Quick Service Restaurant Feasibility Study in the San Diego-Chula Vista-Carlsbad, CA Metro Area

A floor equal to its ceiling

In San Diego, cancellation of limited-service restaurant approvals sits at 16.7% at the floor and the same 16.7% at the ceiling, so counting approvals that have yet to disburse adds nothing. The rate is a substantial one, and a study should ask why so many approvals here did not close. The cell holds 227 approvals worth $98.9 million for FY2017 to FY2026, all in San Diego County, CA.

The market ranks 20 of 779 nationally for this class, and the class holds 2 of 39 within San Diego. The location quotient of 0.88x leaves limited-service restaurants a little under the national mix. The median is $245,700, only 0.79x of the national figure for the class; $100,000 and $549,300 bracket the central half. SBA 7(a) holds 217 loans and SBA 504 holds 10. Franchised units are 30.8%, so a brand is involved in a substantial part of the book, and a study should price royalties and required remodels where they apply.

Lenders and losses

U.S. Bank, National Association holds 25 SBA 7(a) loans and $6.9 million. CDC Small Business Finance Corp. has 17, JPMorgan Chase Bank, National Association 13, Byline Bank 10 and Neighborhood National Bank (CA) 9. No SBA 504 lender here has enough loans to be named. That list reports holders SBA names and passes no verdict on any lender. Of 96 loans disbursed from FY2017 to FY2021, 11.5% show as losses to date, a minimum, and the five-year rate stays blank because Loan Analytics withholds it.

Approvals went from 25 loans in FY2017 to a high of 38 and $14.1 million in FY2018, a low of 12 in FY2021, another rise to 37 loans in FY2024, and 16 loans and $8.2 million in FY2026. Loans whose project county cannot be placed fall outside the 2023 delineation used here.

Testing a San Diego quick-service project

A study must count traffic, visibility and rival brands around a pad site, test whether a franchisor's fee schedule fits the $245,700 median, and show that daily transactions carry debt service. Because so many approvals dropped away, it should also confirm the lease, permits and equity before a lender commits. 227 approvals are context, not a promise. The 227 loans above forecast nothing new.