Feasibility Study Company Independent Feasibility Analysis

Restaurant & Foodservice · Asset Class

Restaurant & Foodservice Feasibility & Market Studies

Independent, lender-grade analysis for restaurant and foodservice going-concern credits across SBA 7(a) and 504, USDA Business and Industry, conventional bank, and equipment or bridge capital. This page is our standing read on where the restaurant market stands, why the recovery is complete on dollars but not on traffic, how ramp-up and prime-cost forecasts fail review, and the difference between the market study, the feasibility study, and the going-concern appraisal a lender requires.

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$1.5T
2025 foodservice sales projected1
42%
Operators not profitable in 20252
26%
Independent first-year failure, not the 90% myth4
19.8%
SBA limited-service historical default rate7
The Restaurant Thesis

Feasibility, not appetite, is the constraint.

A restaurant is not underwritten like a building. An operating restaurant is a going-concern credit, real estate or leasehold plus FF&E and equipment plus business and goodwill, valued and lent against as a business rather than as passive real estate. That single distinction governs every deliverable a restaurant file needs. The industry is large, recovered, and structurally thin: the National Restaurant Association projects $1.5 trillion in 2025 foodservice sales and 15.9 million employees, yet net margins run just 3 to 9 percent, 42 percent of operators reported they were not profitable in 2025, and restaurants remain the highest-default sector in SBA lending history.127 Demand is not the question. Feasibility is.

The market itself is defined by a divergence the headline number hides. The post-COVID recovery is complete on a dollar basis but incomplete on traffic: same-store sales have grown on price and menu mix, not guest counts, and same-store traffic has been persistently negative through most of 2025.8 The segment split has converged, with USDA data showing full-service and limited-service sales nearly even at $552.7 billion and $550.7 billion in 2024.3 Beneath that, the sharpest axis of feasibility risk is franchised versus independent: franchised concepts offer FDD Item 19 performance benchmarks and higher underwriting confidence, while independents have no proven unit economics. And the fulcrum of viability is prime cost, food plus labor, which discipline must hold under roughly 60 to 65 percent of sales even as the Association estimates food and labor costs have each risen about 35 percent over five years.210

What follows is organized as a working desk: a national supply and demand monitor with the regional labor-cost matrix, the ramp-up and prime-cost failure forensics that sink restaurant studies, the capital-source routing that decides which deliverable a project needs, and the study-type distinctions competitors state loosely. Every figure is dated and attributed in the sources below.

The National Supply & Demand Monitor

Where the restaurant market stands, market by market.

A demand, cost, and opportunity read for the major US regions and restaurant market types, compiled from named primary sources. Data current through late 2025 and early 2026; 2025 sales and 2026 outlook figures are projections and are labeled as such.

The national picture frames every region. The National Restaurant Association projects total foodservice sales of $1.5 trillion in 2025, up more than 4 percent nominally, with employment of 15.9 million across more than one million outlets, and the industry surpassed $1 trillion in restaurant-specific sales for the first time in 2024.1 Yet the structure is thin: net margins run 3 to 9 percent, 42 percent of operators reported they were not profitable in 2025, and 60 percent said conditions deteriorated.2 The segment split has essentially converged, with USDA Economic Research Service data showing full-service supplying $552.7 billion and limited-service $550.7 billion of food sales in 2024, full-service edging past for the first time since the pandemic.3 One basis caveat matters for any comparison to prior years: the Association's 2025 report adopted a new sales-estimation methodology based on the USDA Food Expenditure Series, so headline sales are not strictly comparable to pre-2025 figures.1

Opportunity read: Favorable Steady Margin pressure Thin data. Restaurant operating data is genuinely thin at the metro level; unlike hotels or multifamily there is no standardized metro AUV or traffic dataset, so this reads by region and market type, not a false-precision metro leaderboard. Any metro-specific figure should be treated as directional.
Region / market type Demand drivers Segment tilt 2025 sales trend / labor floor Read
California / West CoastHigh income, tourism, denseFast-casual, QSR, fine diningWeakest region since March 2025; CA negative same-store$20 fast-food wage, Apr 2024Margin pressure
SoutheastIn-migration, lower costQSR, casual, franchisedAmong strongest 1- and 2-year growthBlack Box; FRANdata output +6.2%Favorable
SouthwestIn-migration, business-friendlyQSR, fast-casualRanked among top for sales growthFRANdata +8.5% output, highestFavorable
MidwestStable population, value-orientedFamily dining, QSR, casualStrong 1- and 2-year growthValue positioning resonatesSteady
Northeast / New EnglandHigh income, dense, tourismFine dining, casual, FSRNew England among best mid-2025FRANdata output +2.6%, mutedSteady
Rural / small-metroLower density, USDA-eligibleIndependent FSR, QSR franchisesNot separately trackedUSDA B&I financing availableThin data

Regional matrix compiled from Black Box Intelligence regional same-store data, IFA and FRANdata regional output-growth forecasts, and state minimum-wage schedules, 2025–2026; see sources 8, 14, and 18. The single most underwriteable regional variable is the state and local labor-cost environment, driven by minimum wage. Metro-level figures for individual cities are directional only.

Growth is price-led, not traffic-led

The defining feature of the 2023–2025 recovery is that the top line has grown on price and menu mix, not guest counts. Black Box Intelligence data through 2025 show industry same-store sales modestly positive, roughly +1.1 percent in April rising to +2.3 percent in August 2025, while same-store traffic stayed persistently negative, from −1.5 percent to −0.2 percent over the same months.8 Only about 43 to 47 percent of tracked brands posted positive same-store sales in mid-2025, and Black Box's December 2025 review found growth almost entirely price- and mix-driven, with forward guidance calling for continued softening into a weak first half of 2026.9 The underwriting consequence is direct: a forecast that layers traffic growth on top of price growth is doubly optimistic in the current environment.

The “ninety percent fail” claim is a myth

No statistic in this sector is more misused than the failure rate. The claim that 90 percent of restaurants fail in year one is false, and lenders should not underwrite to it. The definitive study, Parsa, Self, Njite and King in the Cornell Hotel and Restaurant Administration Quarterly (2005), found 26.16 percent of independent restaurants failed in year one, about 19 percent in year two, and 14 percent in year three, for cumulative three-year closure near 57 to 62 percent, and only a marginal franchise-versus-independent gap of 57.2 versus 61.4 percent.4 Ohio State University's summary quotes Parsa directly that the 90 percent figure “seems to be a myth ... that is harmful to the restaurant industry,” and that if lenders believe it, serious entrepreneurs cannot get funding.5 Later work by Luo and Stark (2014) and the Bureau of Labor Statistics puts first-year closure closer to 17 to 17.5 percent.6 Failure is real and cumulative, but front-loaded first-year catastrophe is overstated, and “closure” conflates voluntary sale and retirement with financial failure. This is genuinely contested, single-market data and should be treated as such.

Prime cost is the fulcrum, and California's wage reset the floor

Restaurant viability is governed by prime cost, food and beverage cost of goods sold plus total labor as a share of sales. Food cost typically runs 28 to 35 percent and labor 25 to 36 percent, with the Association's 2025 Restaurant Operations Data Abstract reporting full-service labor at a median 36.5 percent of sales and full-service income before taxes of just 2.8 percent.10 Baker Tilly and Restaurant365 put the target prime cost at 60 to 65 percent for full-service and 55 to 60 percent for quick-service, above which profit becomes extremely difficult, and WhippleWood's 2026 benchmark citing NRA data pegs average food cost near 32.4 percent.1112 The single largest cost shock is labor: California's AB 1228, effective April 1, 2024, raised the fast-food minimum wage to $20 an hour at chains with 60-plus locations, and the evidence on employment effects is contested, with the Harvard Shift Project finding no adverse effect while Clemens, Edwards and Meer via the Cato Institute estimated a 2.7 percent employment decline, roughly 18,000 jobs.1819 For underwriting, a California QSR pro forma must carry a prime-cost floor closer to 58 to 62 percent; a single national labor assumption is a documented modeling error.

Going-concern value is not the net-lease basis

One valuation distinction sits underneath every restaurant credit. A single-tenant net-lease QSR property, a corporate-guaranteed McDonald's or Chick-fil-A ground lease, is real estate valued on tenant credit and lease term, and The Boulder Group put overall single-tenant net-lease cap rates at 6.79 percent in mid-2025, with corporate QSR credits the most aggressively priced net-lease assets, McDonald's at 4.30 to 4.60 percent and Chick-fil-A at 4.20 to 4.50 percent on 15-year terms.13 An operating franchisee's business is a different asset entirely, a going concern valued on EBITDA or seller's discretionary earnings at far higher risk. Meanwhile franchising remains a large, financing-enabling structure: the IFA and FRANdata project 851,000 US franchise establishments in 2025, roughly 9 million jobs, and $936.4 billion of output.14 Conflating a 4-to-5 percent net-lease cap rate with the going-concern value of an operating restaurant is one of the most consequential errors in the sector.

Common Review Failures

How restaurant feasibility and ramp-up forecasts fail review.

The sales ramp, prime cost, and capitalization are the variables a credit committee and SBA reviewer scrutinize most, and the places restaurant studies most often break. Each failure below is tied to a real mechanism or number.

  1. Mature AUV assumed in month one instead of a ramp curve

    New restaurants ramp over 12 to 24 months to stabilized volume, with quick-service breakeven often 1 to 2 years, fast-casual 2 to 3, and full-service 3 to 5. A pro forma that assumes mature-unit average unit volume, or FDD Item 19 system-average sales, from month one is the single most common failure mode; underwriters should model a graduated ramp and stress the stabilization date.2417

  2. Prime cost below segment norms without justification

    A forecast showing prime cost under 55 percent for full-service or 52 percent for quick-service, without a documented reason, is not credible. Given post-2019 inflation, in which the Association estimates food and labor costs each rose about 35 percent in five years, sensitivity to a 100-to-300-basis-point food or labor increase should be modeled explicitly.210

  3. The franchised-versus-independent divide, mishandled

    Independents have no proven unit economics; franchised units carry FDD Item 19 performance representations plus franchisor training and marketing. But royalties and ad-fund fees, typically 4 to 8 percent of sales, plus the initial franchise fee compress margin and must be in the model. A franchised pro forma that omits royalties, or an independent one with no comparable benchmark, both fail review.14

  4. Site, trade-area, and daypart errors

    Parsa's research identified location as the number-one failure factor, with restaurants in poor locations failing at rates above 80 percent within three years “regardless of food quality,” and found restaurant density and ownership turnover strongly correlated. Daypart concentration, a breakfast-only or dinner-only concept, and trade-area demographic mismatch are frequent forecast errors.5

  5. Labor and wage-cost underestimation

    Restaurant turnover is structurally high, and replacement costs run more than $10,000 per manager and above $16,000 per general manager, with hourly replacement near $2,706 per Black Box Intelligence. Underestimating the wage line in a high-minimum-wage market, where the prime-cost floor can sit 4 to 6 points higher, is a documented killer.819

  6. Occupancy cost and delivery-commission margin erosion

    Rent and facility cost above roughly 8 to 10 percent of sales kills restaurants; “rent is a check that clears when traffic doesn't.” Blending third-party delivery revenue into total sales without accounting for 15-to-30-percent platform commissions overstates margin, since against 3-to-5-percent net margins an un-repriced delivery order can erase the profit on the plate.920

  7. Undercapitalization and DSCR-constrained sizing

    Undercapitalization is repeatedly cited as the number-one killer: the cash-flow ramp must be funded through stabilization, commonly 6 to 12 months of operating shortfall plus debt service, and SBA now requires a 10 percent equity injection for startups and changes of ownership. A debt-service schedule that assumes stabilized cash flow from month one will breach coverage during the ramp.22

Capital-Source Routing

Which channel funds the project, and what it requires.

Restaurants route through distinct capital sources, and each requires a different deliverable and coverage standard. The study is built to the union of requirements across the channels actually in play, and the first question is always the segment and franchised-versus-independent classification, which determines everything downstream.

The restaurant lender matrix
Deliverable and program convention by capital source. Parameters are current-cycle conventions, not universal minimums, and should be reverified at application.22
Capital sourceDeliverableProgram convention
SBA 7(a)Going-concern feasibility (working capital, leasehold, equipment, franchise fees, goodwill)$5M max; 75–85% guarantee; 10% equity injection
SBA 504Feasibility for owner-occupied real estate and major fixed assets51% existing / 60% new occupancy; 50/40/10
USDA B&I (rural)Owner-operated going-concern feasibility85% under $5M / 80% $5M+; ~$25M max; to 40 years
Conventional / bankIncome and cash-flow underwriting; franchised preferredProven unit economics; harder for independents
Equipment / bridge / MCAFF&E financing or short-term bridgeMCA flagged high-cost, 5–15%+ default

Sources: SBA SOP 50 10 8 (effective June 1, 2025); USDA Rural Development OneRD term sheets; PeerSense SBA loan data; Crestmont Capital. See sources 7, 22, and 23.

Restaurants, especially franchised quick-service, are one of the most common SBA 7(a) uses, and hospitality and food service is the single largest recipient of SBA loans by transaction count, roughly 18 to 22 percent of 7(a) approvals in a given year.22 The 7(a) program dominates over 504 because it can fund working capital, leasehold improvements, equipment, franchise fees, business acquisition, and goodwill, and restaurant real estate is often leased; PeerSense data show 504 used in only about 6 percent of limited-service and 11 percent of full-service restaurant SBA loans, and average approved loan sizes near $223,000 for limited-service and $483,000 for full-service.7 The reinstated SBA Franchise Directory, effective June 1, 2025 under SOP 50 10 8, is the gate for franchised eligibility: if a brand is listed it is eligible, and brands that did not execute the new franchisor certification by July 31, 2025 were removed.22

  • Franchised quick-service startup or new unitSBA 7(a); confirm the brand is on the SBA Franchise Directory and obtain FDD Item 19.22
  • Independent full-service startupSBA 7(a) with substantially higher equity and secondary collateral, or decline for an inexperienced operator.
  • Owner-occupied, general-purpose restaurant real estateSBA 504, subject to the 51% existing or 60% new owner-occupancy test.
  • Rural owner-operated restaurant (population under 50,000)USDA Business & Industry under the OneRD Guarantee Loan Initiative.23
  • Change of ownership with goodwillSBA 7(a) with an independent going-concern business valuation confirming the goodwill allocation is financeable.22
  • Proven multi-unit franchised operatorConventional bank or equipment financing where unit economics support it.
Study Types

Market study, feasibility study, appraisal: three questions.

These three documents answer different questions and are not substitutes. Sponsors and even some lenders conflate them constantly; SBA reviewers and credit committees do not.

What each document answers, and the standard that governs it.
DocumentQuestion answeredGoverning standard
AppraisalWhat is it worth? A going-concern (business enterprise) value combining real estate or leasehold, FF&E, and business goodwill.USPAP / Interagency Guidelines
Market studyIs there demand? Trade area, daypart mix, competition, and supportable sales.Trade-area demand analysis
Feasibility studyDoes it cover its costs and its debt? The market study plus the ramp, prime cost, and DSCR test.Lender + SBA underwriting

The distinction that governs a restaurant file is that an operating restaurant is valued as a going concern, not as real estate alone: the total business is real estate or leasehold, plus FF&E and equipment, plus business and goodwill including any liquor license and franchise rights, typically valued on the income approach or a multiple of EBITDA or seller's discretionary earnings with an allocation among those components.24 Going-concern value can far exceed the underlying real estate; in some restaurants the real estate is less than half of total value. That is the “kiss of death” risk: on failure the goodwill evaporates and FF&E liquidates at steep discounts, often real estate reduced about 30 percent “dark” and FF&E reduced about 75 percent, leaving collateral worth a fraction of the loan. Banks generally cannot lend real-estate dollars against goodwill, which is precisely why the SBA guarantee, which can finance goodwill, dominates restaurant acquisitions.22

One valuation boundary and one scope boundary are worth stating. A single-tenant net-lease QSR property, a corporate-guaranteed ground lease trading at a 4-to-7 percent cap rate, is not valued as a going concern; it is real estate on the tenant's credit, and going-concern logic must never be applied to it.13 And while a lender or the SBA will typically require a Phase I Environmental Site Assessment on owned real estate, the feasibility or market-study author does not perform the Phase I or II ESA; that is a separate environmental professional's engagement.24

Restaurant sub-segments, each with a distinct study scope

Restaurant Questions

Restaurant feasibility and market-study questions.

What is the difference between a restaurant market study and a feasibility study?

For a restaurant the two are related but distinct. A market study assesses the trade area, demand drivers, daypart mix, competition, and the sales a location can reasonably support; it answers whether the demand exists. A feasibility study goes further, testing whether the projected operation can generate enough cash flow to cover operating costs and debt service once a realistic 12-to-24-month sales ramp, segment-appropriate prime cost, franchise royalties, and delivery commissions are modeled, and whether stabilized debt-service coverage clears the lender's threshold. Because an operating restaurant is a going-concern credit, the feasibility study is the core lender and SBA deliverable; the appraisal then concludes on value.

Is a restaurant valued as a business or as real estate?

As a going concern, not as real estate alone. An operating restaurant is the sum of its real estate or leasehold, its FF&E and equipment, and its business or goodwill, including any liquor license and franchise rights, and it is valued on the income approach or a multiple of EBITDA or seller's discretionary earnings with an allocation among those components. Going-concern value can far exceed the underlying real estate; in some restaurants the real estate is less than half of total value. That creates the kiss-of-death risk: on failure the goodwill evaporates and FF&E liquidates at steep discounts, so a single-tenant net-lease QSR property, valued purely on tenant credit and lease term at a 4-to-7 percent cap rate, must never be confused with an operating franchisee's going-concern credit.

Can a restaurant be financed with an SBA loan?

Yes, and it is one of the most common SBA uses. The 7(a) program funds working capital, leasehold improvements, equipment, franchise fees, business acquisition, and goodwill, which is why it dominates restaurant lending over the real-estate-only 504 program; hospitality and food service is the single largest recipient of SBA loans by transaction count. Under SOP 50 10 8, effective June 1, 2025, startups and changes of ownership require a 10 percent equity injection, the minimum business credit score rose to 165, and franchised brands must appear on the reinstated SBA Franchise Directory for streamlined eligibility. The maximum 7(a) loan is $5 million, guaranteed 75 to 85 percent.

Is the claim that ninety percent of restaurants fail in the first year true?

No. It is a myth the academic literature has repeatedly debunked, and lenders should not underwrite to it. The definitive study, Parsa, Self, Njite and King in the Cornell Hotel and Restaurant Administration Quarterly (2005), found 26.16 percent of independent restaurants failed in year one, not 90 percent, with roughly 19 percent in year two and 14 percent in year three, for cumulative three-year closure near 57 to 62 percent. Separate work by Luo and Stark (2014) and the Bureau of Labor Statistics puts first-year closure closer to 17 percent. Failure is real and cumulative, a majority of independents close within three to five years, but front-loaded first-year catastrophe is overstated, and closure often conflates voluntary sale or retirement with financial failure.

What is prime cost, and what should it be?

Prime cost is the sum of food and beverage cost of goods sold plus total labor, expressed as a percentage of sales, and it is the fulcrum of restaurant viability. Food cost typically runs 28 to 35 percent of sales and labor 25 to 36 percent, with the combined prime cost targeted under roughly 60 to 65 percent, full-service toward the top of that band and quick-service toward 55 to 60 percent. Above 65 percent it becomes extremely difficult to make a profit. A pro forma showing prime cost below segment norms, under 52 to 55 percent, without a documented reason is not credible, and loss-making full-service operators typically carry labor cost about 8 points higher than profitable peers.

How did California's twenty-dollar fast-food wage change restaurant underwriting?

California's AB 1228, effective April 1, 2024, raised the minimum wage to $20 an hour for fast-food employees at chains with 60 or more national locations, one of the largest single-industry wage jumps in U.S. history. The evidence on employment effects is genuinely contested: a Harvard Shift Project brief found large wage gains with no adverse effect on hours, while Clemens, Edwards and Meer, in NBER Working Paper 34033 via the Cato Institute, estimated California fast-food employment fell about 2.7 percent, roughly 18,000 jobs. For underwriting the actionable point is settled: a California QSR pro forma must carry a materially higher labor line, a prime-cost floor closer to 58 to 62 percent, than an identical concept in a low-wage state. A single national labor assumption applied across markets is a documented modeling error.

Can a rural restaurant be financed with a USDA loan?

Yes. Restaurants in eligible rural areas, meaning locations not in a city or town of more than 50,000 people, can access the USDA Business and Industry Guaranteed Loan Program. Under the OneRD framework the FY2026 guarantee is 85 percent for loans under $5 million and 80 percent for loans of $5 million or more, up to a $25 million standard maximum, with terms as long as 40 years by asset life. USDA confirms most retail and service businesses are eligible, and a September 2025 assessment to the House Agriculture Committee noted nearly $4 billion invested in accommodations and food services from 2015 to 2024, explicitly including restaurants.

By Market

Restaurant feasibility studies by state.

Restaurant demand, daypart mix, and the labor-cost floor are local. Explore the state markets where trade-area spending, competition, and the minimum-wage environment determine whether a concept pencils.

Underwriting a restaurant or franchise? Start with the ramp and the prime cost.

A methodology briefing walks through the analytical framework, the deliverable your capital source requires, and the current demand, cost, and program data for your segment, concept, and market.

Request a methodology briefing
Sources

Data sources and dates.

Every figure on this page traces to a named authority. Restaurant readings are provider-dependent and often labeled by basis; failure-rate and franchise-survival data are genuinely contested and are flagged as such throughout.

  1. National Restaurant Association, 2025 State of the Restaurant Industry report (February 6, 2025): projected $1.5 trillion 2025 foodservice sales (about 4% nominal growth), 15.9 million employment, more than 1 million outlets, and the new USDA Food Expenditure Series estimation methodology (a basis change versus prior years).
  2. National Restaurant Association, 2026 State of the Restaurant Industry report: 42% of operators not profitable in 2025, 60% reporting deteriorating conditions, net margins of 3–9%, and the estimate that food and labor costs each rose about 35% over five years.
  3. USDA Economic Research Service (2024): full-service $552.7 billion versus limited-service $550.7 billion of foodservice food sales; full-service (36.4%) edging past limited-service (36.3%) of food-away-from-home spending; food-away-from-home CPI 4.1% (2024), 3.8% (2025), ~3.6% forecast (2026); farm and wholesale beef prices (May 2026).
  4. Parsa, Self, Njite & King, “Why Restaurants Fail,” Cornell Hotel and Restaurant Administration Quarterly, Vol. 46, No. 3 (2005), pp. 304–322: 26.16% first-year independent failure, ~57–62% cumulative three-year closure, and a marginal franchise/independent gap (57.2% vs. 61.4%), Columbus, Ohio sample, 1996–1999.
  5. Ohio State University, news.osu.edu summary of Parsa et al.: the “90 percent is a myth” quotation, location as the number-one failure factor (poor sites failing above 80% in three years), and the density/ownership-turnover correlation.
  6. Luo & Stark (2014) and U.S. Bureau of Labor Statistics: ~17% first-year failure for independent full-service restaurants and ~17.5% first-year closure for accommodation-and-food-service establishments.
  7. PeerSense SBA loan database (records 1992–2025): 19.8% historical default for limited-service (NAICS 722211) versus 4.4% for full-service (NAICS 722511); 504 usage of ~6% (LSR) and ~11% (FSR); average approved loan ~$223,000 (LSR) and ~$483,000 (FSR). Single commercial aggregator; treated as directional.
  8. Black Box Intelligence, monthly reviews through 2025: same-store sales (+1.1% April to +2.3% August 2025) and persistently negative traffic (−1.5% to −0.2%); management replacement cost >$10,000 (>$16,000 GM) and hourly replacement ~$2,706.
  9. Black Box Intelligence, December 2025 review (via The Level Index / Level CFO): price- and mix-led growth; 43–47% of brands positive in mid-2025; loss-making full-service labor 42.9% versus 34.2% for profitable peers; softening outlook into H1 2026.
  10. National Restaurant Association, 2025 Restaurant Operations Data Abstract (released August 2025, 900+ operators): full-service labor median 36.5% of sales, limited-service prime cost ~65 cents per sales dollar, and income before taxes (FSR 2.8%, LSR 4.0%) for 2024.
  11. Baker Tilly and Restaurant365: prime-cost guidance (FSR 60–65%, QSR 55–60%; above 65% “extremely difficult” to profit); occupancy-cost target of 5–10% of sales.
  12. WhippleWood CPAs (April 2026 benchmark, citing NRA 2026): industry-average food cost ~32.4% of sales.
  13. The Boulder Group, Q2 2025 Net Lease Research Report (early July 2025) and Q1 2026 report (President Randy Blankstein): overall single-tenant net-lease cap rate 6.79%; retail 6.57%; corporate QSR credits McDonald's 4.30–4.60% (15-year), Chick-fil-A 4.20–4.50%, Wawa 4.90–5.20%. Single-provider; a real-estate basis distinct from going-concern value.
  14. IFA / FRANdata, 2025 Franchising Economic Outlook (February 5, 2025): 851,000 U.S. franchise establishments, 9+ million jobs, $936.4 billion output (+4.4%), and regional output-growth forecasts. The 2026 Outlook shows a revised base (845,000 establishments; $907.3–$921.4 billion output); the base discrepancy is flagged.
  15. USDA Economic Research Service and Nation's Restaurant News / Kalinowski Equity Research (June 2025): restaurant menu-price inflation peaking at 8.8% (March 2023) and moderating to ~3.8% by mid-2025, above the ~3.4% historical average; food-at-home up ~2.3% (2025).
  16. Terrapin Construction Group (2026): fast-casual AUV $3–4.5 million; buildout $385–$675/sq ft and $14,000–$26,000/seat ground-up; QSR $375–$625/sq ft; full-service casual highest.
  17. Jack in the Box 2026 FDD (system-average gross sales $1,913,335 for the 12 months ended September 30, 2025); Raising Cane's ~$6 million AUV (QSR Magazine, 2024); Jersey Mike's 2026 IPO disclosures via Restaurant Dive ($1.4 million AUV, 16% store margin, $515,000 buildout); FRANdata (2023): ~21% of new concepts QSR, sub-$500,000 investment. AUV is FDD Item 19 gross sales, computed inconsistently across brands.
  18. California AB 1228, $20 fast-food minimum wage effective April 1, 2024, for chains with 60+ national locations (an approximate 8% sector-relative increase per NBER Working Paper No. 34033).
  19. Clemens, Edwards & Meer, NBER Working Paper No. 34033 (July 2025), via Cato Institute Research Brief No. 458 (November 5, 2025), using BLS QCEW data: California fast-food employment down 2.7% (~18,000 jobs); Harvard Shift Project brief (October 2024): no adverse employment effect; CNN Business (May 2, 2025): franchisee hour cuts; TRIS (2026): California QSR prime-cost floor 58–62%. Contested; both sides cited to avoid single-source bias.
  20. DoorDash, Uber Eats, and Grubhub commission tiers (DoorDash Basic 15% / Plus 25% / Premier 30%; all-in often 30–40%); Norvet MSP (2026): ~42.9% menu markup to net the same margin against a 30% commission.
  21. Ghost-kitchen contraction: Deloitte via CNBC (February 2024, “overestimated”); IBISWorld (~$2.9 billion U.S. revenue, −5.2% in 2024); CloudKitchens facility closures and delayed Middle East IPO (late 2025); Euromonitor's earlier $1 trillion-by-2030 projection. Estimates diverge widely; the U.S. segment is contracting.
  22. U.S. Small Business Administration, SOP 50 10 8 (effective June 1, 2025): SBA Franchise Directory reinstatement, 10% equity injection for startups and changes of ownership, collateral required above $50,000, minimum 165 business credit score, IRS tax-transcript verification, and 51%/60% owner-occupancy tests; Crestmont Capital's reading of SBA data (hospitality/food service ~18–22% of 7(a) approvals; MCA default 5–15%+).
  23. USDA Rural Development (rd.usda.gov, current as of 2026): Business & Industry Guaranteed Loan Program, “rural” as population under 50,000, ~$25 million standard maximum, FY2026 guarantee 85% (under $5M) / 80% ($5M+) under the OneRD framework (7 CFR Part 5001), terms up to 40 years; House Agriculture Committee assessment (September 18, 2025) noting nearly $4 billion invested in accommodations and food services, 2015–2024. Parameters change annually via Federal Register notice.
  24. Restroworks (2024): segment breakeven timelines (QSR 1–2 years, fast-casual 2–3, full-service 3–5); Elliott & Company, Restaurant Analytics, and the Appraisal Institute, with the Interagency Appraisal Guidelines and USPAP: going-concern (business enterprise) valuation and the required allocation among real estate/leasehold, FF&E, and business/goodwill; Phase I ESA is a separate environmental-professional engagement.