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Consumer Trends

Is it a good time to buy or sell a restaurant?

BizBuySell.com, an online marketplace, has released data on business-for-sale transactions in the restaurant industry. According to BizBuySell’s third quarter Insight Report, there has been a slight increase in restaurant business sales from last year, yet the number of closed transactions is still well short of pre-recession sales. BizBuySell.com saw a similar trend across most industries this quarter.


"This data suggests that the business-for-sale marketplace has flat-lined," explains Mike Handelsman, Group General Manager. “Although we do see a slight increase in transactions over last quarter, it looks like a recovery is going to be much slower in coming than we thought.”
 


Within the restaurant market:
 

  • The median asking price of businesses for sale currently stands at $198,000, down slightly from a year ago at this time, when it stood at $199,999
  • In the third quarter, restaurant businesses had a median revenue of $428,645 and a median cash flow of $89,043. Owners asked for, on average, a revenue multiple of 0.56 and a cash flow multiple of 2.83
  • A year ago at this time, the median revenue was $420,000, with a median cash flow of $89,000. Owners asked for, on average, a revenue multiple of 0.58 and a cash flow multiple of 2.97
  • A total of 195 closed transactions occurred in the third quarter of 2010. This is up from 180 in the third quarter of 2009, but down from 199 in the second quarter of 2010
  • Most restaurant business sales activity occurred in the South, where there were 2,176 listings and 96 closed sales
  • On average, restaurants sold for a median sale price of $110,000, about 85% of the average asking price. The median sale price dropped from Q2, when it stood at $125,000, but is the same as the average sale price from a year ago at this time
  • The median revenue for sold restaurant businesses came in at $360,000, with a median cash flow of $70,000. This is only a slight difference from the Q3 2009 median revenue of $350,000 and median cash flow of $71,926

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