The old saw about the only way to make a small fortune in the restaurant industry is to start with a big fortune is far from universally true. Many restaurateurs have become wealthy by operating their restaurants. 

So, how should restaurants be valued, especially when recent years’ results have been so skewed by COVID-19? Are capitalizations of earnings methods appropriate? Should discounted cash flows be calculated? What multiples should be applied?

The following are among the issues discussed during this highly informative podcast:

• How to calculate Seller Discretionary Earnings? How is SDE affected by non-operating income?
• How to account for leases and store improvements?
• What is the import of key money?
• In which ways might it be appropriate to adjust payroll expenses?
• What are the downsides to underreporting cash receipts?
• How are trends in food costs and worker turnover impacting restaurants’ profitability?
• What are the typical ceilings on total occupancy costs relative to revenue?