Restaurant Feasibility Study Case: Sevierville, Tennessee, SBA 7(a) New Build

Feasibility Study Company prepares feasibility studies for owners, developers and their lenders. This page shows what one looks like for a restaurant: the market, the competitors, the cost of the build and the question every SBA lender asks, which is how much debt the restaurant's cash flow can carry. The project is hypothetical, a new independent full-service restaurant in Sevierville, Tennessee, financed with an SBA 7(a) loan. Ask us to run the same work on your site.

The subject is generic: a freestanding restaurant of about 5,500 square feet on about 1.50 acres along the Winfield Dunn Parkway, the highway that carries visitors from Interstate 40 toward the Smokies. The market figures are public and dated. The model figures come from a case engine that works from the inputs table near the end, where every input names a source or is marked as an assumption. For context, see our restaurant hub, the Tennessee state page and the SBA 7(a) and 504 program page.

Restaurant demand in Sevierville has two layers. The first is the resident base: households, workers and retirees who eat out all year. The second is the visitor flow: the guests of the lodging, attractions and national park that sit within a short drive, whose spending dwarfs the first layer. A feasibility study for a restaurant here has to measure both and be honest about which one pays the debt. The tables below set out the public record for each.

The resident base is small and not growing fast

Between the 2020 Census and the 2024 estimate the city added almost no one: 17,889 became 18,231, a gain of 0.3% [1]. Its American Community Survey reading is slightly higher, 18,397, with 7,904 households [2]. The city is compact, at 743.1 persons per square mile [1], and it is older than the state: its median age of 39.6 compares with 38.9 for Tennessee and 43.5 for the surrounding micropolitan area [2]. A restaurant that depended on those households alone would have a ceiling set by how often 7,904 households eat out, and no loan officer would underwrite that ceiling against a new building.

The county tells a larger story. Sevier County is the larger market, and the first county rows of the table add its 2024 population, its households, its older residents and its unemployment rate [3][4]. Income is middle-market, with the household median and the per capita figure close together, and the home value and rent rows show housing that is not cheap against those incomes [3][4]. That is one reason the wage in the model is set above a bare minimum.

What the county already sells to restaurants

The Census Bureau's County Business Patterns counts restaurant establishments and their employees in Sevier County for 2023, shown in the last two rows of the first table [5]. Both are lower bounds, because the federal tabulation withholds some detail cells to protect individual businesses [5]. They are the best available measure of how large the supply is, and they say the county's restaurant economy is a major employer in its own right, not a thin retail category. The competition a new restaurant faces is therefore county-wide, not a handful of names on one road.

Visitor spending and what it pays for

The county's own release puts 2024 direct visitor spending at $3,929,693,370, a gain of 2.03% over 2023, and attributes $251,693,926 in state tax revenue and $187,210,059 in local tax revenue to tourism [6]. For a restaurant the lesson is not the headline. It is that the visiting guest pays a large share of the local tax base, which gives local government an interest in keeping the corridor open and passable.

Tennessee set a record in 2025, with $32.5 billion of direct visitor spending, 2.7% above the year before, on 150 million visits [7]. The year before, the state counted $31.66 billion and 147 million visitors [7]. The state's growth is steady, not explosive: the tourism economy is up 40% since 2018 [7], and 2025 added 2.7%. The case therefore does not model a boom. It models a restaurant that earns its share of a mature visitor market.

The park and the shape of the year

Great Smoky Mountains National Park sits at the southern edge of the county, and the monthly counts for 2025 show the year's shape: 459,626 visits in January, 506,742 in February, 879,991 in March and 1,026,754 in April [8]. April more than doubles January. A restaurant open every day pays a full week of staff in the winter and does not earn a full week of revenue, which is why the model carries a working capital reserve sized for the slow months and a labor line that does not flex fully with the calendar.

The park's busiest weeks do not help a restaurant that cannot seat them. At the peak a good table-service restaurant is full for a few hours, and the extra guests wait or leave. That is the practical limit on the guest count in this case, and it is why the model tops out at a level that fills the room about twice on an average day, not at a figure the park's visitation might seem to support.

Disruptions and surges

Two events from the last year show how the trade behaves under stress. During the 2025 federal shutdown a coalition of state and local partners kept the Smokies open for 40 days, and more than 2.4 million people visited in that window [7]. In the Sevier County mayor's account of October 2025, lodging revenue was up 5.8% and restaurant and amusement revenue were up too [7]. The corridor's own calendar also adds weekend surges: a truck show at the Sevierville Convention Center brought police warnings of delays on the highway in the autumn of 2025 [18], and the state's road crews closed lanes on the parkway for repaving in January 2026 [17]. A restaurant on the highway has to plan for guests who arrive late, in a hurry, or not at all on a bad traffic day.

The attractions behind the trade matter as well. The region's best-known theme park is described as Tennessee's most ticketed attraction [16]. The research found no attendance figure for it, so the case does not size demand from it, but it explains why the corridor stays busy on weekdays outside the summer and why the model assumes a family-dining mix of lunch and dinner rather than a late-night one.

The subject is a hypothetical pad of about 1.50 acres on the Winfield Dunn Parkway, the divided state route that carries visitors from Interstate 40 toward Pigeon Forge and the park. Which parcel it is, and what zoning it carries, are conditions to confirm. The research could not retrieve a parcel identifier, a verified zoning district, a flood zone or a utility territory for any corridor site from the county assessor, the city planning office or FEMA, so the paragraphs below describe what is known about the corridor and what each missing item would mean.

Zoning and approvals

Whether a restaurant is allowed by right or only by conditional approval in the arterial commercial district that lines the parkway was not found, and neither was the approval timeline. The one dated example in the file is the burger chain that reused a former restaurant site: its plan went through the Planning Commission in the autumn of 2025 and the store opened the following spring [15]. A new-build site plan, a grease interceptor and a parking and stormwater review take longer than a reuse, so the model carries a design and permitting allowance, not a published fee schedule.

Frontage and traffic

The parkway is the main approach from Interstate 40, and local news describes the stretch near the interstate as traffic-choked [14]. The state transportation department's own annual average daily traffic count for the site was not found, and the figures that circulate in listings and on aggregator pages carry no count year or station number, so none is printed. The traffic count is the second condition on the list at the end of the page. Lane closures for repaving in January 2026 are a reminder that access can be disrupted [17], and a site with a deceleration lane and two driveways serves a restaurant better than one with a single shared entrance.

Utilities

Water and sewer providers, electric territory, gas availability and the city's tap and impact fees were not found for any corridor parcel. The model therefore carries a site work allowance and a soft cost allowance and leaves the fee schedule as a lender condition. A commercial kitchen needs a larger water meter, a grease interceptor and sometimes a gas line, so utility cost is likelier to exceed an allowance than fall below it.

Property tax

The reappraisal of 2026 changed the arithmetic for every parcel in the county, and it is the best-dated cost item in the research.

The cost of sales lines are food and beverage purchases: 31.0% of food sales and 26.0% of beverage sales. Gross profit is $2,423,067 in Year 3. Both ratios are placeholders, because the research holds no restaurant cost benchmark for Tennessee or for the nation, and a menu costing and supplier quotes replace them before the loan closes.

Labor is the largest operating cost. The model staffs 64,000 paid hourly hours a year at $15.00 an hour in Year 1, with 11.0% added for payroll taxes and workers' compensation, plus three salaried managers at $235,000 in total. No competitor publishes its staffing, and no Tennessee wage series is in the research, so these are planning figures. The wage in a tourist town is also set by lodging and attraction employers who compete for the same workers, a pressure the research does not measure but any lender should ask about.

The model then adds card processing at 2.7% of sales, marketing at 2.0% of sales, an allowance of $235,000 for utilities, insurance, repairs, supplies, licences and the rest, property tax at 0.50% of land, building and site cost [9], and a replacement reserve of 4.0% of equipment cost each year. Operating costs run $1,721,708 in Year 1 and $1,864,142 in Year 3, while revenue grows from $2,464,000 to $3,471,265. Net operating income is ($1,748) in Year 1, $365,207 in Year 2 and $558,925 in Year 3, a margin of 16.1% at stabilization.

The governing document is SOP 50 10 8.1 with Technical Policy Updates, which applies to applications received on or after October 1, 2026 [22]. For a start-up it asks for 10% equity and projected coverage of 1.15x inside two years, so the coverage test falls in Year 2 of the model. One 7(a) loan may not exceed $5 million; the sponsor's request, at 10.0% equity, stays beneath that cap. Since land, building and site work make up a majority of the use of proceeds, the loan can be amortized over as many as 25 years [22].

Occupancy matters too. For a building to be constructed, the borrower must occupy 60% of it [22], which a restaurant using all of its own space satisfies. Pricing starts from Prime, 7.00% in the Federal Reserve's October 9, 2026 release [24], and adds the largest spread SBA permits on a loan of this size, which gives 10.00%. A lender may offer less. SBA guarantees 75.0% of a loan this size [21], and the upfront guaranty fee for FY2027 follows the fee notice [23].

The building is only part of the collateral story, because a restaurant's value is its cash flow. The restaurant hub explains why lenders read the operator's record and concept as closely as the real estate. As for the study itself, the regulation says 13 CFR 120.160(b): SBA may require professional appraisals, a survey, or a feasibility study [25], which a lender may well invoke for a first-time operator building from the ground up.

As proposed, coverage is -0.01x in Year 1, 0.77x in the Year 2 test and 1.19x at stabilization. Annual debt service of $468,478 is large next to the restaurant's income in the test year, which is only $365,207. The request fails the start-up test, and weak demand is not the reason. The reason is the size of the loan: a restaurant still filling its dining room is being asked to service debt on a whole building and kitchen from the first month.

The engine then adds equity until the second year reaches the floor. With 38.5% down, annual debt service drops to $317,515, Year 2 coverage is 1.15x and Year 3 climbs to 1.76x. The resulting loan, $2,911,806, is far smaller than the request. Because it only just reaches the floor in the test year, a lender would be right to read it as a ceiling rather than a goal.

A sponsor has three realistic answers, and the lender should ask which one is intended. One is to bring the extra cash. Another is to take an existing restaurant building on a lease or by purchase, the route several recent corridor openings took [15]; this page does not model a lease or a conversion, and either would need its own study. The third is to produce evidence, such as the operating record of a sister restaurant, that volume will ramp faster than assumed here. Resubmitting the original request is not among them.

If you are weighing a restaurant site of your own, contact Feasibility Study Company and have the coverage question answered before the lender raises it. We do not forecast what a lender will decide; we put the analysis in front of the lender.

This grid varies the two assumptions that matter most here. Down the rows, the guest count moves by as much as a fifth in either direction in every year; across the columns, food sales per guest move through the range in the headers. Each cell is Year 2 coverage on the restructured loan, and the cells run from -0.55x to 3.05x.

The range is wide because fixed costs absorb a change in revenue before any of it reaches income. At the base check, a one-step shortfall in guests takes Year 2 below the floor, and so does a one-step shortfall in the food check at base volume. A one-step gain in either clears it comfortably. Together, a one-step drop in guests and a one-step drop in the check leaves almost nothing for debt service. The practical lesson is that the concept and its price point matter as much as the building: a sponsor should spend on the menu, the brand and the reservation system before the dining room's finishes.