Restaurant feasibility study.

Restaurant carries the SBA special-purpose property treatment under SOP 50 10 8 because the build-out — commercial kitchen infrastructure, walk-in coolers and freezers, hood-and-fire-suppression systems, dining-room finishes, exterior signage, drive-thru infrastructure where applicable, and prepared site work — serves the restaurant use specifically rather than supporting alternative commercial use. The special-purpose treatment triggers the third-party feasibility study requirement on new construction, substantial renovation, and conversion projects.

The alternative-use limitation is meaningful in restaurant underwriting. A built-out restaurant space cannot easily reposition to retail, office, or other commercial use without removing the kitchen infrastructure, modifying the building shell, and reconfiguring the site for the alternative use. The collateral economics depend on the operating cash flow of the restaurant business itself, and the feasibility study's projection of that cash flow is consequential to the loan.

Conventional bank construction lenders apply parallel standards. Almost no regional or money-center bank will fund a restaurant construction loan or substantial-renovation acquisition without an independent third-party feasibility study, and most banks specify the analyst qualifications, the trade-area scope, the deliverable scope, and frequently the operator-experience documentation in commitment letter terms. Banks engaging with multi-unit franchise sponsors and institutional restaurant operators apply heightened underwriting standards reflecting the asset class's structural failure rate — even at institutional operating quality, restaurant outcomes vary materially with site selection, format match, and operator execution.

The mandatory practice has produced a methodological convention in U.S. restaurant feasibility that runs across analyst firms with limited variance, anchored by industry data sources (National Restaurant Association reports, NPD Group / Circana foodservice data, Technomic Top 500 Chain Restaurant Report, Feasibility Study Consultant database, and primary research with comparable operating restaurants in the trade area). Trade-area definition combines traffic-count-driven QSR methodology with demographic-driven full-service methodology, average ticket benchmarking runs against industry-recognized sources, daypart projection runs against format-specific patterns, and the operating projection runs against industry-recognized prime-cost and operating-expense conventions.

The U.S. restaurant industry segments across distinct format categories, each operating on structurally different economic models. The format selection drives every other variable in the feasibility — capital cost, throughput capacity, ticket structure, labor model, site requirements, and projected revenue.

Quick-Service Restaurant (QSR) — also called fast food — operates on high-throughput low-ticket economics with order-and-pay-at-counter or drive-thru service models. Average ticket typically runs $9 to $18 per customer in 2026 institutional QSR pricing. Throughput capacity is materially higher than other formats, with drive-thru-anchored QSR units serving 600 to 1,500-plus daily transactions at peak performance. Labor model runs heavily part-time hourly with limited full-service-style server roles. Categories include burger chains (McDonald's, Burger King, Wendy's, Five Guys, Shake Shack at the upper end), chicken (Chick-fil-A, Popeyes, KFC, Raising Cane's), Mexican (Taco Bell, Del Taco, Chipotle stretches into fast-casual), pizza (Domino's, Papa John's, Little Caesars), sandwiches (Subway, Jimmy John's, Jersey Mike's), and coffee and beverage (Starbucks, Dunkin', Dutch Bros).

Fast-casual — the category that emerged through the 2000s and matured through the 2010s — operates between QSR and full-service casual with elevated food quality, broader menu variety, and counter-service or hybrid service models. Average ticket typically runs $12 to $22 per customer. Throughput is meaningful but lower than QSR (typically 250 to 600 daily transactions at peak), with longer per-customer dwell time and broader daypart distribution. Categories include Mediterranean (CAVA, Cava Mezze), build-your-own bowl (Chipotle, Sweetgreen, Honeygrow), Asian (Panda Express, Pei Wei), American casual (Panera Bread, Newk's, Zoës Kitchen), and other format-defining concepts.

Full-service casual — the casual-dining category — operates on table-service economics with broader menu, alcohol service, and per-customer ticket typically running $20 to $40 in 2026 institutional pricing. Throughput is materially lower (typically 150 to 400 daily covers), with longer dwell time, multi-course service, and labor model running heavily on full-service-style server roles. Categories include American casual (Applebee's, Chili's, Texas Roadhouse, Outback, Cheesecake Factory), Italian casual (Olive Garden, Carrabba's, Maggiano's), and full-service-casual concepts in Mexican, Asian, seafood, steakhouse, and other categories.

Fine dining — the upscale-dining category — operates on premium pricing with elevated cuisine, extensive wine programs, and white-tablecloth or polished-casual service positioning. Average ticket typically runs $80 to $250-plus per customer. Throughput is the lowest of any restaurant format (typically 80 to 250 daily covers, frequently lower), with long dwell time, multi-course tasting menus at the upper end, and labor model running heavily on highly skilled server, sommelier, and culinary staff. Categories include independent fine-dining concepts, branded steakhouse chains at the upper end (Capital Grille, Ruth's Chris, Morton's, Mastro's), and emerging luxury-dining concepts.

Franchise — operating across all four category formats above — represents a structurally distinct operating decision. Franchised restaurants operate under franchisor brand systems with prescribed menus, operations, marketing, and supply chains in exchange for royalty fees (typically 4 to 8 percent of revenue), advertising fees (typically 2 to 5 percent), and one-time franchise fees. The franchise model produces operator-success-rate advantages over independent restaurants but at the cost of operational flexibility and the system-contribution fee burden.

The feasibility's format-selection rationale documents why the chosen format fits the site, the trade-area demand pattern, the sponsor's operating capability, and the financing structure. Format mismatches — fine dining on a site too large to fill at the format's typical cover count, QSR on a site without drive-thru capability or adequate traffic count, or franchise selection that does not match the trade area's demographic — are recurring feasibility-failure patterns the analysis surfaces.

Restaurant revenue projection runs across two structural variables — average ticket per customer and customer count by daypart — that combine to produce daily and stabilized revenue.

Average ticket varies by format as documented in Section 3, with the standard convention running blended ticket calculations across all dayparts for QSR and fast-casual (where the breakfast, lunch, dinner, and late-night ticket structures are more uniform) and daypart-specific ticket calculations for full-service casual and fine dining (where lunch and dinner ticket levels diverge meaningfully).

Daypart mix is the second structural variable. QSR daypart distribution typically runs heavily breakfast and lunch in the morning-and-midday-anchored brands (Dunkin', Starbucks, McDonald's breakfast and lunch), heavily lunch and dinner in the burger and chicken brands (Wendy's, Chick-fil-A, Burger King), and heavily dinner and late-night in the pizza brands (Domino's, Papa John's). Fast-casual daypart distribution typically runs heavily lunch (frequently 50 to 65 percent of daily revenue) with secondary dinner activity. Full-service casual daypart distribution typically runs lunch and dinner with materially heavier dinner share (frequently 55 to 70 percent of daily revenue at the dinner daypart). Fine dining daypart distribution typically concentrates almost entirely at dinner with minimal or no lunch service.

Stabilized daily customer count varies by format. QSR units typically project 600 to 1,500-plus daily transactions at maturity, with material variation by site characteristics, brand strength, drive-thru availability, and competitive intensity. Fast-casual units typically project 300 to 700 daily transactions. Full-service casual units typically project 200 to 450 daily covers (with each cover representing one customer occupying a seat for one meal). Fine dining units typically project 100 to 300 daily covers, frequently with two seatings per evening at dinner.

The revenue projection translates customer count across the average-ticket structure to produce daily and annual revenue. A fast-casual unit at 450 daily transactions, blended ticket of $16, operating 360 days per year produces approximately $2.6 million in annual revenue. A QSR unit at 900 daily transactions, blended ticket of $13, operating 360 days produces approximately $4.2 million. A full-service casual unit at 280 daily covers, blended ticket of $30, operating 360 days produces approximately $3.0 million. A fine-dining unit at 150 daily covers, blended ticket of $115, operating 312 days (closed Sundays and major holidays) produces approximately $5.4 million.

The deliverable documents the revenue projection at the daypart and ticket level, with primary research benchmarking against comparable units in the trade area and against industry sources (National Restaurant Association data, NPD Group / Circana foodservice tracking, Technomic Top 500 Chain Restaurant Report, Feasibility Study Consultant database). The deliverable also documents the ramp from year-one (typically 65 to 85 percent of stabilized revenue depending on format and operator capability) to stabilization (typically months 12 to 24 from opening for QSR and fast-casual, months 18 to 36 for full-service and fine-dining).

Restaurant operating expense projection runs against the industry-standard prime-cost framework that institutional reviewers examine first. Prime cost — the sum of cost of goods sold (food and beverage) and direct labor — is the structural margin variable that determines whether the restaurant can clear the underwriting bar.

Cost of goods sold (COGS) typically runs 28 to 35 percent of revenue at well-managed restaurants, with material variation by format and menu mix. QSR typically runs 28 to 32 percent COGS reflecting the simpler menu and high-volume purchasing economics. Fast-casual typically runs 28 to 33 percent. Full-service casual typically runs 28 to 35 percent reflecting broader menu variety and higher-cost protein items. Fine dining typically runs 32 to 40 percent reflecting premium ingredients and higher waste rates on smaller production runs.

Direct labor cost typically runs 28 to 35 percent of revenue at well-managed restaurants. QSR typically runs 26 to 32 percent reflecting the part-time hourly labor model and limited management overhead. Fast-casual typically runs 27 to 33 percent. Full-service casual typically runs 30 to 35 percent reflecting the server-tip-credit labor structure where applicable and the kitchen-line staffing requirements. Fine dining typically runs 32 to 38 percent reflecting the highly skilled culinary, server, and sommelier staffing.

The combined prime cost — COGS plus direct labor — typically runs 56 to 68 percent of revenue at well-managed restaurants. The institutional benchmark sets the prime-cost ceiling at approximately 65 percent for sustainable operating economics; restaurants running prime cost above 65 percent typically struggle to clear the remaining occupancy, marketing, utilities, repair-and-maintenance, and other operating expense lines plus debt service at acceptable margins.

Other operating expense categories layer on top of prime cost. Occupancy (rent or mortgage debt service plus property tax plus insurance) typically runs 6 to 12 percent of revenue. Marketing and advertising typically runs 2 to 6 percent. Utilities typically runs 2 to 5 percent. Repair, maintenance, supplies, and other operating costs collectively typically run 5 to 10 percent. The combined non-prime operating expense structure typically runs 18 to 28 percent of revenue.

The resulting EBITDAR (earnings before interest, taxes, depreciation, amortization, and rent) typically runs 12 to 20 percent of revenue at well-managed restaurants. The corresponding restaurant-level cash flow after rent payment frequently runs 5 to 12 percent of revenue, supporting the institutional cap rates and acquisition pricing that the asset class operates within.

The deliverable documents the prime-cost projection explicitly with line-item benchmarks tied to format-appropriate industry sources and to comparable-property primary research where available. Lender reviewers examine the prime-cost discipline closely because the asset class's structural failure mode runs through cost discipline failure rather than through demand-side weakness.