Liquor Store Feasibility Study in the Houston-Pasadena-The Woodlands, TX Metro Area

A thin class in a giant metro

Houston-Pasadena-The Woodlands is a case of volume without concentration. The area ranks 24 of 426 for liquor store loans, but liquor stores are 18 of 39 inside the area and the quotient of 0.29x is far below the national share. SBA approved 39 loans between FY2017 and FY2026 for $18.4 million, all financed through 7(a), with none in the 504 program.

Store-sized tickets

At $350,000 the midpoint is 0.78x the national figure, with loans in the usual band between $137,500 and $544,900. Those numbers fit store purchases and inventory-heavy working capital more than new buildings, which matches the absence of 504 loans. The franchise share is withheld. Harris County holds 32 of the 39 loans, so the cell is a portrait of the core county and says little about the outer counties of the metro. The franchise share is withheld, so nothing is stated about brands.

Two named holders

Hanmi Bank is listed on 7 loans worth $5.5 million, a very high average for the cell, and Wallis Bank on 6 worth $1.2 million. Both entries follow the holder SBA lists today and say nothing of present practice.

Years and absent rates

Printed years: FY2022 with 6 loans and $5.0 million, FY2023 with 7 and $1.9 million, and FY2024 with 5 and $1.8 million. Other years are hidden. SBA offers no cancellation rate, the cohort falling short of 30 loans, and charge-offs are withheld, so no loss figure is available and none should be assumed.

Studying a Houston-area liquor store

A study should start with the legal side: state permits are required and proximity rules can limit where a store may locate. From there it should weigh demand in the trade area, competing stores, price competition from large retailers, margin by category, and the inventory investment, which can be a large part of a loan. Where a store is being bought, weigh the price against the store's reported earnings and the lease terms. Theft and shrink go into the cost model. Show the payment met through a weak quarter, and the appraisal should treat the license, inventory and real estate as distinct pieces of value.