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Restaurant Sales Decline Q2 2025: Higher Prices Signal Strong Demand for Premium Listings

Restaurant Sales Drop 16% Year-Over-Year, 5% From Prior Quarter
Median Selling Prices Rise 3.3% Over Last Year, 16.3% Over Last Quarter
Revenue and Cash Flow Multiples Climb, Reflecting Buyer Confidence in Profitability

Restaurant sales in the second quarter of 2025 slowed sharply, with transaction volume down 16% year-over-year and lagging 5.3% from Q1 2025, according to data drawn from BizBuySell’s Quarterly Insight Report, a leading economic indicator for the U.S. small business economy. That decline is steeper than the overall small business market, where transactions fell just 4% year-over-year and 1% from the previous quarter.

Despite the slowdown in transactions, the restaurant sector moved in the opposite direction from other business types on pricing. Across all industries, median sale prices dropped 6% year-over-year as buyers shifted toward lower-priced deals. Restaurants, however, posted a 3.3% gain over selling prices last year and a 16.3% jump over last quarter, signaling strong buyer demand for higher-priced opportunities.

The report also showed uneven momentum across the U.S. with sharp declines in several regions and modest gains in others. We Sell Restaurants analyzed national and regional data to evaluate quarter-over-quarter and year-over-year performance, revealing key insights into restaurant transactions. These include not only where restaurant transactions are accelerating versus slowing, but also trending in median revenue and cash flow versus the prior year and quarter’s performance.

Median Revenue, Cash Flow and Selling Prices for Restaurants in Q2 2025

The median revenue of restaurants sold in Q2 2025 reached $780,823, up 6.9% from $730,157 in Q2 2024 and slightly higher than $775,000 in Q1 2025. This number suggests sustained consumer demand for dining experiences in line with recent findings from the National Restaurant Association. The NRA reports total consumer spending in restaurants rose 6.6% between June 2024 and June 2025 – nearly double the 3.5% growth in non-restaurant sectors. This implies that, despite economic pressures, consumers continue to prioritize dining out.

While the latest quarterly data shows restaurants generated more revenue, median cash flow was down 8.3% ($121,000 in Q2 2025), versus $132,000 in Q2 2024. That was basically flat from the $120,000 median cash flow reported in first quarter. Despite this decline, the average cash flow multiple climbed to 2.31, a 7% increase from 2.16 in Q2 2024 and 6.1% from 2.18 in Q1 2025. These are both good signs for restaurant sellers, as rising multiples suggests buyers are paying more than last quarter and last year for businesses with strong profitability, reflecting buyer optimism about future earnings.

That optimism carried over to asking prices, with the median holding steady at $275,000 year-over-year and rising 10% from $250,000 in Q1 2025. Buyers are also paying close to asking prices, as the average sale-to-ask price ratio remains nearly unchanged from last year and the prior quarter at 0.89.

Time on Market: Mixed Signals

Median Days on Market held steady quarter-over-quarter, decreasing by just one day from Q1 2025. But compared to Q2 2024, listings are taking significantly longer to close.

Median Days on Market Q2 2025 vs Q2 2024: Up 30 days

While longer days on market could signal tempered buyer demand, experienced restaurant brokers report delays in transaction processes, such as securing lending, obtaining franchise approvals, or negotiating landlord agreements, as the leading causes. This is especially true for deals closed in the most recent quarter, which reflected higher selling prices and greater profitability.

Eric Gagnon, president of We Sell Restaurants, says, “In a high-interest-rate environment, banks may scrutinize deals more closely. In higher price point transactions, landlords and franchisors are also performing their own due diligence on buyers that could add to deal time.

His advice for brokers working with longer deal times: “Adjust the approach to collecting escrow,” he continues, “Collect escrow in stages, once at contract signing and a second time at completion of due diligence or another major milestone.” This demonstrates to the seller a greater financial commitment to the deal despite longer time frames to close.

Regional Restaurant Sales Performance

Regional trends reveal stark contrasts in Q2 2025, with some areas showing robust price growth despite declining transactions, while others faced challenges. Overall, the South showed consistent strength. The Midwest and Mountain regions showed higher prices but fewer deals. The Mountain region saw the greatest decline in transactions, while the Northeast and Pacific markets had the greatest challenges.

South: Consistent Strength

South Region (AL, AR, DC, DE, FL, GA, KY, LA, MD, MS, NC, OK, SC, TN, TX, VA, WV)

Q2 vs Q1 2025: ▼ 9.4%
Q2 2025 vs Q2 2024: ▼ 14.1%
Median Sale Price: $250,000 (▲ 25.3% from Q1; ▲ 13.6% from Q2 LY)
Days on Market: 208 (▼ 5 days from Q1)

The South remained the most active region, with the most restaurants sold. However, transactions were down 14.1% from last year and lagging 9.4% from Q1 2025. Median sale prices rose to $250,000, up 13.6% from $220,000 in Q2 2024 and 25.3% from $199,500 in Q1 2025. Revenue multiples jumped 16.1% year-over-year to 0.43, and cash flow multiples rose to 2.29, up 15.2%.

The South’s consistent performance, bolstered by strong consumer markets in states like Texas and Florida, aligns with relocation trends showing population growth in these areas. Florida and Texas also rank first and second in the U.S. News and World Report’s Best State Rankings for the economy. North Carolina also made the top ten.

Midwest and Mountain: Fewer Sales, Higher Prices

Midwest Region (IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI)

Q2 vs Q1 2025: ▼ 28.6%
Q2 2025 vs Q2 2024: ▼ 22.2%
Median Sale Price: $265,000 (▲ 49.3% from Q1; ▲ 35.9% from Q2 LY)
Days on Market: 236 (▲ 43 days from Q1)

The Midwest saw restaurant transactions decrease significantly. Transactions trailed 22.2% from last year and 28.6% from the prior quarter. However, median sale prices surged to $265,000, up 35.9% and 49.3%, respectively. Since the Midwest activity included only 35 transactions, the median selling prices could have been dramatically impacted by outliers in the form of several large dollar transactions.

Median revenue reached $816,184, and cash flow hit $150,000, both significantly higher than prior periods. Cash flow multiples dipped to 2.29. The Midwest states accounted for 9% of the restaurants sold nationwide in both years.

Mountain Region (AZ, CO, ID, MT, NM, NV, UT, WY)

Q2 vs Q1 2025: ▼ 23.5%
Q2 2025 vs Q2 2024: ▼ 29.7%
Median Sale Price: $350,000 (▲ 45.8% from Q1; ▲ 40.0% from Q2 LY)
Days on Market: 151 (▼ 31 days from Q1)

The Mountain region experienced the steepest decline in restaurants sold, falling 29.7% in Q2 2024 and 23.5% in Q1 2025. Despite fewer deals, median sale prices soared to $350,000, up 40% from Q2 2024 and 45.8% from Q1 2025.

Median revenue reached $894,000 and cash flow at $200,000, reflecting a focus on high-value deals. These trends suggest buyers in these regions are targeting premium opportunities.

Northeast and Pacific: Market Challenges

Northeast Region (CT, MA, ME, NH, NJ, NY, PA, RI, VT)

Q2 vs Q1 2025: ▲ 24.6%
Q2 2025 vs Q2 2024: ▼ 17.4%
Median Sale Price: $250,000 (▼ 23.0% from Q1; ▼ 15.3% from Q2 LY)
Days on Market: 213 (▼ 21 days from Q1)

The Northeast saw transactions decrease 17.4% compared to Q2 2024 but rising sharply (up 24.6%) from the prior quarter. Median sale prices fell to $250,000, down 15.3% from $295,000 in Q2 2024 and 23% from $324,500 in Q1 2025. Median revenue and cash flow also declined to $1,000,000 and $121,000, respectively. However, cash flow multiples rose to 2.41, up 11.6% year-over-year.

Pacific Region

Pacific Region (AK, CA, HI, OR, WA)

Q2 2025 vs Q1 2025: ▲ 2.4%
Q2 2025 vs Q2 2024: ▼ 10.4%
Median Sale Price: $165,000 (▼ 8.3% from Q1; ▼ 17.5% from Q2 LY)
Days on Market: 193 (▲ 17 days from Q1; ▲ 27 days from Q2 LY)

The Pacific region reported a 10.4% year-over-year decline in transactions, though activity rose 2.4% from the prior quarter. Median sale prices dropped to $165,000, down 17.5% and 8.3%, respectively. Median revenue fell sharply to $492,000, a 31.4% decline from Q2 2024. Cash flow multiples remained robust at 2.42, though down slightly year-over-year.

California’s regulatory environment, including recent labor cost increases after the FAST Act and its successor, AB 1228 went into effect, may be dampening sales enthusiasm. This author penned an article for QSR Magazine predicting “fewer restaurants to open and existing ones to struggle for survival” due to a “doom loop” for the industry, sparked in part by pressure on labor pricing created by regulation.

A recent study from the Pepperdine School of Public Policy and Beacon Economics reinforces those findings. Titled “Jumping the Gun on the Fast Act” the report found, “revised employment estimates show a decline of over 23,100 jobs, or 3.2%, in the limited-service restaurant sector over the past year” while during the same period, “the rest of the country experienced a growth of 0.8% in the same category.”

Industry Context and Outlook

Despite California’s struggles, the restaurant industry overall continues to show resilience. Mordo Intelligence forecasts a 10.8% compound annual growth rate (CAGR) for the U.S. foodservice market from 2025-2030. The National Restaurant Association reports that fast-casual and quick-service restaurants remain strong, driven by technology adoption and consumer demand for convenience. However, rising labor and food costs, cited by 92% of operators in the same study, are pressuring profitability, as evidenced by the slight dip in median cash flow.

Immigration issues post-election are on the mind of restaurant owners. The National Restaurant Association surveyed its membership on the topic in August 2025, following the Trump administration’s stated goal of one million deportations this year. Although there was a brief pause in enforcement targeting restaurant workers during Q2, it was quickly recalled. Nation’s Restaurant News quoted an estimate from the Center for Migration Studies that, as of early 2025, there were approximately one million undocumented immigrants working in the U.S. restaurant industry.

The impact to restaurants remains uncertain but with six months of ICE enforcement activity behind us, the Department of Homeland Security reports a decline of approximately 1.5 million illegal aliens across the country. Given that the National Restaurant Association estimates over 20% of all U.S. restaurant workers are foreign born, some of these individuals were likely part of the restaurant labor force.

In addition to immigration, overall unemployment trends may impact the restaurant industry, including the restaurant for sale marketplace. A recent headline from Reuters indicates the US Government will shed 300,000 workers this year based on a forecast by the director of the Office of Personnel Management (OPM). This represents an approximate 12.5% decrease in the federal workforce. While some workers will regain employment in the public sector, they also represent a potential buyer pool for restaurant businesses. The National Restaurant Association reports that about 63% of adults have worked in a restaurant. It is natural that they may navigate to businesses where they have some knowledge or experience.

Other considerations for the industry include an anticipated reduction in interest rates by the Federal Reserve since the market now has much greater clarity on the impact of tariffs on monetary policy. The stock market has hit all-time highs, giving the average American’s 401K a significant boost. Inflation, despite negative outlooks, continues to surprise with core inflation and key elements like energy trending lower. Those who view the financial market through the lens of the actual, versus the hyped, may jump into the business-for-sale market as they see opportunity spreading.

The Path Forward for Restaurant Sales

While Q2 2025 reflects a slowdown in transaction volume, the rise in median sale prices and cash flow multiples signals a market favoring quality over quantity. The South continues to lead in activity, while the Midwest and Mountain regions show promise for high-value deals. The Northeast and Pacific face challenges, particularly in California, where additional regulatory proposals are under consideration.

One such proposal is Senate Bill 68, Allergen Disclosure for Dining Experiences Act (ADDE), which would make California the first U.S. state to require restaurants to disclose the presence of the nine major food allergens. The California Restaurant Association opposes the bill, citing the increased costs and logistical challenges of managing ever changing menus.

As the industry navigates economic headwinds, consumer commitment to dining out remains a bright spot. Specialized restaurant brokers, such as We Sell Restaurants, reported a 16.2% increase in units sold in Q2 2025, far outpacing the industry’s 16% decline. This suggests strong buyer interest through targeted channels. Sellers should highlight robust cash flow to capitalize on this demand, while buyers can find opportunities in regions with rising valuations.

Final Thoughts

Q2 2025 reinforced that restaurant resale is not a one-dimensional market. Transaction volume, while important, doesn’t tell the whole story. Sale prices are trending upward nationally, and buyers are taking longer to close, creating a landscape that rewards preparation, patience, and professional guidance.