To assign a valuation multiple for Starbucks’ stores, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
When you go to sell a Starbucks store based on the median multiple of .36 and net sales estimate of $1,235,000, it would sell for $444,600. This is significantly lower than the estimated investment of $1,100,000.
However, as an owner of multiple Starbucks licenses, you do have the ability to make a profit. Coffee shop owners with over $5 million in sales have a median multiple of 0.86. So, if you had 10 Starbucks stores, amounting to $6,175,000 in sales, selling your multiunit franchise system would amount to $12,350,000. This will make you a profit of over $1 million as the investment would be $11,000,000.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
Deals in this industry usually close for about 86% of the asking price.