Restaurant Feasibility Study in the Birmingham, AL Metro Area

Where restaurants lead the Birmingham book

Birmingham puts the full-service restaurant first among its asset classes, 1 of 39. SBA approved 75 such loans from FY2017 to FY2026, worth $39.1 million in gross dollars, and the area as a whole lands at 69 of 821 once every metro and micro area is sorted by restaurant loans. The location quotient of 1.03x shows a share only slightly above the national mix, so this is a market where restaurants dominate because they dominate everywhere, not because the area leans unusually hard on them. The median loan of $296,100 is 1.08x the national median for the class, a modest premium rather than a different scale of project.

Ticket, franchise mix and lenders in Birmingham

In the middle half, loan amounts run from $113,900 to $658,500. SBA 7(a) carried 70 of the loans and SBA 504 carried 5, and franchise units make up 20.0% of loans, so independents still account for most approvals. For 7(a), SBA lists The Huntington National Bank as current holder of 8 loans worth $3.7 million, ServisFirst Bank of 6 loans worth $4.2 million, PNC Bank, National Association of 6 loans worth $255,000, and Newtek Bank, National Association of 5 loans worth $3.5 million. Those lender lines are only ledger entries, so nobody should read judgment into them. Jefferson County supplies 60 of the loans and Shelby County 9.

Annual volume moved around: 15 loans in FY2017 for $4.8 million, 13 in FY2019 for $9.7 million, a trough of 5 in FY2021 for $2.6 million, then 7 in FY2024 for $3.1 million, 15 in FY2025 for $7.3 million and 9 in FY2026 for $4.1 million. Remaining years are held back as too thin to print, and held back is not zero. Cancellation after approval hit 13.7% of what was approved in FY2017 through FY2024, and that is a floor; the harsher variant that also treats undisbursed loans as cancelled is held back, and so is the charge-off rate. The metro is the CBSA of each loan's project county as drawn in July 2023 and matched by county name; an unplaceable county simply drops out.

Testing a Birmingham restaurant

A study for a restaurant in Birmingham should read the cancellation floor as a caution on projects that never reached closing. It has to test the trade area's real demand for the concept, the build-out cost against a typical request near $296,100, and the sales needed for debt service coverage after rent, labor and food cost. The franchise question matters: a branded unit can lean on system data, while an independent must prove its own volume. Lenders reading the study will compare it with an appraisal, so the forecast should rest on comparable restaurants in Jefferson and Shelby counties. The figures describe history only and promise nothing about a new request.