Quick Service Restaurant Feasibility Study in California

Average in every way but losses

California's quick service restaurant lending is the country's largest, ranking 1 of 54 among states, with 2,752 loans and $1.32 billion from FY2017 to FY2026, while counter-service places 2 of 39 in California's own class ranking. On share and size the cell is almost exactly national: the location quotient is 1.01x and the median loan of $310,000 is 1.00x the national median for the class. The one metric that sets it apart from both California's all-asset lending and quick service nationally is the charge-off floor: across 1,201 loans disbursed from FY2017 to FY2021, 8.5% have been charged off to date, and 5.0% within five years of approval.

The middle half of California counter-service loans runs from $150,000 to $580,000. SBA 7(a) carried 2,569 loans and SBA 504 just 183. Franchise brands account for 39.1% of loans, so independents are the larger group. The lenders are spread wide: Bank of Hope holds 195 loans for $64.0 million, U.S. Bank, National Association 171 for $39.3 million, The Huntington National Bank 120 for $35.2 million, CDC Small Business Finance Corp. 75 under 7(a) for $14.4 million and Northeast Bank 74 for $12.4 million. For 504, The Mortgage Capital Development Corporation holds 45 loans for $38.8 million, Business Finance Capital 24 and CDC Small Business Finance Corp. 23.

What the loss floor means for each side

An 8.5% charge-off floor on a cohort this large is a real signal, not noise. It means the charge-off floor is the measure to watch. Cancellation after approval is ordinary, at 12.7% of FY2017 to FY2024 approvals or 13.4% at the ceiling. For a borrower or a lender, a credible plan matters even for a familiar concept. Volume fell to 183 loans and $80.7 million in FY2020 and recovered to 353 loans and $173.0 million in FY2025.

Proving a California counter-service concept

Los Angeles with 754 loans, Orange with 309, San Diego with 227, Riverside with 161 and San Bernardino with 142 hold most of the lending. The study has to measure demand at the site level: daytime population, traffic and visibility, drive-through access where relevant, and the competing units of every brand within the same trip. Cost must include the full build-out, equipment and opening payroll, plus any franchise requirements. The coverage ratio should be tested at sales below the brand or concept average, with labor at California's actual wage levels. Where the loan holds little property, the appraiser will mostly be valuing the business, which makes the cash flow forecast the core of the credit.