing fees, and no marketing fees. You pay a commission only at closing.
How to Get a Credible Restaurant Valuation in Texas
The right way to value your restaurant is to work with a broker who specializes in restaurant transactions — not a general business broker who occasionally lists a restaurant between franchise territories and car washes.
At EATS Broker, our complimentary restaurant valuation process includes a review of your P&L statements, a lease assessment, an evaluation of your concept and location, and a comparable transaction analysis based on what’s actually closed in the Texas market — not national averages that don’t reflect DFW or Houston pricing realities.
You’ll walk away knowing your realistic value range, your estimated net proceeds, and what — if anything — you should address before going to market. For most sellers, that conversation alone saves months of frustration.
Restaurant Broker Tip: restaurant valuation is part art, part science, and 100% specific to your business. That number in your head may be right, or it may be off by $300,000 in either direction. The only way to know is to sit down with someone who does this every day, knows the Texas market, and can tell you the truth. That’s what we do at EATS Broker.
Ready to Find Out What Your Restaurant Is Actually Worth?
Whether you’ve been thinking about selling for years or this quarter’s numbers finally pushed you to the edge — the first step is a real valuation from a restaurant broker who knows your market.
✅ Get Your Complimentary Restaurant Valuation → www.EATSbroker.com/restaurant-valuations
📞 Book a Confidential Consultation with Dominique Maddox, CBI, CFE → www.EATSbroker.com/contact-usEATS Broker serves restaurant owners and buyers across Dallas, Houston, Austin, and nationwid