Restaurant Feasibility Study in the Washington-Arlington-Alexandria, DC-VA-MD-WV Metro Area

A top-ten restaurant market across four jurisdictions

The Washington-Arlington-Alexandria area ranks 9 of 821 metropolitan and micropolitan areas for full-service restaurant loans, and restaurants head the list of 39 classes in the area, 1 of 39. SBA approved 609 such loans worth $311.0 million during the FY2017 to FY2026 window. With a location quotient of 1.16x, the class is somewhat more common in this area's lending than in the nation's. The area spans the District and parts of Virginia, Maryland and West Virginia, and the busiest counties in the file are Fairfax County, VA with 133 loans, the District of Columbia with 115 and Montgomery County, MD with 96.

Loan size sits close to the national pattern: the median of $281,400 is 1.02x the national median for the class. The spread is wide, with the middle half running from $60,000 to $668,700, which puts small fit-outs and large build-outs in one file. SBA 7(a) carried 570 loans and SBA 504 carried 39. Franchise flags appear on 9.7% of loans, which leaves independents as the large majority of borrowers.

Holders of record

SBA lists the lender now holding each loan, and the rows below follow that convention. Manufacturers and Traders Trust Company holds 156 of the 7(a) loans, worth $28.6 million. TD Bank, National Association holds 47 worth $5.0 million, Hanmi Bank 35 worth $18.8 million, Newtek Bank, National Association 23 worth $7.7 million and Northeast Bank (ME) 23 worth $4.6 million. Hanmi's holdings are fewer but much larger per loan than the others. For 504, Business Finance Group, Inc. holds 17 worth $19.1 million and Rappahannock Economic Development Corporation 14 worth $15.5 million. Holding a loan is a fact about a portfolio, not a rule about what a lender will accept.

Cancellation after approval was at least 13.1% for FY2017 to FY2024 approvals and 14.9% at the ceiling. The disbursed cohort of 224 loans, FY2017 to FY2021, shows no less than 10.7% charged off to date and no less than 7.1% within five years of approval; later losses keep posting, so both are floors. Approvals dipped to 31 in FY2021 and climbed to 87 in FY2025, worth $49.2 million.

What a study here has to test

Because the area crosses jurisdictions, a study must pick the actual submarket: license rules, taxes and parking requirements differ between the District and its suburbs, and so do rents. Demand should be tested against daytime workers, residents and event traffic separately, since a restaurant near a federal office cluster has a different week than one in a residential town center. Cost needs a realistic build-out schedule and a ramp for a new liquor license. Debt service coverage should survive a slow opening year, and the appraisal should treat equipment and leasehold value cautiously. A loan enters this count only if its project county is placed in the July 2023 delineation; one from Loudoun or Prince William with an unplaceable county simply drops out.