Coffee Shop Feasibility Study in the Pittsburgh, PA Metro Area

Pittsburgh coffee shops: all 7(a), and small

All 83 coffee shop and snack bar loans in the Pittsburgh area went through SBA 7(a); none went through 504. SBA approved them between FY2017 and FY2026, worth $21.9 million. The area is 25 of 612 for the category and the category is fifth of 39 within the area, with a location quotient of 1.40x, so coffee shops weigh more here than nationally. The loans are small: the median of $140,000 is only 0.58x the national class midpoint, and the quartiles are $50,000 and $292,700. Franchised shops account for 33.7%.

What 7(a) lending looks like here

With no 504 lending, these are loans for equipment, fit-out, working capital and purchases of existing shops, not for buildings. The Huntington National Bank is listed with 31 loans worth $4.5 million, KeyBank National Association with 10 worth $3.0 million, First Commonwealth Bank with 8 worth $2.2 million and, with 5 loans worth $354,900, Manufacturers and Traders Trust Company. The tiny dollars on the last of those show how small some of the loans are. Holders are listed as SBA records them and nothing more.

Allegheny and the rest

Allegheny County holds 63 loans, Westmoreland 7 and Butler 5. Yearly figures are mostly withheld: FY2017 shows 12 loans and $1.0 million, FY2018 6 loans and $4.1 million, FY2019 14 loans and $1.8 million, FY2022 5 loans and $377,000, FY2023 8 loans and $3.4 million and FY2024 15 loans and $3.2 million. The remaining years are blank for thin counts and not zero.

Outcomes and the study

Cancellation after approval is 9.0% or more of FY2017 to FY2024 approvals, a floor, while both the upper cancellation bound and the write-off rate are kept back. A coffee shop in Pittsburgh needs a study that tests neighbourhood foot traffic and student or office demand, competing roasters and chains within walking range, rent against sales, equipment and build-out cost at a loan near $140,000, the franchisor's disclosures if a brand is involved, and debt service coverage at modest margins. For an appraisal, the value is mostly the business and a leasehold. Counting here follows geography: a loan is counted only where the county of its project is matched, by name, to the 2023 map of metro areas.