Grocery Store Feasibility Study in the Providence-Warwick, RI-MA Metro Area

Providence grocery: a heavy share and small loans

Providence-Warwick leans on grocery stores more than the country does (a location quotient of 1.40x), and the metro is 20 of 412 for grocery loans, though the class ranks 11 of 39 locally. The loans are small: the median of $181,000 is just 0.51x the national median. The 38 loans total $16.2 million across FY2017 to FY2026, with a franchise share of exactly 0.00%.

Lenders, amounts and geography

The middle half of amounts runs from $50,000 to $590,000. The program split is withheld. Metro City Bank holds 6 7(a) loans worth $3.9 million and Santander Bank, National Association holds 6 worth $795,000, so the first has a much larger average. Providence County supplies 28 of the loans. The metro crosses from Rhode Island into Massachusetts, but the printed counties cover only part of the volume.

Only three years can be shown: 5 loans in FY2021 ($4.0 million), 6 in FY2022 ($5.4 million) and 6 in FY2023 ($2.2 million). Everything outside those three years is unpublished, outcome rates included. A reader should take nothing from the missing years and should not call them empty.

What a Providence grocery plan must test

Because the typical loan is small, many of these stores are modest markets. The plan should declare itself either a small neighborhood market or a larger store, then test the households within reach, competing grocers by format, the weekly sales the floor area must produce, and the cost of refrigeration and fit-out against a median near $181,000. Inventory and shrink need a place in working capital.

The mix of a 1.40x location quotient and a 0.51x median ratio is unusual: grocers are common borrowers here, yet each borrows little. That pattern fits a market of small independent stores, which the 0.00% franchise share supports. A study should describe the shopper base for such a store, whether neighborhood, ethnic or convenience oriented, and show how it differs from the supermarkets nearby. It should not borrow national supermarket assumptions for a store this size.

Because grocery margins are thin, coverage of the debt belongs on a cautious sales case, with the owner's labor treated honestly. The sales forecast will be tested by an appraiser who values the store as a business. The metro spans two states, so the study should name the state of the site and the rules that apply. History here promises nothing.