Restaurant Feasibility Study in the Phoenix-Mesa-Chandler, AZ Metro Area

A top class that is thin against the national share

Sit-down restaurants top the Phoenix area's list, placed 1 of 39 in SBA's local loan mix, with 348 loans and $232.4 million approved between FY2017 and FY2026. Yet the location quotient is only 0.70x, so the share of lending going to these restaurants is smaller than the national share. The two facts fit together once the size of the area is considered. Phoenix places 19 of 821 metro and micro areas for the class, a high placement earned by volume, while restaurants here are a lighter part of the local book than in the typical American market.

Loan size and the unusual 504 weight

The median loan of $408,500 is 1.49x the class midpoint nationwide; loans between the quartiles run $160,500 to $850,325. The program split is the other feature to note: 297 of the 348 loans are SBA 7(a), but 51 are SBA 504, a sizeable group for a restaurant class. Franchised concepts account for only 14.7% of loans, so independent operators set the tone, and a study must establish a concept's economics from its own plan and not from a brand's disclosure.

Lenders and geography

At the head of the 504 list stands The Mortgage Capital Development Corporation with 27 loans and $30.5 million, ahead of Arizona Capital Source at 12 and $9.5 million. Of the 7(a) holders, JPMorgan Chase Bank, National Association is credited with 22 loans and $12.5 million, Newtek Bank, National Association at 17 and $7.5 million, Midwest Regional Bank at 13 and $4.1 million, and both Wells Fargo Bank National Association and PNC Bank, National Association at 11. Each entry reports who holds or held a loan, which tells a reader nothing about appetite or policy. Maricopa County accounts for 335 loans and Pinal County for 13.

Outcomes, withheld values and the study

Among FY2017 to FY2024 approvals, at least 12.4% were cancelled after approval, a floor. Loan Analytics withholds two values for this cell, since fewer loans than the printing rule requires stand behind them: the ceiling for cancellations and the rate of charge-offs. Hidden does not mean zero, and no estimate is offered. Phoenix membership comes from putting each project county on the 2023 metro map, so a county that fails the name match removes its loans. Before a sit-down restaurant is financed here, the study should test seat demand against competing supply in the specific trade area, build-out and kitchen equipment cost against the loan range, debt service coverage when a large share of the debt may be real-estate backed, and the appraisal.