Grocery Store Business Broker · HedgeStone Business Advisors · Jason Taken
Last updated 2026-09-04
Recast the labor line before you argue the multiple. Grocery payroll is not a slogan about “the South” or “the coast.” It is the DOL floor for the state, any city overlay, and the wage the store already pays to keep a closer. Book a confidential intro with a headcount by department so seller’s discretionary earnings can be rebuilt at the rate that will actually be paid after Monday.
The sourced floor is the U.S. Department of Labor Wage and Hour Division consolidated minimum-wage table, accessed 2026-09-03. That compilation is the July 1, 2026 WHD table used in this research pack. Confirm the rate in force on the closing date. Several states index. The table is a floor, not a hiring survey.
Food retailing is a thin-net trade. FMI’s Speaks sample reports a 2.1% average net profit for food retailers in 2025, $1 trillion in 2025 supermarket sales, $668,377 average weekly sales per supermarket, and $19.59 weekly sales per square foot of selling area. Those figures describe FMI’s supermarket channel. Your independent box can have a higher labor ratio and a smaller deli. A dollar an hour on thirty hourly people is the kind of number that erases a year of “extra” SDE. BizBuySell’s grocery and supermarket sold sample shows a 3.38 average earnings multiple in 2025, a 2.66 average for 2021–2025, a 1.60–3.15 earnings-multiple interquartile range, and a 0.43 average revenue multiple in 2025. Revenue multiples hide rent and labor. Use them to sanity-check, then return to a recast that already includes the wage law.
State SNAP-retailer counts and CBP establishment counts were not extracted. They stay unused. Labor diligence is this store’s schedule, not a census of boxes.
On the table in this pack, the District of Columbia posts $18.40. Washington State posts $17.13. New York is $17.00 in New York City, Nassau, Suffolk, and Westchester, and $16.00 in the remainder of the state. Connecticut is $16.94. California is $16.90. Oregon is split: Portland metro $16.80, standard $15.55, nonurban counties $14.55. Hawaii and Rhode Island are $16.00. New Jersey is $15.92, or $15.23 for employers who employ fewer than six people and for employees in seasonal employment.
A $15.00 cluster includes Delaware, Illinois, Maryland, Massachusetts, Missouri, and Nebraska. Maine is $15.10. Arizona is $15.15. Colorado is $15.16. Alaska and Florida are $14.00. Vermont is $14.42. Michigan is $13.73. Virginia is $12.77. Nevada and New Mexico are $12.00. South Dakota is $11.85. Minnesota is $11.41. Arkansas is $11.00. Ohio is $11.00, or $7.25 for employers with annual gross receipts under $405,000. Montana is $10.85, with a DOL footnote that a Montana business not covered by the FLSA whose gross annual sales are $110,000 or less may pay $4.00 per hour — a footnote that will not describe a going-concern grocery a lender will finance. West Virginia is $8.75.
Federal $7.25 is the FLSA floor where the state has no higher rate, equals federal, or sits below federal: Alabama, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, New Hampshire, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Wisconsin, and Wyoming. Alabama, Georgia, Louisiana, Mississippi, South Carolina, Tennessee, and Wyoming are described on the table as having no state minimum wage or a state rate lower than federal. Idaho, Indiana, Iowa, Kansas, Kentucky, New Hampshire, North Carolina, North Dakota, Oklahoma, Pennsylvania, Texas, Utah, and Wisconsin equal the federal $7.25.
Do not invent a city rate. The pack does not extract municipal ordinances. A Seattle, Chicago, Denver, or New York City overlay can sit above the state number. Confirm the city before you lock a recast.
A Texas or Pennsylvania grocer already paying $14 to keep night crew is not a $7.25 story. The DOL number is the legal floor. The P&L is the hiring market. If the seller has been running family labor off the books, the recast has to put a replacement wage on those hours at the rate a stranger will accept. Add-backs that are really unpaid spouses are not earnings. They are a labor hole.
Ohio’s small-employer footnote and New Jersey’s fewer-than-six footnote matter only if the grocery actually qualifies. A store that clears FMI-like weekly volume will not. Oregon’s three-tier map means a Portland-metro file and a nonurban file are different labor businesses inside one state. New York’s downstate versus upstate split is the same lesson: the address is the rate.
Montana’s $4.00 footnote is a trap for a CIM that wants to look cheap. If the store is FLSA-covered, the $10.85 figure is the state number on the table. If the store is a going concern a buyer will finance, treat $10.85 as the starting legal conversation and the posted wage as the real one.
Start with hours, not with a percentage. Pull the last twelve months of payroll registers. Split front end, night crew, meat, produce, and deli. Apply the higher of current posted rates, the DOL floor, and any confirmed city rate. If a scheduled state increase hits during diligence, model it. Leave overtime in the recast when it is the operating pattern. A “one-time” overtime spike that repeats every holiday season is the business.
Owner pay comes out and a replacement manager goes in if the buyer will not stand the hours. Recurring shrink stays in earnings. See recasting a grocery P&L. Wholesaler over-advances are debt. They are not an add-back, and they do not offset a wage increase.
DSCR is annual cash flow over annual debt service. A labor recast that drops SDE by $80,000 can turn a financeable file into a hope. SBA 7(a) can finance a change of ownership up to the published $5 million maximum; the lender will underwrite the post-close wage, not the seller’s nostalgic schedule.
Union contracts and WARN clocks are calendar items on larger headcount files. Read employees, union contracts, and WARN. A wage floor is not a union rate. If the store is organized, the contract is the number.
SNAP authorization does not transfer. USDA FNS requires a new owner application. Downtime on EBT does not reduce the wage bill. You still staff the store. Budget cash for labor during the gap, not only for inventory.
Ask for payroll tax filings that tie to the register. A P&L labor line that is systematically below the 941s is either mix or fiction. Ask whether anyone is paid in cash. Unreported cash does not survive SBA, and it does not survive a serious conventional buyer.
Ask how scheduling works on Sundays and late nights, especially in states where grocery alcohol hours are restricted. Labor and license clocks collide. See the alcohol-regime guide.
Ask whether the seller’s “manager” is a salaried exemption that will not survive a buyer’s counsel. Misclassification is not an add-back. It is a successor problem.
Write a labor representation into the APA: employees, rates, accrued PTO, and any pending claims. Transition hours are a close condition. The seller who knows the night crew is part of whether those rates hold for ninety days.
Banner fees and program charges belong in the recast as continuing costs if the buyer will keep the fascia. They sit next to wages, not instead of wages. A high-wage state with a heavy banner program is two stacked occupancy costs: labor and the circular. Recast both before you compare the file to a federal-floor independent that has neither.
Ethnic mix without language on the floor is a shrink plan, and it is also a labor plan. If the closer who speaks the book is paid a premium over the DOL floor, that premium is the going-concern wage. Do not recast them down to $7.25 and call it diligence.
A distressed or declining store still has a wage bill. Price the remaining crew and the remaining lease, not a turnaround novel that assumes you can cut hours without cutting sales. See selling a distressed grocery and buying a distressed store. The DOL floor does not pause because volume slipped. If the seller already cut the night crew below what the volume needs, the recast has to put those hours back at the rate a stranger will accept.
Department gross margin hides in a storewide blend. Meat and produce can sink a “healthy” number, and they are also the departments that need skilled hourly people. A federal-floor state that cannot hire a cutter is not a cheap-labor file. It is a shrink file with a legal floor of $7.25.
Multi-store sales need a shared recast. A $7.25-floor state next to a $15 state is not one labor model. Do not blend them into a company-average wage and call it diligence.
Owned real estate does not fix a labor problem. Recast the store on market rent and on market wages, then cap the building. A rural box can be a good living and a terrible loan if the only way the SDE works is family hours at the federal floor.
Grocery is not a forty-hour whiteboard. Night receiving, 5 a.m. bakery, and a Sunday close that slips past posted hours are where overtime lives. If the seller has been treating those hours as salaried “managers” who still stock cans, counsel will reclassify them and the recast will grow. Keep the operating pattern. Do not “save” SDE by assuming the buyer will run a smaller crew on the same volume. Shrink and service will move the other way.
Paid time off that is on the books is a closing adjustment. Accrued vacation on a forty-person crew is cash, not a vibe. Ask for the accrual report and decide who pays it. Benefits, uniforms, and meal credits do not change the DOL floor. They do change the fully loaded hourly cost you should use when you compare two offers.
A scheduled state increase that lands between LOI and close is a diligence item, not a seller surprise. If the WHD table you printed in September will be stale in January, write the new floor into the model when the state publishes it. This pack’s accessed date is 2026-09-03. Confirm again before you fund.
Comparing offers means cash at close, note terms, inventory treatment, license risk, and the labor assumption each buyer is using. A buyer who recasts at the DOL floor in a federal-floor state while another recasts at the posted $15 hiring wage is not looking at the same store. Make them show the schedule.
Transition and training hours are labor. If the seller stays for thirty days at a stated rate, put that rate in the APA. If family members disappear on Tuesday, the replacement hours have to already be in the recast. See transition and training periods.
When the headcount is marked, book a confidential intro. Bring payroll registers, the handbook, and the store address. Grocery Store Business Broker (HedgeStone Business Advisors) will recast labor against the DOL table and the city overlay before anyone quotes 3.38×. Employment counsel signs the classifications.
Continue on the seller hub or the buyer hub. The valuation pillar and the valuation calculator are for earnings that already include the wage the buyer will pay.
Use this napkin recast on Minimum wage and the grocery P&L when you book the call. It is labeled illustrative. BizBuySell's 2025 grocery sold-business earnings multiple averaged 3.38, with a 2021-2025 IQR of 1.60-3.15.
| Input or output | Illustrative figure |
|---|---|
| Weekly sales (illustrative) | $78,000 |
| Annual sales | $4,056,000 |
| Recast SDE | $166,296 (4.1% of sales) |
| Inventory at cost | $338,000 (~12 turns) |
| Occupancy check | $89,232 / year (2.2% of sales) |
| Low going-concern | $620,703 at 1.70x SDE + inventory |
| High going-concern | $861,832 at 3.15x SDE + inventory |
| Sketch DSCR on a note | 1.37 |
If weekly sales or shrink move 8 percent, the SDE and the note move with them. That is why Jason Taken starts with scan data and the lease, not with a neighbor's rumor multiple.
Book the intro call with your side of the table ready: seller files or buyer capital. The calendar is the only next step.
Print these, mark them up, and bring the marked copy to the intro. They are educational. They are not a valuation letter and not a listing. All downloadable guides.
Have the file ready so the hour is a recast, not a scavenger hunt. Then pick a time.
Get a specialist on the other side of the table
Grocery deals turn on licenses, inventory, and a recast a lender will believe. Book the intro and bring the file.
Book an Intro Call With Jason TakenThe U.S. Department of Labor Wage and Hour Division consolidated minimum-wage table, accessed 2026-09-03, is the sourced floor in the research pack. The table is the July 1, 2026 WHD compilation used for these pages. Confirm the rate in force on the closing date; some states index annually.
On the DOL table in this pack, Alabama, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, New Hampshire, North Carolina, North Dakota, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Wisconsin, and Wyoming pay the federal $7.25 for FLSA-covered employers because the state has no higher rate, equals federal, or sits below federal. That is the legal floor, not the wage a grocer actually posts to hire a closer.
The consolidated table is a state (and District) floor. Cities and counties can sit higher. The pack does not extract those local ordinances. Confirm the city for the store address before you recast.
FMI’s 2025 Speaks sample shows a 2.1% average net profit for food retailers. A dollar an hour on a large hourly crew is not a footnote. Recast the labor line at the post-close rate, then apply a multiple to the recast — not to last year’s underpaid schedule.
No. Employment counsel signs the handbook and the classifications. This page teaches how the DOL floor shows up in SDE, diligence, and the LOI.
A headcount by department, wage rates, overtime hours, payroll-tax filings that tie to the register, and the store address. Book a confidential intro so labor can be recast before anyone quotes a multiple.
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Whether you are exiting or acquiring, pick a time and we will talk through the file.
Book an Intro Call With Jason TakenThis page is educational information from Grocery Store Business Broker (HedgeStone Business Advisors). It is not legal, tax, or investment advice. Licensing, tax, and financing rules vary by state and deal. Confirm every item with counsel and your lender before you sign.
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