Quick Service Restaurant Feasibility Study in North Carolina

A larger quick service ticket in North Carolina

North Carolina's limited-service restaurant loans are big for the format. The North Carolina median is $426,700, 1.37x the national median for quick service, and it is that median which separates this cell from North Carolina's all-asset SBA lending and from quick service nationally. Its middle half ran from $225,500 to $700,000. North Carolina approved 543 quick service loans for $343.9 million in FY2017 through FY2026, ranking 13 of 54 states, and quick service stands 2 of 39 among North Carolina classes, with a location quotient of 1.17x.

A larger median here may reflect new builds and land rather than resales of existing units, a reading consistent with Live Oak Banking Company holding 31 North Carolina loans worth $44.2 million beside The Huntington National Bank's 64 worth $17.8 million. Franchise concepts take 63.2% of loans. SBA 7(a) carried 493 approvals and SBA 504 carried 50, and Business Expansion Funding Corporation holds 29 of those 504 loans for $25.2 million, with Carolina Business Capital, Inc. at 14. United Community Bank and Pinnacle Bank hold 19 and 17 on the 7(a) side.

Floors and the gap between them

North Carolina's cancellation floor is 12.6% for approvals dated FY2017 to FY2024; its ceiling, 15.5%, adds the approved North Carolina loans that had not yet funded. Charge-off has claimed 5.9% or more of the 221 North Carolina loans disbursed in FY2017 through FY2021, and 3.2% inside five years. For a lender, the spread between floor and ceiling is a reminder that recent approvals are not yet tested by closing, let alone by repayment.

Volume has climbed: 36 approvals in FY2020, worth $17.5 million, 67 in FY2024 and 73 in FY2025, the last carrying $50.6 million. Wake and Mecklenburg counties lead with 105 and 92 approvals; Durham, New Hanover and Onslow follow with 24 each.

Testing a North Carolina unit

With a higher loan per unit, the study has to justify the build cost first: land or ground lease, the brand's prototype and the site work. Demand must be tested at the parcel, with traffic and visibility measured against nearby units of the same and rival brands. Debt service coverage should be shown at sales the brand's comparable North Carolina units achieve, after franchise costs, and the appraisal must show the North Carolina site holding value for a second-generation user if the unit closes.