Coffee Shop Feasibility Study in Arkansas

Arkansas coffee: modest loans, a local bank in front

Arkansas holds 43 coffee shop and snack bar loans for FY2017 to FY2026, worth $14.1 million. The state is 38 of 53 for the class and coffee is 8 of 39 on Arkansas's own list, and a quotient of 0.98x that sits almost exactly on the national share. Arkansas borrowers take a median of $180,000, or 0.75x the national class figure, with half of loans between $41,900 and $366,550, which tells us many borrowers asked for very small sums, such as equipment and opening inventory for a leased drive-through or café.

Franchise share and lenders

The franchise share of 30.2% puts Arkansas between the lightly branded and heavily branded states, so a lender sees both brand-backed units and independent cafés. Of the 43 loans, 40 are SBA 7(a) and 3 are SBA 504. One lender stands out: Arvest Bank, with 14 loans and $1.4 million, alone at the 5-loan line. Its dollars per loan are small, and its volume dwarfs every other lender's, so Arvest effectively defines how small coffee shops get financed here. A borrower with a larger project, such as a purchased building, should expect to look beyond one institution.

Cancellation is a floor of 8.6% across FY2017 to FY2024 approvals, matched by an 8.6% ceiling, a modest level. No charge-off rate is shown for Arkansas coffee, as the seasoned loans number under 30; the blank claims nothing about zero.

What an Arkansas study must test

Faulkner County has 8 loans, Washington 7, Benton and Garland 4 each, and Pulaski and Crittenden 3 each, so the evidence is split among Conway, northwest Arkansas, Hot Springs and Little Rock. A study should test demand through traffic, morning commuter flow, university and office populations, and the number of competing cafés and national chains. Cost must cover espresso equipment, build-out and the lease. Coverage has to stand up to the thin margins of beverages and to a slow opening. The appraisal matters little for a leased suite, but the lease terms matter a great deal. The yearly record rose from 3 loans and $141,500 in FY2017 to 5 loans and $3.7 million in FY2026, so loan sizes are growing.