Quick Service Restaurant Feasibility Study in New Jersey

New Jersey: smaller tickets, a high cancellation floor

Cancellation and loan size are the two measures that differ from New Jersey lending in every industry and from limited-service restaurants countrywide. On cancellation, at least 17.3% of New Jersey limited-service approvals in FY2017 to FY2024 never funded, and 18.5% on the ceiling that counts undrawn loans. On size, the median loan is $236,250, 0.76x the class's national median, and approvals in the middle half run from $50,000 to $500,000. Put together, New Jersey quick-service deals are smaller than the class median nationwide and carry a high cancellation floor.

The market and its lenders

The class matters here, ranking 2 of 39 among New Jersey classes and 11 of 54 among states, with 674 approvals worth $256.8 million over FY2017 to FY2026; the class's location quotient there is 0.96x. TD Bank, National Association holds 119 loans totalling $11.6 million, followed by Manufacturers and Traders Trust Company with 44, Northeast Bank with 33 and The Huntington National Bank with 32. Provident Bank holds 25 loans worth $16.7 million. SBA 7(a) carried 655 loans and SBA 504 just 19, led by Trenton Business Assistance Corporation with 15. Franchises are 34.0% of loans. Bergen County leads with 110 loans, ahead of Middlesex with 87 and Hudson with 59. After a low of 32 loans in FY2020, volume recovered to 67 in FY2021 and peaked at 82 in FY2025.

What a lender and a study should take from it

Losses are moderate: 6.9% of the 248 New Jersey loans in the FY2017 to FY2021 funding cohort are charged off and 2.8% failed within five years, both floors. The cancellation floor is the sharper warning. For a borrower it says that a New Jersey approval is not a closing, and that leases, permits, franchisor approval and equity need to be firm before the commitment. New Jersey quick-service feasibility work has to test the site's traffic, parking and drive-through capacity against local site plan rules, map the competition within a short drive, cost the fit-out against a ticket near the $236,250 median, and prove the location covers debt service after rent and franchise fees on sales it can carry. Where real estate is involved, the appraisal will rest on the lease or the land value, so the study should give both.

This class has no special limitation. Loans are classed under the industry entered for the borrower, and the rates are floors.