Restaurant Feasibility Study in the Tucson, AZ Metro Area

Tucson: a second-place class with a thin share and a heavy ticket

Full-service restaurants rank second among Tucson's classes, 2 of 39, but the location quotient is only 0.65x and the metro is 104 of 821 for the class, so restaurants weigh less in Tucson borrowing than in borrowing elsewhere. The 46 loans, worth $35.3 million between FY2017 and FY2026, come with a median of $456,000, which is 1.66x the national figure. Fewer, larger loans define the cell.

The shape of the loans

Half of the amounts fall between $223,500 and $1.2 million, a wide band reaching into seven figures. The 7(a) program accounts for 40 loans and 504 for 6. The franchise share is withheld. No lender has enough loans to be named, and all 46 loans carry Pima County as their project county.

Only three years can be printed: 9 loans in FY2017 ($5.0 million), 5 in FY2018 ($2.2 million) and 10 in FY2019 ($4.8 million). Every year from FY2020 to FY2026 is withheld, together with the cancellation and charge-off rates. A reader therefore sees nothing about the pandemic years or the recent past, and that silence does not mean lending stopped. Lenders who want recent patterns must look elsewhere. Tucson loans enter the metro through Pima County on the 2023 list.

A thin calendar changes how the page should be used. With only three years printed, a lender cannot judge from this cell whether Tucson restaurant lending has grown or shrunk, which puts the burden on the study to bring evidence on recent restaurant openings, closings and sales in the trade area. The 104 of 821 national rank and the 0.65x location quotient say Tucson is an ordinary place to lend to restaurants, and a request well above the median of $456,000 will draw more questions than one near it.

Testing a Tucson restaurant plan

With a median above the national figure and a band reaching past a million dollars, a study here must justify scale. That means documenting the trade area's demand, including residents and any seasonal visitors the plan counts on, the sales of comparable full-service restaurants, rent or purchase cost against those sales, and the cost of kitchen, dining room and patio. The study should show debt service coverage with a soft opening and a summer lull if the concept depends on seasonal trade. An appraisal will test the business income. Nothing here predicts an approval.