Quick Service Restaurant Feasibility Study in Michigan

A Huntington-heavy quick service file

Of Michigan's 815 limited-service restaurant loans, 282 sit with The Huntington National Bank, worth $50.6 million, a book of small loans that shapes the whole cell. Oxford Bank follows with 47 worth $23.0 million, Fifth Third Bank with 29, KeyBank National Association with 21 and ChoiceOne Bank with 20. On 504, the leader is Michigan Certified Development Corporation, with 38 Michigan loans for $32.7 million, while Oakland County Business Finance Corporation holds 8.

Over FY2017 to FY2026 those 815 Michigan approvals carried $363.4 million. Michigan is 7 of 54 states for the class, quick service is 2 of 39 classes inside Michigan, and the location quotient is 1.02x, almost exactly the national weight. The Michigan median of $275,000 is 0.88x the class median nationally, and neither it nor the Michigan outcome floors rise to our distinctness threshold against both the state's all-asset book and fast food nationally. The Michigan range is wide: the middle half ran from $75,000 to $482,500. Franchise concepts account for 57.2%, and SBA 7(a) carried 752 approvals against 63 under SBA 504.

Cancellation is the number to plan around

At least 14.6% of the Michigan quick service approvals made in FY2017 to FY2024 were cancelled; with undisbursed Michigan loans counted as cancelled, the ceiling is 16.4%. For a franchise unit, a cancelled approval can trace back to a site, a lease or a development agreement that changed after the credit decision. Funded loans have held up: across 336 Michigan loans disbursed in FY2017 through FY2021, charge-offs come to 3.9% so far and 2.4% within five years.

What a Michigan study has to test

Demand in this class is local to the parcel. Oakland and Wayne counties hold 159 and 139 approvals, Kent and Macomb 62 and 61, and Washtenaw 35, so a Michigan study must test the site against same-brand and competing units nearby rather than against county totals. Cost should include the brand's build specification and any equipment package. Debt service coverage needs to hold after franchise costs at a realistic first-year sales level, and where a loan funds real estate the appraisal has to work for a buyer outside the brand. Volume also swings: Michigan saw 103 approvals worth $58.1 million in FY2021 and 70 worth $23.9 million in FY2023, so a study should not assume lender appetite stays where it was.