Case Study · Georgia · Quick-Service Restaurant · SBA 7(a)
Quick-Service Restaurant Feasibility Study, Georgia — An SBA 7(a) Worked Case
This is how our independent feasibility study company and franchise QSR feasibility consultant team analyzed a new-build drive-thru quick-service restaurant underwritten to an SBA 7(a) credit, from trade-area demand and a defensible average unit volume 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 on a fast-growing suburban commuter corridor in a major Georgia metro.
A new franchised drive-thru on a Georgia commuter arterial.
A franchisee-sponsor came to our feasibility study company with a ground-up quick-service restaurant and an SBA 7(a) lender that needed the projected cash flow independently tested before it would commit. The subject is a roughly 0.9-acre outparcel on a commuter arterial carrying about 35,000 vehicles per day, in a fast-growing exurban submarket of metro Atlanta. The build program is a 2,400-square-foot freestanding prototype for a national franchised QSR brand, with a dual-lane drive-thru sized for the format that now drives the category.
Because a QSR franchise is a going-concern operating business rather than a passive real-estate play, the lender's question is not “what is the pad worth” but “can this specific site generate the average unit volume, margin, and coverage to service this specific loan.”6 And because SBA eligibility runs through the Franchise Directory, the brand must be listed and the franchisor must have executed the SBA Franchisor Certification before the credit can proceed — a binary gate we confirm at the outset.3 Our scope was the independent demand, AUV, ramp, franchise-load, 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, brand, and parties are composited, not a real named franchisee, address, or completed transaction.
Trade-area demand and a site-specific AUV.
The demand read starts with people, trips, and dayparts, not the franchisor's system-average sales dropped onto a new store. The three-mile ring holds roughly 55,000 residents growing about 2.5 percent a year, layered over strong peak-directional commuter flow on the arterial.
Average unit volume is the primary value driver, and it is the single most misread figure in QSR. Disclosed AUV diverges wildly by brand — McDonald's 2024 FDD Item 19 reported average annual sales of $3,966,000 against a median of $3,797,000, while Taco Bell sits near $2.1 million, Wendy's near $2.06 million, and Jack in the Box near $2.03 million.4 Item 19 is voluntary under the FTC Franchise Rule, survivorship-biased because it reflects only open units, and expressly not a guarantee, so a defensible underwriting AUV is tied to the specific site, never to the system average.4 Against the subject brand's higher disclosed average, and grounded in the trade-area population, daytime commuter flow, and the competitive set, the model carries a conservative site-specific stabilized AUV of about $2.40 million — below the brand's system average, and reached only after a graded one-to-three-year ramp rather than on opening day.6 Off-premise now accounts for more than 70 percent of revenue at leading brands and the drive-thru still carries about 65 percent of QSR orders, so throughput, not seat count, sets the ceiling.9
| Demand driver | Basis | Supported figure |
|---|---|---|
| Trade-area population (3-mi ring) | ~55,000 residents, growing ~2.5%/yr (exurban Atlanta)1 | Rising captive base |
| Daytime population & commuter flow | ~35,000 vehicles/day, peak-directional AM/PM | Lunch + PM daypart capture |
| Occasion base | Food-away-from-home ~55% of U.S. food spending9 | Deep, growing demand pool |
| Stabilized AUV placement | Site-specific read below the brand's Item 19 average4 | ≈ $2.40M/yr |
| Format / off-premise mix | Drive-thru ~65% of QSR orders; off-premise >70% at leading brands9 | Throughput-led volume |
AUV and Item 19 logic grounded in disclosed franchisor data and QSR unit economics; see sources 4, 6, and 9. Figures are illustrative of the engagement type.
A format-and-daypart gap on a growing corridor.
Six QSR competitors sit within roughly three miles, but only one shares the subject's brand tier and dual-lane drive-thru format, and the corridor is adding rooftops faster than it is adding modern drive-thru pads.
| Competitor | Segment | Format | Distance | Read |
|---|---|---|---|---|
| Competitor A | National burger | Single-lane drive-thru | 0.7 mi | Nearest; aging inline, throughput-capped |
| Competitor B | National chicken | Dual-lane drive-thru | 1.2 mi | Strongest defender; newer pad, daypart overlap |
| Competitor C | Coffee & beverage | Drive-thru only | 1.5 mi | AM daypart; limited lunch/dinner overlap |
| Competitor D | Regional Mexican | Drive-thru + dine-in | 1.8 mi | Value-led, dated building |
| Competitor E | National sandwich/sub | Inline, no drive-thru | 2.1 mi | Weak off-premise; no drive-thru capture |
| Competitor F | National pizza | Carryout / delivery | 2.6 mi | Different occasion; low direct overlap |
Competitive set surveyed for the engagement; anonymized. Announced and permitted QSR pads were scanned, not just the standing set, consistent with institutional site-selection practice.
Only one competitor within the ring — the nearest burger unit — is a direct same-segment rival, and it runs a single drive-thru lane that clears roughly 120 cars an hour against 180-plus for a modern dual lane, a genuine throughput ceiling on a busy commuter corridor.7 The strongest defender (Competitor B) is a newer chicken pad a mile-plus away with real daypart overlap, and the model credits it as such rather than assuming the subject captures an empty corridor. A rigorous study does not stop at the standing set: it scans announced and permitted QSR pads so the AUV forecast is not quietly overstated by drive-thrus the trailing data cannot yet see. Here the read is a genuine format-and-daypart gap — the subject's dual-lane prototype fills unmet lunch and evening demand on the going-home side rather than splitting a saturated trade area.
Georgia macro: a favorable Sun Belt QSR corridor.
The state backdrop is a tailwind for a suburban drive-thru unit. Sun Belt suburban Georgia is among the most favorable QSR development environments in the country: car-centric demographics, available pad sites, and a construction and labor cost base below the coastal metros.
Georgia sits squarely in the primary QSR growth corridor. Its car-centric suburban form favors drive-thru pad development, pads remain available on outer-ring arterials, and Southeast construction runs roughly 10 to 20 percent below the national average, so the same prototype pencils at a lower basis here than in a high-cost coastal metro.7 Just as important is the labor floor: Georgia's minimum wage tracks near the federal level, a structural advantage against California's $20 fast-food wage — labor is 25 to 28 percent of QSR sales, so the wage environment is the single most consequential geographic cost variable.59 The demand base is real and local: metro Atlanta added roughly 75,000 residents in the Vintage 2024 estimates, and exurban counties are among the fastest-growing in the country, with Dawson up 6.4 percent and Jackson up 5.8 percent over 2020–2024 — exactly the rooftop growth a new drive-thru corridor needs.1
The capital backdrop is equally deep. Georgia ranked about fifth nationally in SBA 7(a) dollar volume in calendar 2025 at roughly $1.35 billion across some 2,047 loans, all 159 counties are served by a single SBA Georgia District Office in Atlanta, and Live Oak Bank — the number-one 7(a) lender by dollar volume in fiscal 2025 — is active alongside Georgia-heavy franchises such as Ameris, Synovus, and Truist.10 Two recent changes enlarge bankable deal size: the SBA's combined 7(a)-plus-504 ceiling rose to $10 million effective July 4, 2026, and Georgia moved to a flat 4.99 percent state income tax for 2026.1112 The one Georgia-specific risk a careful study still prices is storm exposure: Hurricane Helene crossed the state in September 2024 and produced catastrophic inland damage — Augusta-area losses exceeded $500 million and one Atlanta portfolio reported a 35 percent insurance-premium jump — so the pro forma carries inland wind and a realistic property-insurance load, not just coastal surge.12
Why the corner captures the corridor.
Household growth, daytime population, and intersection geometry all point the same direction, and the dual-lane drive-thru converts that demand into throughput.
The three-mile trade area carries a median household income near $82,000 — comfortably in the band where QSR frequency and average-check hold up — and a daytime population inflated by the outbound morning commute and the inbound evening return. The growth rate near 2.5 percent a year means trailing Census counts understate the captive base, a common exurban distortion a careful study corrects for rather than extrapolates.1
Geometry does the rest. The subject occupies a hard-corner pad on the going-home side of a signalized intersection, where peak-directional evening traffic decelerates and turns — the highest-conversion position on the corridor for the impulse drive-thru trip. The dual-lane configuration clears roughly 180-plus cars an hour where a single lane would cap near 120, protecting the lunch and dinner dayparts from the queue balk that quietly truncates volume at a poorly configured site.7 The nearest same-segment competitor's aging, single-lane box cannot match that throughput, which is why the model credits the subject with a defensible, site-specific AUV rather than importing a saturated-corridor capture rate.
The SBA 7(a) structure.
Total project cost lands at $3.60 million. The 7(a) program can finance the franchise fee, buildout, equipment, working capital, and the owner-occupied real estate in a single loan, which is why an owner-operated, ground-up QSR routes here rather than to a fixed-asset-only 504.
| Cost component | Amount |
|---|---|
| Land (~0.9-acre commuter-corridor pad) | $0.80M |
| Site work & utilities | $0.45M |
| Building shell (2,400 sf drive-thru prototype) | $0.90M |
| Kitchen equipment & FF&E | $0.55M |
| Drive-thru, canopy & signage | $0.25M |
| Initial franchise fee | $0.05M |
| Soft costs & contingency | $0.35M |
| Working capital & pre-opening | $0.25M |
| Total project cost | $3.60M |
All-in development before land is consistent with the $1.3M–$2.5M range for a freestanding drive-thru QSR, with Southeast cost running below the national average. See source 7.
| Item | Figure |
|---|---|
| SBA 7(a) loan (90%) | $3.24M |
| Borrower equity injection (10%) | $0.36M |
| Term / amortization | 10-year term / 25-year blended amortization |
| Illustrative rate | ~10.25% (Prime + 2.75%) |
| Annual debt service | ≈ $360k |
Structure per SBA 7(a) conventions under SOP 50 10 8; owner-occupancy 60% for new construction; single-loan 7(a) cap $5M; 10% equity injection and minimum business credit score 165. See sources 2 and 3.
The equity injection sits at the SBA baseline of 10 percent, which the deal earns precisely because the brand is listed on the reinstated Franchise Directory and the franchisor has executed the SBA Franchisor Certification — the streamlined-eligibility gate that lets a franchised start-up clear at the standard injection rather than a heavier one.3 At $3.24 million the loan sits comfortably under the $5 million single-loan 7(a) ceiling, so the franchise fee, buildout, equipment, working capital, and owner-occupied real estate all fund within one 7(a) facility.2 On a 25-year blended amortization at an illustrative 10.25 percent (Prime plus 2.75), annual debt service is about $360,000 — the number the projected coverage has to clear. The study exists to support exactly that: the debt-service coverage the lender must document to approve the credit, tested against an independent read of demand rather than the franchisee's own projection.
Feasible and bankable, on coverage the credit can document.
The stabilized model builds four-wall cash flow from a site-specific AUV, nets prime cost and the franchise load off the top, and carries the coverage to the SBA floor and beyond on a graded ramp.
| Line | Basis | Amount |
|---|---|---|
| Stabilized AUV (Year 3) | Site-specific, below the brand's Item 19 average4 | $2.40M |
| Food & paper (COGS) | ~29% of sales5 | ($0.70M) |
| Labor | ~28.5% of sales (Georgia wage floor)5 | ($0.68M) |
| Other operating (utilities, R&M, insurance, supplies, controllables) | ~12% of sales | ($0.29M) |
| Franchise royalty | 5% of sales5 | ($0.12M) |
| Ad-fund contribution | 3% of sales5 | ($0.07M) |
| Four-wall EBITDA (before occupancy / debt) | 22.5% four-wall margin | ≈ $0.54M |
Prime cost of ~57.5% (food plus labor) sits inside the 55–65% range, the 8% royalty-plus-ad load comes off the top, and the 22.5% four-wall margin is within the 12–30% range for well-run units. Because the real estate is owner-occupied and financed by the 7(a) loan, the rent line is replaced by debt service, so four-wall EBITDA is the cash available for debt service. See sources 5 and 9.
| Year | Stage | AUV | Four-wall EBITDA | Debt-service basis | DSCR |
|---|---|---|---|---|---|
| Year 1 | Ramp (interest-only bridge) | ~$1.92M (80%) | ~$350k (18.2%) | Interest-only ~$332k | 1.05 |
| Year 2 | Building | ~$2.21M (92%) | ~$470k (21.3%) | Full amortizing ~$360k | 1.30 |
| Year 3 | Stabilized | ~$2.40M (100%) | ~$540k (22.5%) | Full amortizing ~$360k | 1.50 |
DSCR computed as four-wall EBITDA divided by the period debt-service obligation. See source 11 for the ~1.15x coverage convention.
The stabilized 1.50x coverage is the figure the lender documents, and it clears the SBA's roughly 1.15x floor with real headroom.11 By Year 2 the unit already covers fully amortizing debt service at 1.30x. The Year 1 figure of 1.05x is intentionally slim — it is the ramp year — which is exactly why the structure carries an interest-only bridge through stabilization: the bridge covers the ramp, and permanent, fully amortizing coverage is measured once the unit reaches its supportable AUV. Modeling day-one AUV at the Item 19 system average, or mature-unit margins in Year 1, is the single most common way these pro formas fail review; the ramp here is deliberately graded, and the franchise royalty and ad-fund load are modeled off the top rather than buried in operating expense.6
On the equity side, the $0.36 million injection earns growing levered free cash flow — roughly $18,000 in the interest-only ramp year, building toward about $150,000 a year once stabilized and net of an FF&E and franchise-reimaging reserve that funds the mid-hold remodel most franchise agreements mandate. The exit is valued on a going-concern basis and never conflated with a net-lease cap rate: a single owner-operated unit is a business, so capitalizing a Year-10 stabilized four-wall cash flow near $0.62 million at a conservative single-unit going-concern multiple — cross-checked against a franchisee-guaranteed net-lease value at roughly a 6.80 percent cap, wider than the 5.82 percent corporate and 4.40 percent McDonald's ground-lease prints — implies a gross sale near $3.7 million and roughly $1.0 million of net equity after selling costs and the ~$2.83 million outstanding SBA balance.8 Holding AUV roughly flat once stabilized, rather than assuming perpetual same-unit sales growth, the blended result is an illustrative levered equity IRR of about 23 percent over a 10-year hold.
Verdict: financially feasible and bankable. On an independently derived, site-specific AUV, a stabilized 1.50x DSCR, and a ~23% levered equity IRR, the projections support the SBA 7(a) credit.
Independent AUV, ramp, franchise load, 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 franchisee's projection against the market, not to restate it — the value of the deliverable is precisely that it carries no stake in the outcome. We derived a site-specific AUV from trade-area population, daytime commuter flow, and the competitive set, then placed it below the brand's Item 19 average rather than importing the system number, and we graded it over a one-to-three-year ramp. The franchise royalty and ad-fund load were modeled explicitly, off the top, and the four-wall margin was built from through-cycle prime cost, not a best-case peak.
The coverage analysis was then stress-tested. We ran the debt-service coverage against AUV and margin downside — the two variables a QSR is most exposed to — to confirm the credit still holds through the ramp trough when sales open slower or labor and food cost run hot. Two scope boundaries are worth stating plainly: as the feasibility consultant we distinguish the going-concern operating value from any net-lease real-estate value and do not conflate the two, and we reference, but do not perform, the Phase I environmental site assessment, which is a separate environmental professional's engagement run in parallel to the study.13 That combination — independent AUV and ramp, the franchise load off the top, 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 Georgia QSR for an SBA loan? Start with the feasibility study.
Feasibility Study Company prepares independent quick-service restaurant feasibility studies for SBA 7(a) and 504 credits, built to the coverage standard your lender must document. A methodology briefing walks through the AUV, ramp, franchise-load, competition, and DSCR analysis behind a case like this one, calibrated to your brand, 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 Georgia, Quick-Service Restaurant, and SBA 7(a) & 504 analyses and the primary authorities they cite.
- U.S. Census Bureau, Vintage 2024 Population Estimates (metro Atlanta ~6.4M, adding ~75,000 residents; fast-growing exurban counties including Dawson +6.4% and Jackson +5.8% over 2020–2024), released 2025, as compiled in the firm's Georgia market analysis.
- 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 special-purpose properties, startups, and ground-up construction; owner-occupancy of 51% (existing) or 60% (new construction); 7(a) can finance the franchise, equipment, working capital, and owner-occupied real estate in one loan; single-loan 7(a) cap of $5 million.
- U.S. Small Business Administration, SOP 50 10 8 Franchise Directory provisions (via the firm's QSR analysis): the Franchise Directory was reinstated effective June 1, 2025, a brand must be listed and the franchisor must have executed the SBA Franchisor Certification for streamlined eligibility, multi-brand franchisees clear eligibility per brand, and the restored underwriting includes a 10% equity injection for start-ups and a minimum business credit score of 165.
- McDonald's 2025 FDD via Franchise Chatter (2024 Item 19 average annual sales $3,966,000, median $3,797,000) and QSR Magazine QSR 50 / franchise cost data: AUV divergence by brand (Taco Bell ~$2.1M, Wendy's ~$2.06M, Jack in the Box ~$2.03M); Item 19 is voluntary and survivorship-biased under the FTC Franchise Rule and is not a guarantee, so underwriting AUV must be site-specific.
- CT Acquisitions (2026): franchise royalty of roughly 4–6% and ad-fund contribution of roughly 2–4% (a combined 6–12%+ load off the top); culta.ai / National Restaurant Association (2026): prime cost 55–65% of sales, food cost 25–30%, labor 25–28% for QSR; paperchase.ac (2026): well-run four-wall EBITDA in the 12–30% range.
- CT Acquisitions (2026) and qsr.pro (2026): a new QSR unit typically ramps over one to three years and rarely opens at the Item 19 system average; the fix is an explicit ramp curve with the trough year stressed against debt service, and the franchise load modeled off the top.
- Terrapin Construction Group (2026): all-in development of $1.3M–$2.5M for an 1,800-square-foot freestanding QSR with drive-thru, $220–$580 per square foot before land, with the Southeast running roughly 10–20% below the national average; qsr.pro (2026): a single drive-thru lane clears ~120 cars/hour versus 180+ for a dual lane.
- The Boulder Group, Q1 2026 Net Lease Research Report: McDonald's ground lease 4.40%, all corporate-guaranteed QSR 5.82%, and all franchisee-guaranteed QSR 6.80% — a guarantor-driven spread that separates a going-concern operating value from a net-lease real-estate value on the same building.
- Mordor Intelligence (2025–2026): off-premise over 70% of revenue at leading brands; Revenue Management Solutions (2025): drive-thru ~65% of QSR orders; USDA Economic Research Service (2024–2025): food-away-from-home at ~55% of U.S. food spending; the QSR market-type framework rating Sun Belt suburban Georgia favorable on drive-thru suitability, pad availability, and a lower labor-cost floor against California's $20 fast-food wage.
- GoSBA Loans analysis of SBA FOIA loan data (Georgia #5 in 7(a) dollar volume, CY2025, ~$1.35B across ~2,047 loans), published February 2026; U.S. Small Business Administration Georgia District Office directory (233 Peachtree St. NE, Atlanta; all 159 counties; SBA Region IV headquarters); Coleman Report fiscal 2025 7(a) lender rankings (Live Oak Bank #1 by dollar volume).
- SBA Policy Notice 5000-879058 (effective July 4, 2026), combined 7(a)-plus-504 cap of $10 million and FY2026 manufacturing fee waivers; SBA/504 DSCR convention of roughly 1.15x or higher, per the firm's SBA analysis.
- Georgia Department of Revenue / Georgia Budget & Policy Institute, HB 463 flat income-tax schedule (4.99% for 2026); FOX5 Atlanta / National Hurricane Center, Hurricane Helene Georgia impact (September 2024): Augusta/Richmond County damage >$500M, ~1.3M power outages; Partners Real Estate, 35% Atlanta-portfolio insurance-premium increase (2024).
- U.S. Small Business Administration SOP 50 10 8 (going-concern appraisal for change-of-ownership special-purpose transactions, prepared by a state-Certified General appraiser allocating value across real estate, equipment, and intangibles) and ASTM E1527-21: a QSR is generally low environmental risk, but a lender typically expects a Phase I ESA, with attention to prior gas-station or dry-cleaner site uses; the feasibility author references but does not perform the environmental site assessment.