Coffee Shop Feasibility Study in New Mexico

Franchise-heavy coffee in a small market

New Mexico coffee lending is small and heavily franchised. The state shows 42 loans between FY2017 and FY2026, worth $11.6 million, with brands behind 31.0% of loans. The median of $205,000 is 0.85x the national median, and typical loans span $82,250 to $347,500. Nationally the class ranks 40 of 53, but inside New Mexico it is 7 of 39, and its location quotient of 1.16x shows modest overweight. No metric stands out for this cell.

Who lends

Guaranteed term loans under 7(a) number 36, against 6 under 504. Western Commerce Bank has 6 loans worth $2.1 million, an average above the state median, and Wells Fargo Bank National Association trails with 5 loans for $483,000. Bernalillo County dominates the map with 16 loans, followed by San Juan with 7, Lea with 4, and Dona Ana and Eddy with 3 each.

Volatile approvals

FY2018 brought 6 loans worth $904,600, FY2020 only 1 loan worth $164,500, and FY2021 just 2. The rebound came in FY2022 and FY2023, with 6 loans each and $2.2 million in the latter, and FY2025 matched that count with $2.4 million. FY2026 closed with 2 loans worth $185,700.

Cancellations and an unreported loss rate

The cancellation floor for New Mexico coffee is 11.8%, drawn from approvals between FY2017 and FY2024, and the strict reading of unfunded loans does not change it. No charge-off percentage is offered, because the early funded group is below 30 loans. Silence on that point should not be taken for a good record.

What a study must test

In New Mexico the first questions are traffic and climate of demand: morning commuter counts at the site, drive-through capacity, and whether the surrounding population supports daily purchases at the price point. Existing national drive-through chains and local roasters need to be mapped, since a franchise-heavy class often means crowded corners. With a median near $205,000, build-out may cover equipment and a leasehold; a project that adds a drive-through or a building needs a larger raise and a reason. Repayment should be tested at a conservative ticket count and a slow first year, as an appraiser will assign little value to a leased shop.