Quick Service Restaurant Feasibility Study in Texas

Texas approved 1,812 SBA loans to limited-service restaurants from FY2017 to FY2026, worth $1.03 billion, ranking 2 of 54 among states, and in Texas the class is 2 of 39 by count. The distinctive measure is the charge-off floor. Of the 802 loans disbursed in FY2017 to FY2021, 11.3% have been charged off to date and 6.9% within five years of approval, a floor higher than both the Texas all-class rate and the national rate for quick service by more than our distinctness margin.

A franchise book at above-median size

Franchise units account for 63.4% of Texas quick service loans, and the median loan of $388,750 is 1.25x the national median, with the middle half running from $223,600 to $660,450. Quick service also takes more of the Texas SBA book than its national share, with a location quotient of 1.15x. In short, Texas lenders have financed many franchised units at larger tickets, and enough of the early cohort has failed to lift the class above its comparators on losses. Cancellation runs at a floor of 11.4% and a ceiling of 12.2%, so the risk is spread across both stages of a loan.

Who holds Texas quick service loans

SBA 7(a) carries 1,720 approvals and SBA 504 carries 92. The Huntington National Bank holds 177 of the 7(a) loans worth $66.1 million; Stearns Bank National Association holds 56, PNC Bank, National Association 54, and Prosperity Bank and Wells Fargo Bank National Association 51 each. Capital Certified Development Corporation leads 504 with 30 loans, followed by LiftFund, Inc. with 16 and North Texas Certified Development Corporation with 15. SBA assigns each Texas restaurant loan to its holder of record today. Approvals reached 212 and $143.3 million in FY2025, from 111 in FY2020.

What a Texas quick service study has to prove

The lender will read the study against this loss floor, so the projections have to come from comparable units of the same brand in similar Texas trade areas, not from system averages in the franchise disclosure. Demand testing must place the unit among the competition, and Harris County alone has 264 approvals, with Tarrant at 212, Dallas at 178, Collin at 152, Denton at 115 and Bexar at 104. Cost testing has to price the pad, site work and build package from bids. Debt service coverage should be stressed for a slower ramp and a new competitor on the same corridor, with reserves to carry the first year. Where a pad is bought, the appraisal must stand on restaurant comparables and on alternative retail use. The class has no coding caveat; every rate here is a floor.