Here is a general rule of thumb. A restaurant gets between 20-25% of annual gross. (pizza places can command 30%.)
A good lease is about 7-8% of gross, a great lease is 5% and under.
If you hit 10% you have to be in love with the area because thats a bit much.
If the place requires capital to fix up and update, the offer goes down.
Remember lease and gross% of sales is what is important. The seller could have a million dollars worth of equipment and IT AIN'T WORTH JACK SQUAT. If he closes, that all becomes USED EQUIPMENT AND SELLS FOR ABOUT 8-10c ON A DOLLAR.
So a 480,000 annual gross restarurant is worth between 96-110,000. Since you say it needs work, 80,000-85,000
Remember one thing. 99% of places that are selling are selling because the owner can't make ends meet. (There are exceptions,
death, retire, divorce, but that are very, very rare) I would
stand by and pay attention, you may get it for way, way less if you wait this guy out. If he goes under I can see you getting it for 10,000 to 20,000 G's.