Coffee Shop Feasibility Study in Alabama

Bigger tickets than the national coffee book

Alabama's coffee shop and snack bar lending carries a larger ticket than the class does nationally. Between FY2017 and FY2026 the Alabama coffee book reached 67 loans worth $26.2 million, and the median of $296,800 comes to 1.24x the class's median nationwide. Alabama stands 34 of 53 on volume for the class, among Alabama's asset classes the group places 7 of 39, and a location quotient of 1.12x puts the share of loans a little above the national share. We did not find a distinctive metric that clears both Alabama overall and coffee shops nationally, so the premium in loan size should be read as a tendency, not a proven edge.

Franchises, programs and lenders

The central band of loans spans $134,700 to $509,950. SBA 7(a) accounts for 60 loans and SBA 504 for 7. Franchise brands make up 49.3% of the loans, so about half of all deals involve a franchisor whose unit economics a lender will test. In 7(a) lending The Huntington National Bank is first at 10 loans worth $4.3 million, followed by United Community Bank with 5 loans worth $3.2 million and Sabre Finance with 5 worth $732,900. By county, Jefferson leads with 22 loans, Baldwin has 13 and Madison 9, then Shelby and Tuscaloosa with 4 each, which places the activity in Birmingham, the Gulf coast and Huntsville.

Timing, cancellations and the withheld rate

FY2025 produced 13 loans and $5.8 million, the strongest year in the series, against 3 loans in FY2018. Among Alabama approvals from FY2017 through FY2024, no fewer than 13.0% were cancelled, and 15.2% when loans still undisbursed are counted. Those are floors. A charge-off rate for Alabama coffee shops cannot be given, because under 30 Alabama loans reached the disbursed cohort; we offer no figure and make no claim that charge-offs are absent.

Study questions for an Alabama coffee shop

A coffee shop study has to prove the daily traffic that justifies a ticket near $296,800: commuter flow, student and hospital populations, and the drive-through share of sales. It should test the build-out and equipment cost against that traffic, and estimate debt service coverage with a slow first year, since morning sales take time to build habit. If a franchise is involved, the royalty and marketing contributions need to sit inside the cash flow. The appraisal of a going concern will weigh lease terms and trailing sales, so a startup projection must be conservative enough to defend. Competition from national chains and local roasters should be mapped by distance rather than described in general terms.