A restaurant is valued from its provable, normalized earnings, checked against comparable sales and its underlying assets — the three approaches BDC describes. The lease, equipment, licences and staff then push the number up or down.
There is no reliable public “standard multiple” for Ontario restaurants — anyone quoting one without seeing your books is guessing.
The first question every owner asks me is “what’s it worth?” — and the honest answer is that it depends on what a buyer can verify, not on what you feel the business is worth after years of building it. This guide explains how the number actually gets built, and what you can do to make it bigger and more defensible. It is one chapter of the full series on how to sell a restaurant in Ontario.
What are the three ways a business gets valued?
The Business Development Bank of Canada describes three broad approaches: earnings- or cash-flow-based methods, which value the business on the income it generates; market-based methods, which look at what comparable businesses have actually sold for; and asset-based methods, which value what the business owns. BDC also recommends engaging a professional — a Chartered Business Valuator — rather than relying on rules of thumb.
For most operating restaurants, the earnings approach leads and the other two act as checks. A profitable room with a strong lease is worth more than its used equipment; a money-losing room may be worth little more than its assets and its location.
What are normalized earnings, and why do they decide everything?
Normalized earnings — sometimes called discretionary earnings — are what the business really generates for an owner once the statements are adjusted for things that will not carry over to a buyer: the owner’s own compensation choices, family members on payroll at non-market rates, personal expenses run through the business, one-time costs such as a renovation or an equipment failure.
Two restaurants with identical revenue can have very different normalized earnings, which is why revenue alone tells a buyer almost nothing. It is also why the valuation conversation starts at your accountant’s desk: the adjustments have to be documented and defensible, because the buyer’s accountant will re-do every one of them during due diligence.
Is there a standard multiple for Ontario restaurants?
No — at least, not one you can rely on. There is no reliable public source of “standard multiples” for Ontario restaurant sales. Private business sale data is thin, self-reported and rarely comparable: a downtown licensed dining room, a franchised quick-service unit and a strip-plaza takeout counter are different businesses that happen to share an industry code.
So treat any confident multiple with suspicion. When someone quotes you one without having seen your books, your lease and your licence file, they are not valuing your restaurant — they are reciting a number. The useful version of the market approach is narrower: what have genuinely comparable restaurants, in comparable locations, on comparable leases, actually sold for? That evidence exists, but it takes work to assemble, and a Chartered Business Valuator or an experienced business broker is who assembles it.
What factors move a restaurant’s value up or down?
Beyond earnings, this is what I tell owners to prepare for, because it is what buyers and their advisors probe. None of these are statistics; they are the recurring pressure points of restaurant deals.
| Factor | What buyers look at | What you can prepare |
|---|---|---|
| Lease terms and remaining term | Rent relative to sales, renewal options, assignment clause, demolition or redevelopment clauses | A copy of the lease and all amendments; know your options and dates |
| Location | Foot traffic, parking, the street’s trajectory, nearby anchors and competitors | An honest read on the block — buyers will do their own |
| Equipment condition and ownership | Age and state of the kitchen; what is owned outright versus leased or financed | An equipment list with ownership status, leases and service records |
| Licences | Liquor sales licence status, capacity, patio endorsements, compliance history | Your AGCO file in order; see the licence transfer guide |
| Brand and reviews | Reputation, ratings trajectory, whether goodwill survives an ownership change | Know what is tied to you personally versus the business |
| Staff stability | Tenure, key-person risk in the kitchen, whether the team will stay | Current, accurate employment records; see the employees guide |
| Supplier contracts | Terms that transfer, exclusivities, pricing that depends on the current owner | A list of key suppliers and any written agreements |
How does the lease affect the number?
More than any other single document. The buyer is not just buying your cash flow — they are buying the right to keep earning it in that room, and that right lives in the lease. A short remaining term with no renewal options makes the earnings stream hard to pay for; an assignment clause that gives the landlord broad discretion adds deal risk; a demolition clause can cap the value outright. Read your lease before you price the business, and read the full guide on lease assignment before you list.
Who should actually value your restaurant?
Your accountant, first, to get the normalized earnings picture straight — and for many sales a Chartered Business Valuator, which is the professional engagement BDC points to. My role is different: I bring the market read — what buyers are active, what comparable businesses have traded, how the lease and licence position will land — and I use the valuation work to set and defend an asking price. The structure of the deal also feeds back into value: an asset sale and a share sale can produce different after-tax outcomes from the same headline price, which is an accountant conversation worth having early.
How I help
Commercial and business sales, including restaurants, are part of my practice alongside residential work across the GTA. I coordinate the confidential marketing, buyer screening and negotiation, and I work from the valuation your accountant or CBV builds — while your lawyer and accountant handle the legal and tax execution.
The takeaway
Value is built from provable, normalized earnings and stress-tested against your lease, equipment, licences, staff and suppliers. There is no standard multiple to look up, so the work is documentation: the better organized your evidence, the stronger — and more defensible — your price.
Thinking about selling your restaurant?
Tell me a little about the business and I will give you a confidential, no-obligation read on what it might be worth and how a quiet sale would work. No pitch, no obligation.
connect@jatindua.com · 437-987-1925 · Book a confidential consultation
Confidential. Reviewed personally and answered within 24 hours. I never share, sell or distribute your information.
Frequently asked questions
What is a restaurant in Ontario worth?
What a buyer can verify: its normalized earnings, checked against comparable sales and the value of its assets, then adjusted for the lease, equipment, licences, staff and supplier picture. There is no formula that produces the number without seeing the books, which is why BDC recommends engaging a professional such as a Chartered Business Valuator.
Is there a standard multiple for valuing restaurants?
No reliable public one exists for Ontario restaurants. Private sale data is thin and rarely comparable across restaurant types. Be wary of anyone quoting a multiple without seeing your financial statements, your lease and your licence position — a number produced without your books is a guess.
What are normalized or discretionary earnings?
The earnings the business really generates for an owner once the statements are adjusted for items that will not carry over to a buyer — owner compensation choices, non-market family wages, personal expenses and one-time costs. Buyers value the business on these adjusted earnings, and their accountants will verify every adjustment.
Does my lease really change what my restaurant is worth?
Yes, materially. The buyer is paying for the right to keep operating in your space, and that right is defined by the lease: the remaining term, renewal options, the assignment clause and any demolition clause. A weak lease position makes strong earnings harder to pay for.
Sources
- BDC — Business valuation: what’s your company worth?. The earnings-based, market-based and asset-based approaches, and the recommendation to engage a professional. Accessed 13 August 2026.
- Commercial Tenancies Act, R.S.O. 1990, c. L.7 (e-Laws). Section 23 on landlord consent to assignment, the backdrop to the lease factors above. Accessed 13 August 2026.
- AGCO — Manage your liquor sales licence. Licence transfer requirements that feed into the licence factor. Accessed 13 August 2026.
Related reading
- How to sell a restaurant in Ontario: the complete process
- Asset sale vs share sale: which way to sell your restaurant?
- Assigning your restaurant lease: landlord consent explained
About the author — Jatin Dua
Jatin Dua is a licensed Realtor with RE/MAX Quantum Realty in Etobicoke, Toronto. Commercial and business sales — including restaurants — are part of his practice, alongside residential work across the GTA. Content on this site is checked against primary sources — the CRA, the AGCO and ontario.ca — before publication.
Reach me at connect@jatindua.com or 437-987-1925.