Hospitality businesses are usually sold as two things at once: an operating business and the real estate or lease it sits on. A restaurant, hotel, short-term rental or golf course is priced on its cash flow, but the deal often turns on permits and approvals the buyer has to win on its own, such as a liquor license, a franchise agreement or a rental permit. Sellers who sort out those approvals early tend to close faster and keep more of the price.
Key points
- Value the operating business and the real estate separately, even if you sell both to the same buyer.
- Liquor licenses usually need state approval to transfer, and in quota states the license itself can be a large part of the price.
- Franchise brands must approve the buyer, and hotel brands typically require a property improvement plan as a condition of transfer.
- A long, assignable lease at a fair rent is often the most important asset in a restaurant sale.
- Many states require sales tax clearance in a business sale, and buyers who skip it can inherit the seller's unpaid tax.
Restaurants and bars
The general sale process is covered in our business sale guide. Restaurants have their own pricing patterns.
How restaurants are valued
Most independent restaurants sell on a multiple of seller's discretionary earnings (SDE), which adds the owner's pay and personal expenses back to profit. BizBuySell, which tracks reported small business sales, said restaurants sold in 2025 at an average cash flow multiple of 2.3 and a median price of about $215,000. Its restaurant benchmarks covering 2021 through 2025 show a median sale price of $220,000 and an average earnings multiple of 2.15 (BizBuySell restaurant benchmarks). These are averages across many kinds of restaurants. A specific restaurant can sell well above or below them.
A restaurant that is losing money is often sold as an "asset sale" for the value of its equipment, buildout and lease. In busy markets, a good lease with a hood system and grease trap already in place has value on its own.
What buyers look at
- Lease term, renewal options, rent as a share of sales, and the landlord's consent to assignment
- Food and labor costs as a percentage of sales
- Sales trends by month, and how much comes from delivery apps
- Whether the chef or owner is the draw, or the concept would survive without them
- Health inspection history and equipment condition
- Point-of-sale data that matches tax returns
Cash-heavy businesses face a familiar problem: income that was not reported cannot be counted in the price. Buyers and lenders rely on tax returns and sales tax filings.
Franchised restaurants
Franchise agreements give the franchisor the right to approve a buyer. Expect a transfer fee, buyer training, a new franchise agreement on current terms and sometimes a required remodel. Read your agreement for a right of first refusal, which lets the franchisor match an offer. Allow time in the purchase agreement for franchisor approval.
Liquor license transfers
Alcohol rules are set state by state, and sometimes by city or county. The common patterns:
- The buyer must apply and qualify on its own, with background checks and financial disclosures, even when the license transfers.
- State alcohol agency approval for a transfer can take about 30 days to six months, depending on the state and license type.
- Some states let the buyer operate during the transfer. California can allow interim operation under the existing license with agency approval. Colorado and Florida issue temporary permits during a transfer, and Florida's temporary permit fee is $100.
- In quota states, where the number of licenses is capped by population, buying an existing license is often the only practical route to a full liquor license, and licenses can sell for large sums. Pennsylvania, for example, requires local approval to transfer a license into a municipality that is at or over its quota.
Make the deal contingent on the license transfer, or on the buyer getting a new license, so neither side closes without it. Sellers should also check for unpaid alcohol taxes or pending violations, which can hold up a transfer.
Licensed establishments also carry liability exposure that buyers will ask about. Our guide to dram shop liability explains when bars and restaurants can be sued for serving intoxicated guests, and buyers commonly review past claims and liquor liability insurance. Incidents involving drunk driving after a guest leaves can lead to these claims.
Hotels and motels
Brand approval and the PIP
Most hotel franchise agreements are not assumed by a buyer. The brand treats the buyer as a new applicant, reviews its finances and experience, and issues a change-of-ownership property improvement plan, or PIP. The PIP lists the renovations and replacements the buyer must finish, with deadlines. On an older property, the PIP can run into large sums, and buyers deduct it from what they will pay.
Request a PIP from the brand early, before or during marketing, so buyers can price it. If a buyer plans to change brands, the seller may owe termination fees under the existing franchise agreement, which should be addressed in the purchase agreement.
Valuation
Hotels are valued more like real estate than small businesses. Buyers and appraisers look at net operating income, capitalization rates, revenue per available room, occupancy and average daily rate, plus the condition of the building. The operating business and the real estate are usually sold together, but lenders and tax advisers often separate the value of the business, the furniture and equipment, and the property.
Buyers will review safety items closely, including pools, fire systems and security. Hotel owners can face claims for injuries on the property, covered in our guides to drowning and pool accidents and negligent security. Disclose open claims early.
Short-term rentals
Short-term rental portfolios are usually sold as real estate with furnishings, booking history and sometimes a brand or website. The value of that rental income depends on whether the buyer can keep renting legally. Many cities tie short-term rental permits to the owner or the specific property and do not allow them to transfer. Some cap or ban new permits, which can make an existing permit worth a premium or make the rental income impossible to continue.
Before marketing, confirm whether the permit transfers, what a buyer must do to obtain one, whether the property carries any open violations, and how local occupancy taxes are handled. Platform listings and reviews usually belong to the account holder and may not transfer at all.
Golf courses
Golf course sales are largely real estate sales, with an operating business attached. Buyers look at rounds played, membership revenue, food and beverage income, maintenance costs and water rights or irrigation supply. Many courses are bought for their land, and zoning or deed restrictions that require the property to remain a golf course can sharply affect value. A club with members may also have to deal with membership deposits or bylaws that limit how it can be sold.
Common deal terms
Small restaurant and bar sales are usually asset sales. The buyer takes the equipment, name, recipes, phone number and lease, and the seller keeps its cash and pays its own debts. Seller financing is common, because many lenders are cautious about restaurants, and our guide to selling a business covers how seller notes are usually secured.
A few items are specific to hospitality and should be written into the agreement:
- Food, beverage and liquor inventory, counted the day before closing and paid for separately
- Outstanding gift cards, which the buyer may have to honor
- Deposits already collected for weddings, banquets, group room blocks or future bookings
- Accrued wages, tips and vacation pay owed to staff
- A training period, often a few weeks, during which the seller introduces the buyer to staff, vendors and regulars
- A non-compete covering a reasonable distance and time, subject to state limits
Taxes and bulk sale notices
Most states have repealed the old commercial bulk sales laws, but many still have tax-related bulk sale rules. In these states, a buyer that does not notify the tax agency before closing can become liable for the seller's unpaid sales tax. New York, for example, requires the buyer to file a notice at least 10 days before taking possession or paying for the assets, after which the state either releases the buyer or notifies it of tax owed (New York bulk sale guidance). Because restaurants and hotels collect sales and occupancy taxes, buyers in this sector watch these rules closely.
On the seller's side, the allocation of the price among equipment, the license, goodwill and real estate affects the tax bill. Have a CPA review the allocation before signing.
Preparing to sell
Get two to three years of clean financial statements that match your tax returns and sales tax filings. Confirm the remaining lease term and talk to your landlord about assignment before a buyer does. Pull the liquor license file, the franchise agreement and any rental permits so you know what transfers and what the buyer must apply for.
Keep the sale quiet. Staff turnover and rumors can hurt sales during the months a deal takes. A hospitality business broker can market a restaurant, hotel or rental portfolio confidentially and screen buyers for licensing and financing before you share details.
Owners of related businesses may find useful comparisons in our guides to medical spa and practice sales and food manufacturing businesses, which are priced differently from restaurants.
Alcohol, permit and tax rules differ by state and city and change often. A lawyer licensed in your state should confirm the transfer requirements and deadlines for your sale.