Coffee Shop Feasibility Study in Colorado

Colorado coffee: a branded book with real losses

Franchise systems dominate Colorado's coffee and snack bar lending. Of 225 SBA approvals from FY2017 to FY2026, 51.1% went to franchise units. The Colorado median was $327,000, which is 1.36x the class median nationwide, and loans between the quartiles spanned $119,300 to $500,000, for $89.8 million approved in all. Even so, neither that median nor the Colorado cancellation and charge-off floors is flagged against Colorado lending in every class or against coffee lending across the country. The state ranks 12 of 53 for the class, coffee stands 9 of 39 among Colorado asset classes, and a 1.04x location quotient puts it at about its national weight.

The Colorado credit record

This is the gauge a Colorado lender will read first. Of 84 Colorado coffee loans funded from FY2017 to FY2021, 7.1% have ended in charge-off, and 6.0% failed before their fifth year, so most of the losses came early, during ramp-up. Both are floors on a cohort still paying. Cancellations are also material: at least 12.8% of Colorado approvals dated FY2017 to FY2024 never funded, and 14.5% once loans still awaiting disbursement are counted. For a borrower, the opening budget and the first year of sales deserve the closest work.

Lending is almost all SBA 7(a), with 195 loans against 30 under SBA 504. Holders are spread out: The Huntington National Bank holds 17 Colorado coffee loans worth $7.3 million, Zions Bancorporation, National Association 16, Newtek Bank, National Association 13, First National Bank of Omaha 10, and U.S. Bank, National Association 8, the last worth only $209,500. Volume has grown, with 31 approvals in FY2023 and 35 in FY2025.

What a Colorado coffee feasibility study must test

Given early-life losses, the study has to prove the ramp. Demand work should measure morning traffic, drive-through access where it applies, and competing cafes within the realistic catchment. El Paso County holds 36 approvals and Denver 35, then Larimer 23, Jefferson 22 and Arapahoe 19, so most Colorado comparisons come from those five counties. Cost estimates must include the full franchise package where one applies, plus any drive-through site work, at current bids. The payment test should run on realistic first-year sales after royalties and occupancy, not on a mature-store average. If the loan buys a pad site or building, the Colorado appraisal must value that property on its own, apart from the brand. The SBA record covers only SBA loans, so conventionally financed cafes are not counted here.