Quick Service Restaurant Feasibility Study in the Birmingham, AL Metro Area

A class that outweighs its national share

Birmingham's limited-service restaurant record is stronger than the national pattern. The location quotient of 1.46x says quick-service concepts take a bigger slice of the area's SBA loans than they do in loan files nationwide, and quick service stands 2 of 39 inside the area. Across metro and micro areas the rank is 51 of 779. From FY2017 to FY2026, 71 loans were approved for $42.1 million.

Bigger than the national median

The median loan is $465,000, or 1.50x what the class borrows nationally at its midpoint, and the bulk of loans run from $252,250 to $713,250. That is a heavier ticket than a typical quick-service lease-up, and it suggests a share of projects here involve new construction or equipment packages instead of simple conversions. By program, 7(a) accounts for 66 loans and 504 for 5. Franchises make up 54.9% of loans, so roughly speaking the area is split between branded and independent operators.

Counties and the one lender that can be named

Jefferson County accounts for 50 of the area's loans and Shelby County for 12, so the Birmingham core and the suburban corridor to the south carry the class. United Community Bank (SC) holds 5 loans worth $2.1 million, and no other holder reaches the loan count needed to be named. That figure is SBA's listing of the present holder and says nothing about any lender's policy.

Annual pattern and the floors

FY2017 shows 7 loans for $3.4 million, FY2020 9 loans for $4.1 million, FY2021 5 for $1.7 million, FY2022 6 for $3.8 million, FY2023 10 for $4.5 million and FY2024 9 for $4.2 million. The years FY2018, FY2019, FY2025 and FY2026 are withheld, which means too few loans to show and not none. Among FY2017 through FY2024 approvals, cancellation was 9.4% or more, which is a floor. Of the loss measures, only that floor reaches the page.

What a Birmingham study must test

Because the area leans toward quick-service lending and the median ticket is above the national figure, a study here should be skeptical of unit costs borrowed from other markets. It should test local construction and equipment pricing, the corridor's traffic and competing drive-throughs, wage rates, and whether a franchise or independent concept fits the trade area. Loan payments should still be met when sales fall short of plan, and the appraisal should reconcile income value to land and improvements.