Case Study · Washington · Coffee Shop · SBA 7(a)
Coffee Shop Feasibility Study, Washington — An SBA 7(a) Worked Case
This is how our independent feasibility study company and consultant team analyzed a new double-drive-thru specialty coffee project underwritten to an SBA 7(a) credit, from trade-area and morning-commute drive-thru demand through the debt-service coverage a lender must document. It is a representative, anonymized worked example of the methodology — not a specific client deal — set in a fast-growing suburban commuter trade area in a major Washington metro.
A dual-lane drive-thru on a Washington commuter arterial.
A sponsor came to our feasibility study company with a ground-up specialty-coffee project and an SBA 7(a) lender that needed the projected cash flow independently tested before it would commit. The subject is a roughly 0.7-acre pad on a suburban commuter arterial carrying about 24,000 vehicles per day, in a fast-growing outer-ring submarket of a major Washington metro. The build program is a compact, roughly 1,000-square-foot building configured for a double (dual-lane) drive-thru, with a walk-up window and a small patio, operated by the owner rather than leased to a tenant.
Because a coffee shop is a going-concern operating business rather than passive real estate, the lender's question is not “what is the dirt worth” but “can this specific site generate the cars, tickets, and margin to service this specific loan.”7 Coffee is not a named special-purpose property the way a gas station or car wash is, so the standard going-concern path applies; but as a ground-up build with no operating history, it is precisely the kind of project for which an SBA lender expects an independent feasibility study.8 Our scope was the independent demand, drive-thru throughput, competition, and debt-service analysis that supports that credit.
Representative and anonymized. Every figure below is illustrative of a typical engagement of this type; the site, corridor, and parties are composited, not a real named borrower, address, or completed transaction.
Trade-area and morning-commute drive-thru demand.
The demand read starts with people, cars, and the morning daypart, not a capture rate applied to a traffic count. The three-mile ring holds roughly 55,000 residents in a growing suburban submarket, layered over strong peak-directional commuter flow on the arterial.
Coffee demand is at a multi-decade high and behaves as a durable daily habit: 66 percent of US adults drank coffee in the past day in 2025, a 20-year high, and a record 59 percent of out-of-home purchases were made at a drive-thru, up 9 percent year over year.2 The Pacific Northwest is the origin market for the drive-thru format and carries the country's highest specialty consumption, which is a real tailwind for a well-sited specialty store — and a reason the competitive set is taken seriously rather than assumed away.2 Volume, though, is set at the lane, not the billboard: drive-thru throughput benchmarks run 60 to 300 customers per 30,000 morning vehicles, with 50 to 70 percent of the day's volume concentrated in the 6-to-10 a.m. window and window times of roughly 30 to 45 seconds.3 A dual-lane forecourt on the morning-commute side of a 24,000-vehicle arterial, with a growing residential base behind it, supports a stabilized run rate near 600 transactions a day at an average ticket around $7.25 — a defensible placement above the typical independent's $400,000 to $800,000 average unit volume but well below the $2.1-to-$2.55-million volumes the leading national drive-thru brands report.3 On roughly 360 operating days, that supports stabilized revenue near $1.57 million.
| Demand driver | Basis | Supported figure |
|---|---|---|
| Trade-area population (3-mi ring) | ~55,000 residents, growing suburban submarket | Rising captive base |
| Corridor traffic | ~24,000 vehicles/day, peak-directional AM/PM | Primary trip capture |
| Stabilized transactions | Dual-lane drive-thru; 50–70% in the 6–10 a.m. daypart3 | ≈ 600 cars/day |
| Average ticket | Specialty-coffee daypart mix (beverage + food attach)2 | ≈ $7.25 |
| Stabilized revenue | ~600 cars × ~$7.25 × ~360 operating days | ≈ $1.57M/yr |
Transaction, daypart, and average-unit-volume logic grounded in National Coffee Association demand data and drive-thru throughput benchmarks; see sources 2 and 3. Figures are illustrative of the engagement type.
A mature coffee culture, but a thin drive-thru corner.
Six coffee competitors sit within three miles, but only one is a true dual-lane drive-thru rival, and the strongest walk-up brands sit on the wrong side of the morning commute. The corridor is well-caffeinated on paper and underserved on format.
| Competitor | Type / tier | Format | Distance | Read |
|---|---|---|---|---|
| Competitor A | National brand | Cafe + single drive-thru | 0.9 mi | Nearest; cross-corridor, off-peak AM side |
| Competitor B | Franchised drive-thru | Dual-lane drive-thru | 1.6 mi | The one direct format rival |
| Competitor C | Regional drive-thru | Single drive-thru | 2.1 mi | Off the peak-commute path |
| Competitor D | Independent cafe | Sit-down, no drive-thru | 1.3 mi | Dwell-focused; thin AM throughput |
| Competitor E | QSR with coffee | Drive-thru | 2.7 mi | Coffee secondary to food |
| Competitor F | Independent kiosk | Walk-up stand | 2.4 mi | Limited capacity, no lane |
Competitive set surveyed for the engagement; anonymized. Announced and permitted supply was scanned, not just the standing set, consistent with institutional site-selection practice — a chain drive-thru opening within a half-mile can trigger deliberate sales transfer.3
The read is not “empty market” — the Pacific Northwest is saturated with coffee — but format-and-position undersupply. Only one competitor within three miles is a true dual-lane drive-thru, and it sits more than a mile and a half away; the nearest national brand is on the far, off-peak side of the corridor's morning flow, where a left turn against traffic sheds exactly the habitual commuter the format depends on. A rigorous study does not stop at the standing set: it scans announced and permitted supply so the capture forecast is not quietly overstated by a chain lane the trailing data cannot yet see.3 Here the subject wins on the two variables coffee feasibility turns on most — a dual-lane forecourt that clears queues at peak, and a hard position on the morning-commute, right-turn-inbound side of the road.
Washington macro: a coffee tailwind, a cost headwind.
The state backdrop is favorable for a suburban drive-thru, tempered by an above-average operating-cost load. Washington reached 8,035,700 residents as of April 1, 2024, growing by 84,550 in a single year with roughly 82 percent of the gain from net migration.
More than two-thirds of that growth landed in the five largest metro counties, exactly the fast-growing suburban ring where a drive-thru pad pencils, and Washington carries no personal income tax and ranks among the country's strongest in-migration states.1 Culturally, this is coffee's home court: the Pacific Northwest is the origin market for the drive-thru format and carries the nation's highest specialty consumption, so the daily-habit demand thesis underwriters rely on is, if anything, stronger here than the national average.2 A statewide read would be a mistake, though — Washington runs three divergent economies, and a suburban Puget Sound commuter corridor behaves nothing like Spokane or the rural Columbia Basin — which is why the analysis is built to this submarket rather than a state average.1
The offsetting reality is cost, and for a labor-intensive coffee box it is decisive. Washington carries one of the highest state minimum wages in the country, rising again in 2026, which pushes the labor line to the upper end of the 25-to-35-percent range coffee already runs.4 The state also levies a Business & Occupation gross-receipts tax and a combined sales tax of roughly 7.7 to 10.35 percent, and Cascadia seismic design is a real line item on a ground-up build rather than a rounding error.11 The feasibility test therefore turns on whether a genuinely strong revenue line survives a heavier-than-average cost structure and still covers a highly leveraged basis — not on optimistic top-line growth. On the capital side the backdrop cuts the sponsor's way: the SBA's combined 7(a)-plus-504 ceiling rose to $10 million effective July 4, 2026, and Washington is served by a deep 7(a) lending channel through the SBA Seattle District Office.10
Why the corner captures the morning.
Daytime population, household income, and growth all point the same direction, and the intersection geometry converts that demand into cars in the lane during the only daypart that matters most.
The three-mile trade area carries a suburban household-income profile comfortably above the level at which specialty attach rates and food-pairing strengthen, and a daytime population inflated by the outbound morning commute. Coffee is intensely site-dependent — visibility, ingress and egress, stacking configuration, and above all being on the morning-commute, right-turn-inbound side of the road — and the subject holds that position, where habitual AM traffic can enter without crossing oncoming lanes.3 That is the difference between a site that captures the 6-to-10 a.m. rush and one that watches it pass on the far curb.3
Geometry does the rest. Demand is intensely concentrated in the morning — 50 to 70 percent of drive-thru volume occurs in that four-hour window — so peak throughput, not all-day average, sets the revenue ceiling. A single-lane stand chokes at the exact moment the business is made, and too many cars in a line actively drives customers away; the subject's dual-lane forecourt clears the queue that would spill at a smaller site and lets the store convert the rush it is positioned to catch.3 The model credits the subject with a run rate above a typical independent precisely because the format and the corner defend it — and grades the afternoon and evening dayparts as structurally thinner, which is why the ramp and the stabilized ticket are built on the morning, not an assumed even day.
The SBA 7(a) structure.
Total project cost lands at $2.10 million. The 7(a) program can finance the owner-occupied real estate, the equipment, and working capital in a single loan, which is why an owner-operated, ground-up drive-thru routes here rather than to a fixed-asset-only 504.
| Cost component | Amount |
|---|---|
| Land (~0.7-acre pad) | $0.52M |
| Site work, dual drive-thru lanes & utilities | $0.35M |
| Building shell (~1,000 sf) | $0.50M |
| Equipment & FF&E (espresso systems, drive-thru tech, refrigeration) | $0.36M |
| Signage, canopy & menu boards | $0.085M |
| Soft costs, design, permits & contingency | $0.18M |
| Working capital & pre-opening reserves | $0.105M |
| Total project cost | $2.10M |
Buildout and equipment allocation grounded in coffee-shop cost ranges: a full-service or drive-thru cafe runs roughly $150,000–$400,000+ and equipment is 15–40% of buildout, with a commercial espresso machine alone at $5,000–$20,000+. See source 6.
| Item | Figure |
|---|---|
| SBA 7(a) loan (90%) | $1.89M |
| Borrower equity injection (10%) | $0.21M |
| Term / amortization | Blended: 25-yr on real estate, 10-yr on FF&E / working capital |
| Illustrative rate | ~10.25% (Prime + ~2.75%) |
| Annual debt service (fully amortizing) | ≈ $242k |
Structure per SBA 7(a) conventions under SOP 50 10 8; owner-occupancy 60% for new construction; single-loan 7(a) cap $5M; 7(a) up to 25 years with real estate, 10 years for equipment and working capital. See sources 8 and 9.
The equity injection sits at the baseline 10 percent, not the elevated 15-to-20 percent an SBA lender demands for a special-purpose start-up. That is deliberate and grounded: a coffee shop is generally not a special-purpose property, so the standard going-concern path and the baseline injection apply, even though the ground-up, no-operating-history profile still makes an independent feasibility study expected.89 The 7(a) finances the owned pad, the shell, the espresso and drive-thru equipment, and pre-opening working capital in one facility — the real reason it beats a 504 here, which would not cover the working-capital line. Because part of the loan sits on real estate and part on shorter-lived equipment, it amortizes on a blended basis — 25 years on the real-estate portion, 10 years on FF&E and working capital — and at an illustrative 10.25 percent (Prime plus roughly 2.75) annual debt service is about $242,000. In Washington the credit routes through the SBA Seattle District Office and an active bench of 7(a) Preferred Lenders, with the combined 7(a)-plus-504 ceiling lifted to $10 million in 2026.10 That $242,000 is the number the projected coverage has to clear.
Feasible and bankable, on coverage the credit can document.
The stabilized model builds beverage-and-food gross profit at coffee's high drink-level margin, nets a heavier-than-average Washington labor and operating load, and carries the coverage to the SBA floor and well beyond — but only after a graded ramp.
| Line | Basis | Amount |
|---|---|---|
| Revenue | ~600 cars/day × ~$7.25 × ~360 days | ≈ $1,566k |
| COGS | ~30% of revenue; elevated green-coffee cost5 | ≈ ($470k) |
| Beverage & food gross profit | ~70% gross margin4 | ≈ $1,096k |
| Labor | ~28% of revenue at stabilization (WA wage load)4 | ≈ ($438k) |
| Other operating expense | Card fees, utilities, R&M & reserve, insurance, property tax, marketing, supplies, G&A | ≈ ($270k) |
| Store-level EBITDA | Gross profit less labor and operating expense | ≈ $388k |
Store-level EBITDA of ~$388k is ~24.8% of revenue; because the building is owner-occupied there is no rent line, so debt service (below) replaces occupancy cost. Beverage gross margins of 70–80%+ compress to a thin net after labor, COGS, and operating expense. See sources 4 and 5.
| Year | Stage | Revenue | Store-level EBITDA | Debt-service basis | DSCR |
|---|---|---|---|---|---|
| Year 1 | Ramp (~390 cars/day) | ~$1.02M | ~$213k | Interest-only ~$194k | 1.10 |
| Year 2 | Building (~510 cars/day) | ~$1.33M | ~$327k | Full amortizing ~$242k | 1.35 |
| Year 3 | Stabilized (~600 cars/day) | ~$1.57M | ~$388k | Full amortizing ~$242k | 1.60 |
DSCR computed as store-level EBITDA divided by the period debt-service obligation. The ramp to full transaction volume runs 9–18 months, so Year 1 is graded to roughly two-thirds of stabilized cars/day. See sources 4 and 9 for the ramp and ~1.15x coverage conventions.
The stabilized 1.60x coverage is the figure the lender documents, and it clears the SBA's roughly 1.15x floor with real headroom.9 By Year 2 the project already covers fully amortizing debt service at 1.35x. The Year 1 figure of 1.10x is intentionally thin — it is the ramp year — which is exactly why the structure carries an interest-only bridge through stabilization: a new shop must build a customer base and a daily-habit routine over 9 to 18 months, and DSCR must be sized on that ramped, not stabilized, cash flow.4 Projecting stabilized volume or an 18-percent net margin from opening is one of the most common ways these coffee pro formas fail review; the ramp here is deliberately graded from roughly 390 cars a day to 600. The model was also stress-tested on the sector's signature risk: holding green coffee at or above its 2025 record for 12 to 24 months lifts COGS toward the top of its range, and the credit still clears the SBA floor in that downside because the beverage margin and the dual-lane volume absorb it.5
On the equity side, the $0.21 million injection earns growing levered free cash flow — roughly breakeven in the interest-only ramp year, building past $100,000 a year once stabilized and net of an FF&E replacement reserve for espresso systems, drive-thru technology, and refrigeration. The exit is valued on a going-concern basis, not a leased-fee cap rate: an owner-operated coffee shop is a business, and a single stabilized specialty operator is valued on a disciplined multiple — independents commonly trade around 1.5x to 3x SDE, with the specialty segment nearer 4x to 6x EBITDA — entirely distinct from a net-leased Starbucks or Dutch Bros ground lease priced as real estate on tenant credit at a sub-6-percent cap.7 Capitalizing a Year-10 store-level EBITDA near $0.46 million on that going-concern basis, net of the outstanding SBA balance and selling costs, implies net equity in the roughly $1.7-to-$1.8-million range; the blended result is an illustrative levered equity IRR of about 25 percent over a 10-year hold.
Verdict: financially feasible and bankable. On independently derived demand, a stabilized 1.60x DSCR, and a ~25% levered equity IRR, the projections support the SBA 7(a) credit.
Independent demand, drive-thru throughput, competition, and DSCR stress.
The engagement was scoped the way a credit committee reads it. As an independent feasibility consultant, our role is to test the sponsor's projection against the market, not to restate it — the value of the deliverable is precisely that it carries no stake in the outcome. The subject is an independent operator with no franchise brand or FDD Item 19 average-unit-volume data to lean on, so operator experience and this site-specific study carry the file; a franchised deal would instead require the brand to be listed on the SBA Franchise Directory before proceeds could be disbursed.12 We derived transaction volume from morning directional traffic, the trade-area base, and the competitive set, then capped it at the lane's physical car-stacking and speed-of-service limit rather than applying a flat capture rate to a traffic count. Revenue was modeled on a graded 9-to-18-month ramp at through-cycle margins, with the afternoon and evening dayparts held structurally thinner than the morning.3
The coverage analysis was then stress-tested. We ran debt-service coverage against transaction-volume downside and, critically, against a sustained elevated green-coffee scenario — holding the bean at or above its 2025 record for 12 to 24 months — because commodity cost is a live margin risk rather than a historical footnote.5 One scope boundary is worth stating plainly: as the feasibility consultant, we reference, but do not perform, the Phase I environmental site assessment, with attention to any prior site use such as a former gas station or dry cleaner; that is a separate environmental professional's engagement that runs in parallel to the study.8 That combination — independent demand, throughput, competition, and a stressed DSCR — is what lets the lender rely on the file.
Representative engagement
This is an anonymized, illustrative worked example of our methodology, built on market data current to 2026; figures are representative of a typical engagement of this type and do not depict a specific client, site, or completed transaction.
Underwriting a Washington coffee shop for an SBA loan? Start with the feasibility study.
Feasibility Study Company prepares independent coffee shop and drive-thru feasibility studies for SBA 7(a) and 504 credits, built to the coverage standard your lender must document. A methodology briefing walks through the demand, drive-thru throughput, competition, ramp, and DSCR analysis behind a case like this one, calibrated to your corridor and format.
Request a methodology briefingData sources and dates.
The deal figures are illustrative of the engagement type; the market data that grounds each dimension is real and sourced, drawn from our standing Washington, Coffee Shop & Cafe, and SBA 7(a) & 504 analyses and the primary authorities they cite.
- Washington State Office of Financial Management (OFM), April 1, 2024 population estimates (state 8,035,700; +84,550 in 2024, ~82% net migration; more than two-thirds of growth in the five largest metro counties; no state personal income tax), as compiled in the firm's Washington market analysis.
- National Coffee Association, National Coffee Data Trends (“The Atlas of American Coffee”), Spring and Fall 2025: 66% past-day consumption (a 20-year high), a record 48% specialty past-day, and a record 59% of out-of-home purchases at a drive-thru (up 9% year over year); the West carries the country's highest specialty consumption (58% past-week) and is the origin market for the drive-thru format.
- QSR Magazine (2024–2025), CoffeeFest, and the Scooter's, 7 Brew, and Dutch Bros FDD / earnings disclosures: drive-thru throughput of 60–300 customers per 30,000 morning vehicles (6–10 a.m.), 50–70% of volume in the morning daypart, 30–45-second window times; drive-thru AUVs of ~$2.1M (Dutch Bros system) to ~$2.55M (7 Brew FDD) and ~$885,355 system / $1,276,780 top-quartile (Scooter's) against a typical independent's $400,000–$800,000; the morning-commute side of the road and half-mile chain transfer as documented site-selection factors.
- VantaInsights (2026), Roast Launch (2026), and BusinessDojo (2025–2026): coffee COGS of 25–35% and labor of 25–35% of revenue, beverage gross margins of 70–80%+, net margins of ~2.5–7% for a typical shop and 12–18% stabilized in years two–three, and a 9–18-month ramp with a year-one net margin of 0–6% or a small loss; 2026 state minimum-wage increases pressuring the labor line.
- Perfect Daily Grind and Food & Wine (February 2025), Perfect Daily Grind (October 2025), and the U.S. Chamber of Commerce / CPI with Mintel (2026): ICE arabica futures at an all-time record above $4.30 per pound in early February 2025 (peaking near $4.41), the highest since the 1977 Brazil frost, remaining elevated near $3.10–$3.50 through year-end, and U.S. retail coffee prices up 18.3% year over year as of January 2026.
- Buildout-cost sources — joe Coffee, Restroworks, BusinessCostHQ, Bellwether, and 7shifts (2025–2026): a full-service or drive-thru cafe buildout of roughly $150,000–$400,000+, equipment at 15–40% of total startup cost, and a commercial espresso machine at ~$5,000–$20,000+.
- BizBuySell Coffee Shop & Cafe Valuation Benchmarks (2025), CT Acquisitions (2026), Peak Business Valuation, and Westwood Net Lease / SRS Real Estate Partners / The Boulder Group (2025): going-concern multiples of ~1.5x–3x SDE for an independent single unit (BizBuySell average ~2.23x in 2025) and ~4x–6x EBITDA for the specialty segment, against net-leased coffee (STNL) cap rates around ~5.25% (Dutch Bros) and ~5.65% (Starbucks) — a distinct real-estate basis that must never be conflated with going-concern value.
- U.S. Small Business Administration SOP 50 10 8 (effective June 1, 2025) and 13 CFR 120.160(b): a feasibility study is discretionary but expected for startup and ground-up projects with no operating history; owner-occupancy of 51% (existing) or 60% (new construction); the 7(a) can finance real estate, equipment, and working capital in one loan; and a coffee shop is generally not a named special-purpose property, so the standard going-concern path (including a lender-required Phase I ESA performed by a separate environmental professional) applies.
- SBA SOP 50 10 8: single-loan 7(a) cap of $5 million; 7(a) terms up to 25 years with real estate and 10 years for equipment and working capital; baseline equity injection generally 10% (higher for startup and special-purpose deals); and the SBA/504 debt-service-coverage convention of roughly 1.15x or higher, sized on ramped rather than stabilized cash flow for a new shop.
- U.S. Small Business Administration, Seattle District Office directory (2026): serves all of Washington except four southwest counties (Portland District); offices in Seattle and Spokane; Washington-active 7(a) Preferred Lenders include WaFd, Columbia, and Banner, with 504 credits routing through Evergreen Business Capital (Puget Sound) and the Northwest Business Development Association (Eastern Washington); combined 7(a)-plus-504 cap raised to $10 million effective July 4, 2026 (SBA Policy Notice / News Release 26-52).
- Holland & Knight, RSM, and Kiplinger (2025), with USGS and the Washington Department of Natural Resources: Washington levies no personal income tax but a Business & Occupation gross-receipts tax and a combined sales tax of 7.7%–10.35%; and Cascadia Subduction Zone and Seattle Fault seismic-design provisions are a material ground-up cost and underwriting factor priced per project rather than assumed away.
- U.S. Small Business Administration SOP 50 10 8 (reinstated Franchise Directory) and the Scooter's Coffee FDD, with the GoSBA 2025 SBA FOIA analysis: a franchised coffee brand must be listed on the SBA Franchise Directory before franchise loan proceeds can be disbursed, franchise fee loads such as Scooter's 6% royalty plus a 2% brand fund compress owner earnings, and roughly 10% of SBA loans go to franchises — the franchised-versus-independent divide underwritten here as an independent operator with no FDD Item 19 data to lean on.