Restaurant Feasibility Study in the Nashville-Davidson--Murfreesboro--Franklin, TN Metro Area

Nashville restaurants: second in the area, mid-table nationally

Restaurants hold the number two position among the 39 classes in the Nashville area, behind only one other kind of business, yet nationally the area stands only 47 of 821 for sit-down restaurant lending. SBA files list 125 loans from FY2017 to FY2026, $95.1 million gross. The location quotient of 0.88x says restaurants carry a slightly smaller share of local loans than they do of the national book. Davidson County has 64 loans, Williamson 23, Rutherford 14, Wilson 8 and Maury 7.

The median loan is $400,000, 1.45x the national figure for the class. The bottom quartile starts at $100,000 and the top quartile reaches $1.1 million, a wide corridor between small requests and large ones. The franchise share is 18.4%. The Nashville restaurant row for program split is blank because Loan Analytics holds back both its 7(a) figure and its 504 figure.

Holders worth reading with care

Pinnacle Bank (TN) leads in dollars, $20.3 million across 16 loans. U.S. Bank, National Association also has 16 loans, but only $736,300 in all, a book of very small tickets. Next are The Huntington National Bank (15 loans, $3.7 million), Newtek Bank, National Association (7 loans, $2.1 million) and First Horizon Bank (5 loans, $6.8 million). The contrast between two banks with the same count and wildly different dollars is a reminder that count alone says little about a lender's footprint. SBA files list holdings; they do not describe what a lender wants from a restaurant request.

Cancellations and the missing charge-off figure

A cancellation floor of 16.7% applies to approvals through FY2024, which is high enough that a lender may reasonably want leases and permits in hand before committing. Loan Analytics withholds both the upper bound on cancellations and the charge-off rate here; no number appears for either, and a gap is not a zero.

The median of $400,000 against a class ranking of 2 of 39 shows that restaurants are common borrowers in Nashville and that their loans run large. A request below the $100,000 quartile edge sits in the lowest quarter of the file, and one above $1.1 million sits in the highest. A study should place the project on that spectrum and explain what the dollars buy.

Our study for a Tennessee restaurant would test the corridor and its parking, rent against projected sales, labor cost, and the coverage ratio on a request near $400,000. Davidson, Williamson, Rutherford, Wilson and Maury restaurants make up the 125 once each county passes a lookup in the July 2023 delineation; a restaurant that fails the lookup joins no metro, so 125 is a minimum.