Why do cafe’s have such low multiples?

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April 17, 2024

by a searcher in New York, NY, USA

Just curious, I noticed businesses like cafés and restaurants have such low multiples. When you look at the data, some of it’s clear since most of these businesses fail. But if you find one that is profitable, why the low multiple?

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Reply by a searcher
from University of Pennsylvania in Boston, MA, USA
Hi Michael, all of the usual reasons: lots of operational work from the owner, no scalability, local clients and workforce, lots of competition, compressed margins (low price but employees demand high salaries), difficulty finding employees, etc.
commentor profile
Reply by a searcher
from MCI in Linz, Österreich
Simple answer: no barrier to entry.
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