Restaurant Feasibility Study in the Worcester, MA Metro Area

Worcester: small restaurant loans, settled cancellations

Worcester records 79 full-service restaurant loans over FY2017 to FY2026, amounting to $28.3 million, every one of them in Worcester County. Locally restaurants are the top class, first among 39, and the area stands 66 of 821 for the class; its 0.78x location quotient puts restaurants beneath the nationwide weight. The median loan of $208,000 is 0.76x the national midpoint, between quartiles of $87,500 and $467,500. Cancellation after approval is 19.0% among FY2017 to FY2024 approvals, while the upper bound, which treats undisbursed loans as cancelled, gives 19.0% again, so the figure is exact.

A strong 504 share and named holders

Of the 79 loans, 56 are 7(a) and 23 are 504, about a quarter on the real-estate program. In 504, Worcester Business Development Corporation holds 7 loans worth $3.9 million and Bay Colony Development Corporation 6 worth $3.6 million. In 7(a), Avidia Bank is credited with 9 loans worth $5.8 million, Santander Bank, National Association with 7 worth $904,400, TD Bank, National Association with 6 worth $376,500, and Eastern Bank and Cornerstone Bank (MA) with 5 each, worth $1.2 million and $575,800. SBA's holder records say nothing of anyone's policy.

What is withheld

Two figures are kept out for lack of loans, the franchise share and the charge-off rate, and neither is zero. Several yearly counts are blank too: FY2019 and FY2021 are not published, while FY2017 shows 13 loans and $3.2 million and FY2025 16 loans and $7.0 million, the high point, against 5 loans and $1.1 million in FY2026.

The study

Cancellation here is a settled 19.0% and the median loan is $208,000. A study here has to test whether the concept and its financing are ready before approval is relied on: seat demand against nearby operators, lease terms or purchase price, build-out cost against loans near the median, the case for 504 if the building is bought, and cash flow through slow months. A loan is counted only when its project county name is found on the 2023 metro map, so applicants outside that county should not read the figures as covering their own market.