Quick Service Restaurant Feasibility Study in the Houston-Pasadena-The Woodlands, TX Metro Area

A franchise-dominated drive-through market

What marks Houston-Pasadena-The Woodlands is the brand. Franchise flags appear on 65.7% of its limited-service restaurant loans, so most of the 452 approvals between FY2017 and FY2026 financed a concept with a franchisor behind it. Gross dollars came to $236.9 million. Houston is sixth among 779 areas for the class, and the class is runner-up among the area's 39. A location quotient of 1.05x puts quick-service restaurants only slightly above their national weight in this area's lending, while Harris County alone supplies 264 loans, Fort Bend County 82 and Montgomery County 44.

Houston loans run above the class norm: a $374,400 median at 1.20x the national level, and a central range that starts high, at $249,750, and ends at $630,000, so very small loans are rare. SBA 7(a) accounts for 437 loans and SBA 504 for 15, so nearly all of this lending finances business purposes more than owned property.

Holders of the loans

Everything in the lender lists is SBA's account of who holds a loan today. Under 7(a), the order is The Huntington National Bank (45 loans, $16.6 million), Prosperity Bank (31, $22.1 million), Simmons Bank (24, $9.3 million), Stearns Bank National Association (21, $9.4 million) and JPMorgan Chase Bank, National Association (19, $8.6 million). Prosperity's loans run biggest on average among the five. For 504 only LiftFund, Inc. reaches the listing threshold, with 6 loans worth $6.0 million. A holding record is a description of paper, and it supports no conclusion about how a particular holder would view a new application.

In Houston, cancellations claimed 11.5% or more of the approvals dated FY2017 to FY2024. The matching ceiling, which would add loans never disbursed, is withheld by SBA for this cell and carries no figure here. For the 205 loans of FY2017 to FY2021 that reached disbursement, charge-offs stand at no less than 13.7% to date and no less than 9.3% within five years of approval; both are minimums. Approvals fell to 22 in FY2020 and stood at 38 in FY2026, worth $21.6 million.

What a study for Houston has to test

With franchising this common, the study begins from the franchisor's published unit economics and then tests whether the proposed address can match them: pass-by traffic along the freeway corridors, access and turning movements, and the other drive-through units within the trade area. Build cost and equipment have to be set against the franchisor's required specifications. Debt service coverage should absorb royalty and marketing fees from the first month. In appraisal, a lender will weigh the lease and equipment more than land, so downside value is modest if the brand is withdrawn. Houston's counts depend on each loan's county being found on the area list of July 2023; a mismatch removes the loan, so no total here is overstated.