Restaurant Feasibility Study in the Detroit-Warren-Dearborn, MI Metro Area

A restaurant market priced below the country's

Full-service restaurants lead the local list of classes (1 of 39), and the area stands at 12 of 821 metro and micro areas for them, with 492 loans between FY2017 and FY2026, totalling $209.0 million. Yet the metro does not lean on restaurants harder than the country does. The location quotient is 0.89x, a touch under parity, and a median loan of $177,000 is only 0.64x the nationwide median for restaurants. Detroit borrowers ask for markedly smaller sums than restaurant borrowers elsewhere.

Sizes, programs and franchises

Detroit approvals in the central half sit from $50,000 to $500,000, so the lower end of the range reaches down to small projects. SBA 7(a) accounts for 458 loans and SBA 504 for 34. Franchised concepts represent 12.8% of loans. Oakland County leads with 229 loans, followed by Wayne County at 153 and Macomb at 75, with Livingston at 14, St. Clair at 13 and Lapeer at 8 well behind. Yearly volume ran from 70 loans in FY2018 down to 25 in FY2026, although dollars in FY2025 reached $31.8 million on only 50 loans.

One bank dominates the 7(a) record

In the current-holder listing, Huntington alone holds 269 loans worth $68.2 million, far more than any other 7(a) holder; Fifth Third Bank trails at 23, with Newtek Bank, National Association at 13, Newtek Small Business Finance, LLC at 9 and, in between, JPMorgan Chase Bank, National Association at 12. For the 504 program Michigan Certified Development Corporation holds 23 loans and $13.1 million. SBA states who holds a loan today, and nothing here describes any institution's practices or what it would ask of an applicant.

Cancellations and the charge-off record

Cancellations after approval reach at least 11.5% for loans approved in FY2017 to FY2024, and as many as 15.1% once loans still undisbursed are added. Charge-offs so far stand at no less than 3.2% across the 216 loans in the FY2017 to FY2021 group that funded. No five-year charge-off rate is printed: Loan Analytics withholds it for Detroit restaurants given the loan count behind it, and the omission does not imply none failed.

Testing a Detroit-area restaurant

With small tickets, a restaurant here lives or dies on occupancy cost and a realistic sales ramp, so a feasibility study should price rent or ownership against sales that comparable rooms in the specific suburb or city neighborhood actually achieve, rather than against a metro average. It should show how debt service coverage holds if the first year opens slowly, and whether the equipment and working capital sit inside the modest median. Because cancellation after approval is common here, the study should also record what happens to the plan if financing falls through at the last stage. A Detroit-area loan counts only if its project county falls inside the July 2023 statistical area.