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SDE Calculator

Calculate your restaurant's Seller's Discretionary Earnings and estimated value. The standard valuation method for owner-operated restaurants.

Quick Valuation Estimate

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Industry Benchmark Reference

Rent to Sales:5-8%
Total Occupancy:6-10%
Food & Bev (COGS):25-35%
Labor:25-35%
Prime Cost (COGS+Labor):55-65%
Net Profit Margin:5-15%

Factors That Affect Your Multiple

Lease terms (5+ years remaining = higher)
Rent under 8% of sales = higher multiple
Growing revenue trends = higher multiple
Absentee ownership = higher multiple
Type 47 liquor license = premium value
Strong location/visibility = higher

Your Valuation Estimate Will Appear Here

Start with gross sales and net profit to see an instant valuation estimate

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Understanding SDE Valuation

What is SDE (Seller's Discretionary Earnings)?

SDE is the most common valuation method for owner-operated restaurants with less than $1M in annual earnings. It calculates what a new owner-operator would earn by adding back the current owner's salary, benefits, and discretionary expenses to the net profit.

SDE = Net Profit + Owner's Salary + Owner Benefits + Depreciation + One-Time Expenses + Personal Expenses

Why SDE Matters for Restaurant Sales

Most restaurant buyers are owner-operators who will work in the business. SDE shows them the total economic benefit they'll receive—including the salary they'll pay themselves. This makes SDE the standard for valuing restaurants where the owner is actively involved.

Typical SDE Multiples by Earnings Tier

  • Under $75K SDE: 1.0x - 2.0x (smaller operations, higher risk)
  • $75K - $150K SDE: 1.5x - 2.5x (solid small restaurants)
  • $150K - $300K SDE: 2.0x - 3.0x (strong performers)
  • $300K - $500K SDE: 2.25x - 3.25x (premium operations)
  • $500K - $1M SDE: 2.5x - 3.5x (larger, more desirable)
  • Over $1M SDE: 3.0x - 4.0x (consider EBITDA method)

What Affects Your Multiple?

  • Lease Terms: 5+ years remaining with favorable rent (under 8% of sales) commands higher multiples
  • Prime Cost: COGS + Labor under 65% indicates efficient operations
  • Location: High-traffic, visible locations with strong demographics
  • Trends: Growing revenue and profit trends increase buyer confidence
  • Owner Involvement: Semi-absentee operations are more valuable than owner-dependent ones
  • Licenses: Type 47 liquor licenses add significant value in California

When to Use EBITDA Instead

If your restaurant has SDE above $500K-$1M, or operates with professional management (not owner-operated), consider an EBITDA-based valuation. EBITDA removes the owner salary component and is standard for larger operations, multi-unit groups, and institutional buyers.

Get a Professional Broker Price Opinion

This calculator provides estimates based on industry standards, but actual valuations depend on many factors including market conditions, buyer demand, and deal structure. Our experienced brokers have sold hundreds of restaurants and can provide a complimentary, confidential valuation.

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