Few businesses evoke as much attachment as restaurants. The owner has often invested years of evenings and weekends, sometimes their savings, into it. It is normal that they attach great value to it. As for the buyer, they mainly ask one thing: how much will this restaurant earn them, once everyone has been paid, including themselves?

The gap between these two viewpoints is often wide. It is explained by characteristics specific to the sector: thin margins, partial cash sales, an owner who works in the kitchen or front-of-house, a leased premise where the lease determines the future, expensive equipment that quickly loses its value, and permits that do not always automatically follow the new owner.

This guide is intended for restaurateurs preparing for a sale, and for buyers who want to make a fair offer. It covers independent restaurants, franchises, bistros and brasseries, cafés, and counter-service establishments.

Summary answer: a profitable restaurant is generally valued by multiplying its normalized profit by a factor that is often between 1.5 and 4 times EBITDA. For a small restaurant run by its owner, we instead use the owner’s discretionary profit. Sales must be validated by sales recording system reports and bank deposits. The profit must be normalized (owner's salary, family, rent, non-recurring items), then adjusted according to the lease, the condition of the equipment, permits, and reputation. A restaurant that is not profitable once the owner is paid is generally sold "turnkey," at the value of its equipment and improvements.

Why a restaurant is valued differently

• Margins are thin. A variation of a few points in food or labor costs can wipe out the profit.

• The owner is often at the heart of operations. Chef, manager, purchasing and scheduling coordinator: their departure changes the business.

• Sales are difficult to verify without the right tools. A portion of sales is still paid in cash, and tips complicate the reading of the figures.

• The premises are leased and customized. The hood, ducts, grease trap, and interior fit-outs represent significant investments, often integrated into the building and sometimes owned by the landlord.

• Equipment depreciates quickly. A ten-year-old oven, dishwasher, or walk-in cooler has almost no resale value, even if it still works.

• Reputation is fragile. It relies on a chef, a team, an ambiance, and online reviews that can change rapidly.

Step 1: determine which type of restaurant you are evaluating

Before talking about a multiple, classify the restaurant into one of these three categories. The valuation method follows from this.

The owner's discretionary profit corresponds to EBITDA to which the remuneration of a single owner-operator is added. It answers the question from a buyer who intends to work in their restaurant: "How much will it earn me, including my own salary?" The multiples applied to this profit are lower than those applied to EBITDA. Never mix the two.

Step 2: validate sales

This is the first step, and the most important. Everything else follows from it.

Sales recording system reports

In Quebec, restaurants and bars are subject to mandatory billing. They must use a certified sales recording system that communicates with Revenu Québec's MEV-WEB, and provide a bill produced by this system to every customer. The reports from this system are the most reliable source for reconstructing sales.

Request the monthly sales reports from the last 24 to 36 months, and compare them:

• to the sales recorded in the financial statements;

• to the sales declared in GST and QST returns;

• to bank deposits, taking into account card payments, transaction fees, and cash.

Delivery platforms

Sales through delivery platforms are often presented at the gross amount, while commissions can be high. Analyze the net margin of this channel. Sales growth coming primarily from delivery may be accompanied by a drop in profitability.

"Undisclosed" cash sales

It still happens that a seller mentions cash sales that do not appear in the financial statements. A buyer should never pay for these sales: they cannot be verified, no lender will finance them, and in a share purchase, they expose the buyer to tax assessments for prior years. The price is based on declared sales. See Financial statement analysis: keys to a successful purchase.

Trends

Analyze sales month by month over three years, distinguishing between:

• real growth (more customers) versus price increases on the menu;

• food sales and alcohol sales, which do not have the same margin;

• dine-in, takeout, delivery, and catering sales;

• seasonality, especially in tourist regions or office sectors.

Step 3: normalize the profit

Start from the financial statements of the last three fiscal years and adjust them to reflect normal operation under a new owner.

Adjustments specific to the restaurant industry

• Owner's salary: compare it to the cost of a manager or chef, depending on the role they actually fill. A chef-owner who only pays themselves $35,000 for 60 hours per week is overvaluing the profit.

• Family: relatives who work without pay will need to be replaced by employees; those who are paid without working are removed from the calculation.

• Rent: if the building belongs to the seller or a related company, bring the rent to market price, since the buyer will sign a new lease.

• Personal expenses: family meals, wine for personal use, vehicle, cell phone.

• Non-recurring major repairs: a walk-in cooler compressor replaced at once can be removed from the calculation. But a restaurant always has repairs; only remove what is truly exceptional.

• Tips: they belong to employees and are not part of restaurant revenue. Verify that they are handled correctly in bookkeeping and payroll, and that tip-sharing agreements comply with the Act respecting labour standards.

• Minimum wage: the general rate has been $16.60 per hour since May 1, 2026, with a separate rate for tipped employees. If the previous year's results are based on old rates, adjust the payroll.

Step 4: analyze key ratios

Restaurateurs manage their business using a few ratios expressed as a percentage of sales. They allow for comparing the restaurant to itself over time and to similar establishments.

These benchmarks vary by concept (fast food, family, fine dining, bar). They are meant to ask the right questions, not to provide the final word.

Example: a restaurant shows a food cost of 26% while its menu and pricing suggest about 32%. Two possible explanations: excellent cost control or an overvalued year-end inventory that inflates the margin. A physical inventory count and an analysis of supplier invoices will settle it.

Step 5: evaluate the lease and the premises

For a restaurant, the lease is often the element that makes or breaks the transaction.

Questions to ask

• Remaining term and renewal options: a buyer financing their purchase over five or seven years needs a lease of at least the same duration.

• Assignment: does the lease allow for assignment to the buyer in an asset purchase? Is a change of shareholders treated as an assignment in a share purchase? Obtain the landlord's written consent before closing.

• Permitted use: does the lease allow for restaurant operation, alcohol service, cooking (frying, grilling), a terrace?

• Exclusivity: in a shopping center, does the landlord commit not to lease to a direct competitor?

• Improvements: who owns the hood, ducts, grease trap, built-in walk-in cooler? Many leases stipulate that leasehold improvements become the property of the landlord at the end of the lease.

• Restoration: must the tenant restore the premises to their original state at the end of the lease? The cost can be high.

• Personal guarantee: the landlord will likely require the buyer to personally guarantee the lease, as the seller did.

Impact on value

A profitable restaurant with a two-year lease and no renewal option is worth much less than the same restaurant with a ten-year lease. In the first case, the buyer risks losing their location, and with it the clientele, before having repaid their purchase. The multiple must drop accordingly, sometimes down to leaving only a value close to that of the equipment.

Step 6: evaluate equipment and improvements

Inspect

Have the kitchen and refrigeration equipment inspected by a technician: age, maintenance, upcoming repairs needed. Also check the ventilation and fire suppression system above the cooking appliances, and the date of its last inspection. A non-compliant system must be corrected before opening under the new owner.

Distinguish values

• In-place value: what the equipment is worth to a buyer continuing operations. This is the relevant value for a "turnkey" sale.

• Resale value: used restaurant equipment generally sells for a fraction of its new cost. This is the absolute floor of value.

Leased or supplied equipment

Some equipment may be leased (dishwashers, coffee machines, POS systems) or provided by a supplier in exchange for a purchasing commitment (drink refrigerators, fountains). Draw up a list of what actually belongs to the restaurant and what will be transferred, replaced, or returned.

Upcoming investments

A restaurant whose equipment and decor have not been updated for ten years will require rapid investments. This amount is deducted, in whole or in part, from the value.

Step 7: verify permits and compliance

Restaurant permits are tied to the operator. A change of owner, depending on the transaction structure, may require a new application or a notice of change. Delays must be factored into the closing schedule.

• MAPAQ food permit (restaurant permit): check if it is in good standing, recent inspection reports, and the steps to be taken for the new operator.

• The liquor license from the Régie des alcools, des courses et des jeux (RACJ): check the license category, specific authorizations (terrace, hours), and the procedures required when changing operators or shareholders. For a brewery or bar, alcohol sales can represent a large portion of revenue: do not sign without knowing when the new license or authorization will be obtained.

• The sales recording system: it must be certified and configured in the name of the new operator.

• Municipal permits: occupancy certificate, terrace, signage.

• The Charter of the French Language: since June 1, 2025, when a trademark in a language other than French appears on outdoor signage, French must be clearly predominant. Check the sign.

• Employer obligations: CNESST file, compliance with labor standards, accrued vacation pay owed to employees.

Advice: make obtaining the necessary permits a closing condition in the purchase agreement.

Step 8: evaluate intangible elements

Reputation

Analyze online reviews on several platforms and over at least two years: average rating, trend, number of reviews, owner responses. A reputation based on a chef who is leaving with the seller will not transfer.

The chef and the team

Who designs the menu? Who does the purchasing? Are the chef and key personnel staying after the sale? In a market where restaurant labor is scarce, a stable team has real value. A meeting with key employees, with the seller's consent, is often decisive.

Recipes, brand, and digital assets

Recipes, the name, logo, website, and social media and online booking accounts are part of what the buyer is paying for. Verify that they belong to the business and that they will be transferred. See Who owns a business’s data, accounts, and creations?.

Franchise

For a franchised restaurant, obtain the franchisor's transfer conditions early: buyer approval, right of first refusal, transfer fees, training, renovations required upon transfer, and remaining contract term. Renovations imposed at the time of sale can represent a significant portion of the price.

Step 9: choose the multiple and reconcile

Observed ranges

TRNSFR observes, for the restaurant industry in Quebec (independents and franchises), multiples in the range of 1.5 to 4 times EBITDA. See Business sale multiples in Quebec: guide by industry and size.

What drives the multiple up or down

Inventory

A restaurant's inventory (food, drinks, alcohol, packaging) is usually added to the price, at cost, based on a count taken the day before closing. It generally represents a modest amount compared to the price, but it must be excluded from the negotiation on the multiple.

The floor: the turnkey

When normalized profit is low or zero, the buyer pays for an already fitted-out space, equipment in place, and sometimes a sought-after location. They thus avoid the cost and delays of a full fit-out. This is the "turnkey" sale. Its value depends on the cost a buyer would avoid, the condition of the facilities, and the length of the lease, much more than on past results.

Complete example: a neighborhood brewery in Gatineau

A brewery has $1,800,000 in sales, 35% of which is alcohol. The owner works there as a manager and pays himself $45,000. His spouse is on the payroll for $35,000, but does not work at the restaurant. The lease, signed with an independent landlord, has six years to run, with a five-year renewal option.

The seller is asking for $750,000, based on EBITDA of $190,000 and "potential."

Normalization

Ratios

Food and beverage cost is 31% of sales, labor is 33%, a prime cost of 64%. Occupancy cost is 7%. The sales recording system reports reconcile with the financial statements and tax returns. Sales have increased by 4% per year over three years, about half of which was due to price increases.

The result

At a multiple of 2.5 (solid lease and stable reputation, but sales growing mainly through prices and 12-year-old kitchen equipment), the value is approximately $550,000, plus inventory at cost, estimated at $25,000. Equipment and fit-outs are valued at approximately $180,000 in place: goodwill therefore represents the bulk of the value.

The parties agreed on $560,000, plus inventory at cost based on a count at closing. Closing was conditional upon obtaining RACJ and MAPAQ authorizations in the buyer's name. The seller stayed for six weeks to ensure the transition with suppliers and the team.

Two short examples

A café in Joliette

An independent café has $420,000 in sales. The owner works there full-time. Her discretionary profit is $85,000. At a multiple of 1.5, the value would be approximately $128,000. But the lease has only two years left, with no renewal option, and the landlord refuses to commit. The buyer offers $80,000, barely more than the value of the equipment in place (approximately $60,000). The seller finally negotiates a new five-year lease with her landlord before putting her café back on the market, this time at $125,000.

A turnkey restaurant in Lévis

A family restaurant no longer generates profit once the owner's labor is paid at market rates. It is sold turnkey for $95,000 to a restaurateur who will open a new concept. The buyer pays for a complete and compliant kitchen, a recent hood, a fitted-out dining room, and a seven-year lease. They avoid several months of work and an investment they estimate at over $250,000.

What the seller can do to increase value

• Extend your lease before selling, with renewal options and a clear assignment clause.

• Pay yourself a market salary and pay your family for work actually performed.

• Train a manager or sous-chef capable of running the restaurant without you.

• Document your recipes and your cost specification sheets.

• Track your ratios each month and perform a physical count of inventory.

• Maintain the equipment and keep maintenance and inspection invoices.

• Take care of your online reputation and respond to reviews.

• Resolve compliance issues: permits, sales recording system, signage, labor standards.

For full preparation, see the sale preparation checklist and The ultimate guide to selling a business.

Checklist: evaluating a restaurant

☐ Category determined: profitable managed, profitable owner-operated, or turnkey

☐ Sales recording system reports obtained for 24 to 36 months

☐ Sales reconciled with financial statements, GST/QST returns, and bank deposits

☐ Sales analyzed by channel (dining room, takeout, delivery, catering) and by type (food, alcohol)

☐ Owner and family salary adjusted to market rates

☐ Tip handling verified

☐ Food cost, labor, prime cost, and occupancy cost calculated

☐ Lease analyzed: duration, renewal, assignment, usage, fit-outs, restoration

☐ Written consent from landlord obtained

☐ Equipment and ventilation and fire suppression system inspected

☐ Equipment leased or supplied by suppliers inventoried

☐ Permit procedures (MAPAQ, RACJ, municipality) planned and scheduled as closing conditions

☐ Online reputation analyzed over at least two years

☐ Retention of chef and key personnel discussed

☐ Franchisor transfer conditions obtained, if applicable

☐ Inventory count terms planned

☐ Multiple justified and turnkey value verified as a floor

Most frequent traps

• Paying for undeclared sales. They are worthless to the buyer, and they can be costly.

• Forgetting the owner's salary. A restaurant's profit often disappears as soon as you pay a manager or chef.

• Applying an EBITDA multiple to discretionary profit. This is the fastest way to overpay for a small restaurant.

• Discovering the lease at the end. A short or non-assignable lease can reduce the value to that of the equipment.

• Signing before having the permits. A brewery without a liquor license is not the same business.

• Paying for equipment at its original cost. Used restaurant equipment sells for a fraction of that price.

• Buying the reputation of a chef who is leaving. Plan for the transition or adjust the price.

• Ignoring franchisor requirements. Renovations imposed upon transfer can be significant.

For other common mistakes, see The 5 most common mistakes when transferring a business in Quebec.

Can you evaluate your restaurant yourself?

For an initial estimate, yes. A restaurateur knows their sales, costs, and clientele. By normalizing their profit, calculating their ratios, and applying a range of multiples, they obtain a useful order of magnitude. TRNSFR's EBITDA calculator, AI business evaluation tool, and business evaluation checklist can help.

To set a selling price or make an offer, have the analysis validated by a CPA familiar with the restaurant industry: validation of sales, normalization, structure (shares or assets), choice of GST/QST at closing, and seller taxation. Entrust the review of the lease, franchise agreement, and purchase agreement, as well as the transfer of permits, to a lawyer or notary. For restaurants for sale on the platform, see the Restoration section of TRNSFR.

Sources

• TRNSFR, Business Sales Multiples in Quebec: A Guide by Industry and Size

• Revenu Québec, Transition to the WEB-SRM – Restaurant Sector

• Régie des alcools, des courses et des jeux, Restaurant Liquor Permit

• Government of Quebec, Permits for food preparation, restaurant or retail sale (MAPAQ)

• Government of Quebec, The general minimum wage rate will increase to $16.60 per hour on May 1, 2026

• Éducaloi, Language Rights: New Rules for Businesses

This article provides general information and does not replace a business valuation or tax, accounting, or legal analysis tailored to your situation.