Quick Service Restaurant Feasibility Study in Delaware

A compact state with a restaurant-heavy book

Delaware shows how concentrated a small state's lending can be around one class. Limited-service restaurants in the state received 68 approvals over FY2017 to FY2026, worth $29.4 million, and restaurants rank second among 39 asset classes inside Delaware even though the state sits 44 of 54 for the class. The location quotient is 1.06x and the median of $326,250 is 1.05x the national class median. The median and location quotient sit close to the national class, so this cell is best read as a small-state example of the national pattern.

Almost entirely a 7(a) market

Of the 68 loans, 66 used SBA 7(a) and only 2 used SBA 504, so nearly all of these loans sit under 7(a). Franchise brands account for 52.9% of the loans. The central band runs from $90,000 to $548,950. Manufacturers and Traders Trust Company leads with 17 loans worth $2.7 million, with Wilmington Savings Fund Society FSB and TD Bank, National Association at 6 each, worth $2.4 million and $2.2 million. Geography is lopsided: New Castle County has 46 loans, Sussex 15 and Kent 7.

Recent acceleration and cancellation risk

Volume was thin in FY2019 and FY2020, with 4 and 2 loans, then climbed to 10 loans and $6.0 million in FY2025 and 12 loans and $7.7 million in FY2026. Delaware cancellations among FY2017 to FY2024 approvals came to a floor of 6.5%, with the ceiling at the same 6.5%, so the floor is also the whole range. Delaware's charge-off rate is not shown: that cohort is thin, with fewer than 30 loans that funded, so we neither quote a number nor imply that none occurred.

What a Delaware study has to test

Because the market is small and concentrated, the study should treat trade area carefully: traffic counts, daytime population and commuting patterns. A franchise deal needs the brand's sales benchmarks tested against local reality, plus royalty and advertising charges inside the coverage calculation. Cost should be compared with a ticket that often falls near the median, and debt service coverage should be shown in an off-season case. An appraiser valuing the going concern will want a defensible sales forecast and a lease that survives the loan term. Competition within a short drive deserves a count of existing drive-throughs and a view of how many are national brands.