Quick Service Restaurant Feasibility Study in Maryland

Quick service near the top of Maryland's class list

Maryland's SBA lenders put limited-service restaurants at 2 of 39 among asset classes, and a location quotient of 1.10x shows them carrying a little more weight there than nationally. Measured against other states the market is mid-sized, 21 of 54, with 369 approvals totalling $140.0 million over FY2017 to FY2026. Maryland's median loan is $283,000, 0.91x the class median nationwide; the central half of Maryland approvals spreads widely, from $75,000 to $495,000. No metric in the cell differs from both Maryland as a whole and quick-service lending nationally by the required margin. What it shows instead is one lender holding many of the loans and one program carrying most of them.

One bank, almost no 504

Manufacturers and Traders Trust Company holds 127 of the Maryland quick-service loans, $23.2 million in all, far ahead of The Huntington National Bank at 21 and Newtek Bank, National Association at 13. SBA 504 is nearly absent, 6 loans against 363 under SBA 7(a). Few Maryland quick-service borrowers, in other words, use the 504 route to buy a building. Franchises account for 48.5% of loans. Prince George's County leads with 69 loans, then Baltimore County with 55, Montgomery with 50, Anne Arundel with 35 and Baltimore City with 32. After just 16 loans in FY2020, approvals reached 66 and $27.0 million in FY2025.

Floors and feasibility

Cancellation took no less than 12.4% of Maryland approvals from FY2017 to FY2024, and the ceiling that adds undrawn loans is 14.9%. Of the 123 Maryland loans disbursed during FY2017 to FY2021, 4.9% are charged off to date and 1.6% failed within five years, and neither number is final. For a franchised unit, the Maryland study has to test the specific pad or end-cap for traffic, visibility and drive-through stacking, measure the daytime and residential population within a few minutes' drive, and list the competing concepts on the same road. It has to cost the build-out to the franchisor's standard, test the royalty and marketing fees against projected sales, and show debt service coverage after rent. With so little 504 activity, the lease term and renewal options belong in the analysis, and any appraisal of an owned site will rest on the lease or the land.

No special limitation applies to this class. Loans are counted under the borrower's industry as SBA records it, and both rates are floors.