How to value a cafe business?

[MorningStar]

Need help valuing this business.

A cafe business with 60 locations and total annual revenue of Rs 150 crores. Net profit is Rs 3 crore.

Assuming all stores are on lease/rent.
How much valuation does the business get?

Available information so far:

1. Sales have increased at CAGR of 20% over last 4 year.
2. Number of stores have increased at the rate of 3 stores p.annum.
3. Biggest expense is Labor followed by raw material and rent.
4. No funding done so far.
5. There is debt of around Rs 20 crores

Do we value this business via sales multiple or profitability metrics ?

Any help would be very helpful.

[ChaitanyaC]

Cafe Coffee Day - Will you Date?

Café Coffee Day well known for its CCD outlets operates outlets since 1996. They are present in about 209 cities in India. They have a market share of about 46% and are the largest in terms of total number of chains. Café Coffee Day (CCD) has come out with an IPO for an amount of Rs 1150 crores with fresh issue of 35060976 shares valuing the company at ~ Rs 6756 crores approximately. Post issue Promoter Holding will stand at ~52.55% [image] Apart from this CCD owns about 16.6% stake in Mindtr…

[MorningStar]

Not sure it’s helpful in this context. I have worked with CCD for over a decade and the only value left in that business is of 50k vending machines that they operate. Cafe business doesn’t generate 4 cr avg annual revenue per store in ccd.

[ChaitanyaC]

Had you mentioned that you had worked with CCD, may be I wouldn’t have given the link. I thought there would be something in the thread that could help your query, considering the business is same, and as there has been some discussion on the business.

A lot of times, members present different views about a business, as they are from different walks of life, and are from different professions. So generally it helps to read.