Coffee Shop Feasibility Study in Utah

Utah's coffee and snack bar boom

Utah is one of the more active states for SBA coffee shop and snack bar lending, and its record has a shape of its own. The 204 loans approved from FY2017 to FY2026 carried $65.1 million and rank Utah 14 of 53, coffee and snack bars place 6 of 39 among Utah classes, and at 1.28x the location quotient shows the class holding more of Utah's SBA book than the national pattern would predict. The Utah median of $245,000 is 1.02x the class median nationwide, so the typical deal is ordinary in size; our screen flags nothing here, because no headline figure differs from Utah lending overall and from the class nationally by enough, net of sampling noise. The story is volume, brand share and a lender list led by Zions.

Zions and the credit unions

Zions Bancorporation, National Association holds 42 loans worth $11.1 million, and credit unions follow: America First Federal Credit Union with 18 loans for $7.2 million and Mountain America FCU with 16 for $3.4 million. Central Bank holds 12 for $3.6 million and Community Banks of Colorado, A Division of NBH Bank 11 for $3.0 million. Under the programs, 193 Utah coffee loans are 7(a) and just 11 are 504. Franchised concepts are 47.1% of loans, and Utah's quartiles run from $80,000 to $462,000. Salt Lake County with 63 loans and Utah County with 61 are nearly level, with Washington County at 23, Davis at 22 and Weber at 12.

Approvals have climbed steadily, from 10 loans and $1.4 million in FY2017 to 24 loans and $9.9 million in FY2023 and 39 loans and $14.4 million in FY2026. Utah's cancellation floor is 7.4% for approvals made in FY2017 through FY2024, and its ceiling 8.1%. Of the 70 Utah loans that funded between FY2017 and FY2021, 7.1% are charged off to date and 4.3% failed inside five years. Both rates are floors that will rise if open loans go bad, and a lender should read them as a sign that brand support does not remove early operating risk.

What a Utah coffee study must test

With volume growing fast, the central question for a new Utah shop is saturation. A feasibility study has to map existing coffee and snack bar outlets, branded drive-throughs especially, against traffic and rooftops in the specific trade area, whether in Salt Lake, Utah County or Washington County. The cost test needs the pad or lease, build-out to brand standard and franchise obligations. Debt service coverage should hold at ticket counts below the brand's averages, since a newer store in a crowded market may not reach them, and working capital should cover a slow start. The appraisal, if real estate is financed, has to rest on comparable pad sales and leases in that county.