Quick Service Restaurant Feasibility Study in Oklahoma

A loss rate that sets Oklahoma apart

Oklahoma's limited-service restaurant loans fail more often after funding than the class does elsewhere or than Oklahoma SBA loans do in general. Of 98 Oklahoma quick-service loans that disbursed over FY2017 to FY2021, 15.3% have been charged off so far, and 8.2% failed before reaching their fifth year. Our test finds that charge-off floor above both the national quick-service rate and the Oklahoma loss rate for SBA lending as a whole, by more than the margin; it is the cell's distinctive measure, and because it is a floor, it can still climb as open loans age.

The loans are not unusually large. Oklahoma's 198 approvals from FY2017 to FY2026 total $80.3 million, with a median of $257,750, 0.83x the national median for the class, and a quartile range from $117,000 to $588,875. Franchise concepts account for 60.1% of the count. The class is central to Oklahoma SBA lending, ranking 2 of 39 by Oklahoma count, while a location quotient of 1.09x puts it a little above its national weight; the state is 29 of 54 nationally. Nearly every loan is 7(a), 190 against 8 under SBA 504.

Who carries the risk

BancFirst holds 63 Oklahoma quick-service loans worth $25.6 million, a position no other lender approaches, so its underwriting effectively defines this record. The Huntington National Bank holds 12, Arvest Bank 10 totalling only $847,100, and Citizens Bank and First Oklahoma Bank 6 each. Rural Enterprises of Oklahoma, Inc. holds 6 of the 504 loans worth $3.7 million. Cancellation adds to the picture: 14.8% of FY2017 through FY2024 approvals were cancelled, and 15.4% at the ceiling. Volume has slowed, from 27 approvals in FY2017 to 9 in FY2026.

What an Oklahoma restaurant study must test

Oklahoma County holds 71 approvals, Tulsa 42 and Cleveland 19, so most projects compete in the Oklahoma City and Tulsa metros. Given the loss floor, a feasibility study here has to do more than confirm a franchisor's site approval. It must test sales at the specific location against the competing quick-service units in the same trade area, using traffic counts and comparable unit volumes, and show how the store performs if sales come in below the brand's average. Cost testing must include site work, equipment and pre-opening costs at real bids. Debt service coverage has to survive royalties, advertising fund charges and labor at local wage rates, stressed for a soft first year, since 8.2% of these loans failed inside five years. Appraisers should price the Oklahoma building for whichever restaurant operator might take it next, because a failed brand unit may only re-let at a lower rent. Nothing qualifies the Oklahoma figures: the limited-service code carries no caveat and no shared code.