Model Case: Culver's-Class Franchise Drive-Thru on Owned Land in Polk County, Florida, SBA 504

A model feasibility case built only from public data. The parcel, borrower and operator are hypothetical; no client file or engagement data is used. The case follows the house format: at a glance, determination, program eligibility, site and regulatory pathway, market analysis, full cost table, operating assumptions, ten-year pro forma, DSCR by year, break-even, sensitivities, valuation indication and conditions. Figures are as of October 9, 2026. Part of the restaurant feasibility study cluster; format detail on the QSR and drive-thru feasibility study and restaurant franchise feasibility study pages, program detail on the SBA 504 feasibility study page, and the state frame on the Florida feasibility study page.

The project is not feasible as proposed. A Metro L prototype on a purchased outparcel costs $4,798,191 inside the 504 project and $5,088,191 in all, and at the 20 percent contribution that 13 CFR 120.910 sets for a new business in a limited or single-purpose building, debt of $3,838,552 costs $343,954 a year. At the Item 19 franchised median of $4,036,492 the Culver's company-store cost structure produces $524,744 of income before occupancy, property taxes, interest and depreciation, which is the figure most lender summaries treat as EBITDA. It is not. On owned land there is no rent, but Polk County's 12.9291 mills on a $3,450,000 just value, tangible personal property tax, Florida property insurance above the Wisconsin company-store basis, the $3,200 a month of approved-supplier technology subscriptions that Item 11 discloses and Item 19 excludes, and the office overhead that the FDD warns franchisees carry and company stores do not, take $148,538 off that line in year 3. EBITDA is $376,206, coverage is 1.09x at stabilization and 0.69x in year 1, and the project needs sales 1.8 percent above the system median to reach the 1.15x floor. Sales are not the gap; the Florida state average is $4,287,146 and 119 Florida units stand behind it. The gap is the cost of a Metro L on purchased land against an income line that is thinner than it looks.

The project is feasible as restructured, subject to the conditions at the end of this page. The restructure changes three things. The prototype becomes the Metro M at 4,060 SF, which with a smaller site package brings the 504 project to $4,416,471 and total cost to $4,836,471. The contribution rises from 20 to 25 percent of the 504 project, which with the franchise fee, training, opening inventory, working capital and a $130,000 reserve funded outside the project puts the borrower's equity at $1,524,118, 31.5 percent of total cost, above the 20 percent of projected investment that Culver's Item 7 Note 13 requires in cash or liquid assets. And the reserve covers the first year. Debt falls to $3,312,353 and debt service to $297,913. Stabilized DSCR is 1.28x at the system median and 1.50x at the Florida state average; year 1 is 0.81x, which the reserve carries; the project holds 1.15x down to sales 3.7 percent below the median and 1.00x down to 8.2 percent below.

Two alternatives were tested and rejected. A 7(a) loan at 10 percent equity, the 10.00 percent rate cap and a 25-year maturity carries $487,727 of debt service on the restructured cost and covers 0.78x at stabilization; this is a 504 project. A 15 percent contribution, which applies if the CDC reads the building as multipurpose, as one Florida CDC advertises for restaurants, lowers equity by $437,797 and coverage to 1.13x; the contribution, not the eligibility ruling, is what makes the case work.

A 7(a) loan was considered and rejected on coverage, above. USDA Business and Industry does not apply; Polk County's urbanized area exceeds the 50,000 population ceiling.

The model case fixes the county and the corridor type, not the parcel: an outparcel of about 1.3 acres, inside the 45,000 to 70,000 SF site that Item 7 Note 3 specifies, on a four-lane suburban arterial in unincorporated Polk County on the growth side of the Lakeland-Winter Haven MSA. Polk County's population reached 846,896 on April 1, 2025 by the Florida Office of Economic and Demographic Research's estimate, up 16.8 percent from the 2020 census, against 10.8 percent for the Orlando MSA and 7.2 percent for Tampa-St. Petersburg over the same period; it is one of the fastest-growing counties in the country by the Census Bureau's recent estimates.

Entitlement runs through the Polk County Land Development Code. A drive-through restaurant on an arterial in a commercial district is a permitted use subject to site plan review, access management on a state or county road, and a traffic study where the county's thresholds are met; the ITE 11th edition rate for a fast-food restaurant with drive-through (land use 934) is 467.48 daily trips and 33.03 PM peak-hour trips per 1,000 SF with a 49 percent pass-by share, so a 4,060 SF Metro M generates about 1,898 daily and 134 PM peak-hour trips before pass-by credit. The zoning verification letter and the access permit are conditions. Culver's double drive-thru stacking is sized by the franchisor's prototype; the county's stacking minimum is confirmed at site plan.

Impact fees are modest in Polk County. The July 1, 2025 schedule charges retail and commercial uses $5,657 per 1,000 SF in Transportation Zone A ($4,778 transportation, $288 fire rescue, $289 law enforcement, $78 EMS, $224 correctional), with no separate fast-food category; the model carries $22,967 for the Metro M and flags the classification for confirmation. Water and sewer capacity fees depend on the utility and are carried at $60,000 as a model assumption.

Property tax is Florida's just-value basis with no assessment ratio for commercial property. The 2025 final millage for unincorporated Polk County (tax code 90) is 12.9291, of which 6.6348 is the county general fund, 5.2900 the school board (local and state), 0.1831 the water management district and 0.8212 the parks, library and stormwater MSTUs. On a $3,200,000 just value for land, site and building the tax is $41,373 in year 1; tangible personal property tax on $655,000 of FF&E, signs and POS adds $8,469 and declines as the equipment depreciates. Florida's minimum wage rose to $15.00 on September 30, 2026, inside the $10.00 to $23.55 crew range the FDD discloses. Sales tax is a pass-through.

Brand economics. Culver's 2026 FDD, issued March 30, 2026, reports FY2025 results for 988 franchised restaurants open the full year: average sales $4,142,737, up 9.3 percent, median $4,036,492, high $9,030,702, low $1,103,114, with 450 units at or above the average and 99 below $3,000,000. The Florida state average across 119 units is $4,287,146; Texas is $3,480,360 across 13, Georgia $3,569,622 across 22, Wisconsin $4,517,210 across 138 and Utah $2,991,077 across 14. The seven company stores, all in Wisconsin, averaged $4,267,870 and ran food at 30.5 percent, paper at 3.0 percent, wages at 31.7 percent, benefits at 5.9 percent, utilities 1.7 percent, G&A 3.9 percent, repairs 1.7 percent, royalty 4.0 percent, advertising 2.5 percent and local advertising 1.0 percent, for income of 13.0 percent before rent, real estate taxes, personal property taxes, interest and depreciation. The company-store table is an operating-leverage curve: Spring Green earned 8.7 percent on $2,910,198 and Sauk City 15.9 percent on $5,152,432, about 3.2 points of margin per $1,000,000 of sales, and the model uses that slope for every sales case. The 45 franchised units opened in 2025 are excluded from Item 19, so the year-one ramp is a stated assumption: 85 percent of stabilized in year 1, 95 percent in year 2, stabilized from year 3, with 75 percent tested.

Sector backdrop. The National Restaurant Association projects $1.55 trillion of 2026 sales with 1.3 percent real growth and reports that 42 percent of operators were unprofitable in 2025. Census retail sales for food services and drinking places were $105.07 billion in August 2026, up 5.8 percent on the year, while Black Box Intelligence chain traffic was negative in every month from January through May 2026 (down 2.0 percent in May) against same-store sales up 0.7 to 1.8 percent, and the CPI for food away from home ran 3.4 percent. The burger segment is weaker than the industry: Wendy's U.S. same-restaurant sales fell 7.8 percent in Q1 2026 and its U.S. company margin fell to 11.4 percent from 14.8 percent; Meritage Hospitality, a 314-unit Wendy's franchisee, filed Chapter 11 on September 17, 2026 after food, paper and labor reached 66.1 percent of sales and store-level EBITDA fell 48 percent. Beef is the cost driver: the USDA Economic Research Service forecast beef and veal prices up 9.4 percent for 2026, and the cattle herd stood at 86.2 million head, the smallest since the early 1950s. Culver's prime cost of 71.0 percent including benefits already sits within five points of the Meritage ratio, which is why the sensitivities below treat a three-point food and paper move and a 10 percent wage move as the operating stresses.

Trade area and competition. A drive-through QSR trades on the arterial, not the rooftop. The study for a fixed parcel would report the FDOT and county traffic counts on both approaches, the drive-time population and daytime employment within five and ten minutes, the inbound-side retail generators, and a census of every burger, chicken and frozen-custard drive-through within three miles with its brand, building age and estimated volume, plus the permitted pipeline. For the model case these are conditions. The sales base is set from Item 19 rather than from a site forecast: the system median is the base, the Florida state average is the upside, and the Texas average and the $3,000,000 bottom-decile threshold are the downside cases.

The bank rate is a model assumption inside the 7 to 9 percent range quoted for 504 first liens in October 2026; the debenture is modeled at the October 2026 effective rate, which includes the SBA, CDC and central servicing fees. The 504 fees are 2.65 percent of the debenture, the 0.50 percent SBA guarantee fee plus CDC processing, funding and underwriter fees, a model composite.

The operating statement is the Culver's company-store statement at the sales case, with the income ratio moved along the FDD curve, and five franchisee-level lines below it that the company statement excludes or understates.

The owner is the operating general manager and is paid inside the wages line, which is how the company stores are staffed; a lender that requires a separate owner draw on top reduces EBITDA by that amount, and the sensitivity table shows the effect of a 10 percent wage move. Culver's reserves a technology fee of $600 to $1,000 a month that it does not currently charge; it is not modeled. Sales grow 2.5 percent a year after stabilization and fixed costs 3 percent.

The proposed structure reaches 1.15x in year 4 and 1.25x in year 6 on the modeled sales growth; a lender underwriting to year 3 does not get there. The year-one shortfall as restructured is $55,829, inside the $130,000 reserve with three months of debt service to spare; the proposed structure's two-year cumulative shortfall is $121,125 with no reserve.

A drive-through QSR has no winter trough of the kind that governs a lodging case; its exposure is the opening year. At 85 percent of stabilized sales the FDD curve puts the income ratio at 11.1 percent, not 13.0, because labor does not scale down with volume in a new unit, and EBITDA in year 1 is $242,084 against $297,913 of debt service. The FDD itself warns that restaurants "have experienced varying periods of time to become established," and no public cohort fixes the ramp, so the model labels it as an assumption and tests 75 percent: year 1 falls to 0.53x and the shortfall to about $140,000, which exceeds the reserve by about $10,000. The reserve is therefore sized to the base ramp with three months of cushion, and the slower ramp is a condition on the operator's opening plan rather than on the structure.

On the stabilized year-3 statement with sales moved along the FDD curve, the restructured project covers debt service at $3,705,179 of sales (8.2 percent below the median), reaches 1.15x at $3,888,162 (3.7 percent below) and 1.25x at $4,005,516 (0.8 percent below). As proposed, break-even is $3,910,292, 1.15x needs $4,110,317 (1.8 percent above the median) and 1.25x needs $4,238,434 (5.0 percent above). Against the Item 19 distribution, in which 46 percent of units met or beat the $4,142,737 average and 10 percent fell below $3,000,000, the restructured cushion is thin but real; the proposed structure has none.

All rows start from the restructured base unless labeled otherwise.

Sales volume is the binding variable, and the operating stresses are nearly as severe because the brand's prime cost leaves 29 percent of sales to cover everything else. A 10 percent sales miss or a three-point food move takes the restructured project below 1.0x on its own; a 10 percent wage move does the same. Rate, amortization and contribution risks are each absorbable. The two state averages bracket the question the lender has to answer: at Florida volumes the project covers 1.50x, at Texas volumes 0.83x, and the parcel's own traffic, inbound-side position and competitive census decide which the site resembles.

No Culver's-specific sale with a published cap rate exists in the public record. The indications below capitalize a market ground-and-building rent at the Boulder Group's Q3 2026 net lease rates for franchisee-guaranteed QSR, which are the right rates for a first-unit franchisee; corporate-guaranteed QSR trades 97 basis points tighter at 5.90 percent and is not available to this borrower.

Item 7 Note 3 gives the ground-lease alternative at $100,000 to $500,000 a year, 2.4 to 12.1 percent of the franchised average for land alone, and the FDD describes the company buildings as single-purpose. At every rate the value depends on the same sales assumption as the DSCR: a rent of 6 to 7 percent of sales is supportable only at median volume, and the going-concern appraisal and the dark-value opinion are separate conditions. Used restaurant equipment brings 10 to 30 cents on the dollar at auction, so the $655,000 of FF&E, signs and POS supports little of the debenture.

Prepared by Michal Mohelsky, J.D., FMVA, Practicing Affiliate of the Appraisal Institute. Model case aligned with SBA SOP 50 10 8.1, under USPAP discipline. MMCG Invest, LLC, 27 Maiden Lane, Suite 625, San Francisco, CA 94108.