Quick Service Restaurant Feasibility Study in the Memphis, TN-MS-AR Metro Area

Memphis: second in class, two-thirds franchised

The Memphis record for limited-service restaurant spans FY2017 to FY2026: 53 loans, $32.5 million. Memphis has two ranks to read: 2 of 39 among its own classes and 65 of 779 for limited-service restaurant against other areas. A 1.40x location quotient means limited-service restaurant is moderately over-represented among Memphis loans. The Memphis area crosses three state lines, though the county detail puts nearly all loans in Shelby County, TN. Shelby County, TN carries 45 of the loans.

Typical size is $450,000, and the central half stretches $300,000 to $620,000 in Memphis. At 1.45x of the national figure, limited-service restaurant projects in Memphis cost more to finance. Memphis: the 7(a) versus 504 split is suppressed, not zero. A franchise share this high means brand rules shape the economics. Franchise brands stand behind 66.0% of the Memphis loans.

The lender behind the loans

Metro City Bank is named alone, on the 7(a) side. Metro City Bank (8 loans, $5.0 million) hold the 7(a) loans shown. Names in Memphis are shown as SBA publishes them, so read them as holdings.

Of Memphis approvals made FY2017 to FY2024, 12.8% or more were cancelled. Even the Memphis ceiling for undisbursed loans lands on 12.8%. Charge-offs in Memphis are unmeasured here: the rate is withheld. By year: FY2017 brought 6 loans worth $1.7 million, FY2021 brought 6 loans worth $2.2 million, FY2024 brought 5 loans worth $2.0 million, and FY2026 brought 7 loans worth $8.2 million. Memphis years not shown stay suppressed. Which loans belong to Memphis depends on county names, so some loans are absent.

Memphis: what the study must test

With two-thirds of the loans franchised, the study should begin with the franchisor's system: required build-out, royalty and advertising charges, and average unit volumes against which projected sales will be judged. Traffic counts past the site must be converted into realistic stop rates, and a sister unit of the brand nearby may split a trade area. Labor per ticket and delivery-app fees tighten margin. Coverage should survive a slow opening quarter and a cost spike. The appraisal of a pad site should state whether the lender can reach an alternative user if the brand leaves. If the brand is nationally known, projected sales should be compared with the average for that brand in similar markets, not with the best unit in its system.