Restaurant Feasibility Study in California

The largest restaurant file in the country

California ranks 1 of 54 states for full-service restaurant loans, and full-service restaurants rank 1 of 39 among asset classes within California. From FY2017 to FY2026 the state approved 4,184 such loans worth $2.50 billion. Even so, the California location quotient is 1.03x: restaurants take roughly the share of California SBA loans that they take of loans nationwide, so the size of this file reflects the size of the state, not a tilt toward the class.

None of the headline measures clears our distinctness margin against both California and full-service dining nationally. The California median loan of $330,000 is 1.20x its national counterpart, and California's middle half covers $150,000 to $752,250. That makes this page a strong reference for full-service restaurant lending generally. Its cohort of 1,765 disbursed California loans also gives the charge-off floor a lot of statistical weight.

Lenders, programs and outcomes

Bank of Hope is the current holder of 421 California restaurant loans worth $176.6 million, and U.S. Bank, National Association of 320 worth $59.2 million, a book of much smaller loans. JPMorgan Chase Bank, National Association holds 137, Wells Fargo Bank National Association 124 and Hanmi Bank 120. SBA 7(a) carried 3,776 approvals and SBA 504 carried 408, the 504 loans headed by The Mortgage Capital Development Corporation, 97 of them worth $106.0 million. Franchise concepts are only 7.5% of loans: California's full-service restaurant borrowers are overwhelmingly independent.

Among those 1,765 California loans disbursed FY2017 to FY2021, at least 6.6% have been charged off, and 4.2% within five years of approval. Cancellation took 13.0% or more of California restaurant approvals from FY2017 to FY2024, and 13.7% at the ceiling. Volume fell from 539 approvals in FY2017 to 223 in FY2021 and recovered to 452 in FY2026, worth $296.5 million.

What a California restaurant study must test

For an independent restaurant, the study replaces the brand's track record with evidence. Demand must be built from the trade area's spending and the competing seats nearby, whether the site is in Los Angeles County, with 1,185 approvals, or in Orange, San Diego or Riverside, with 450, 345 and 258. Cost should cover kitchen equipment, build-out and the permits a change of use can trigger. Debt service coverage needs a realistic ramp and a menu margin the operator has achieved before, and the appraisal for a leased California restaurant will rest on equipment and leasehold value, which a lender should discount for a failed concept.