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<br />City of San Leandro Marina Lodging Development <br /> <br />Page 16 <br /> <br />" <br /> <br />3. Restaurant Economic Viability <br /> <br />Taking the mid-point of the previously-discussed estimated restaurant revenue range, <br />$5,500,000, the likely net operating income of the restaurant is projected at 10.0 <br />percent, or $550,000. Typical income multiples used in the valuation of restaurants <br />range from three to six times income. For the recommended restaurant, we estimate <br />that a multiple of five is most appropriate, indicating a potential valuation of <br />$2,750,000 for the recommended Marina restaurant ($550,000 x 5 = $2,750,000). <br />This valuation is in excess of the estimated construction cost, indicating economic <br />viability. As noted, we assume that the facility would be located on a leased land <br />parcel. The estimated lease income to the City is projected at approximately 3.0 <br />percent of gross annual restaurant revenue. <br />