Model Case: Double-Lane Drive-Thru Coffee Kiosk on a Ground Lease in Olathe, Johnson County, Kansas, SBA 7(a)

A model feasibility case built only from public data. The pad, 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, collateral and conditions. Figures are as of October 9, 2026. Part of the restaurant feasibility study cluster; format detail on the coffee shop feasibility study and restaurant franchise feasibility study pages, program detail on the SBA 7(a) feasibility study page, and the state frame on the Kansas feasibility study page.

The project is not feasible as proposed. A $1.52 million first-unit kiosk is a 7 Brew-class cost: 7 Brew's 2026 Item 7 runs $940,500 to $2,283,500, and 7 Brew sells ten-store development commitments with applications reported closed, so a first-unit franchisee buys into Scooter's, Human Bean, Biggby or Ziggi's at volumes of about $750,000 to $1,000,000. At the Scooter's kiosk average of $998,869, the unit earns $133,837 at stabilization after ground rent, 12.6 percent of sales and within a few thousand dollars of the $134,457 Scooter's discloses, and the $1,369,283 loan at the 10.00 percent cap on a ten-year maturity costs $217,142 a year. Coverage is 0.62x at stabilization and 0.36x in year 1, and 1.15x would need $1,461,686 of sales, 46 percent above the brand average. A 25-year maturity, which the SOP allows only for real estate and which no SBA text extends to a modular building on leased land, would take the proposed project to 0.90x. The gap is sales-to-investment: a $1.5 million kiosk at $1.0 million of sales invests $1.50 for every dollar of revenue, against about $0.75 at 7 Brew's volume.

The project is feasible as restructured, subject to the conditions at the end of this page, and the first of those conditions is the one that decides it. The restructure brings the kiosk building and site work to the low end of the published ranges, $1,295,881 in all with a $40,000 reserve, raises equity to 20 percent, and carries the sales case at the Scooter's kiosk top quartile of $1,433,875 rather than the average. That sales case is not a brand figure; it is a site claim, and it is supportable only where the pad's traffic count, inbound morning position, visibility and competitive census match the pads that produce top-quartile volumes. On it the unit earns $249,138 at stabilization, 16.4 percent of sales, covers 1.52x in year 3 and 1.02x in year 1, and holds 1.15x down to $1,193,928 of sales. At the brand average the same structure covers 0.85x. The determination is therefore conditional in the plain sense: the structure works at a volume the site must prove.

Two alternatives frame the case. At the 7 Brew FY2024 franchised average of $1,989,229 even the proposed structure covers 1.76x, which is why the format's growth has been financed at all; and on a 25-year maturity the restructured project covers 2.20x, which is why borrowers ask for one. Neither is available to a first-unit franchisee of a Scooter's-class brand on MMCG's reading of the SOP, and the case does not rely on either.

A 504 loan was considered and rejected: the land is leased, and the franchise fee, working capital and pre-opening costs are 504-ineligible. USDA Business and Industry does not apply inside the Kansas City urbanized area.

Olathe is the Johnson County seat on the Kansas side of the Kansas City metro. Johnson County reached 636,906 residents in the Census Bureau's Vintage 2025 estimate, adding 4,630 in the latest year and carrying most of Kansas's growth while the state grew 1.3 percent in five years; Scooter's, based in Omaha, counts Kansas inside its core footprint. The model case fixes the city and the pad type, not the address: a 0.6-acre outparcel on a suburban arterial, inside the 8,000 to 50,000 SF lot range 7 Brew publishes for the format and the 0.62 to 1.16-acre pads on 20,000 to 38,000 vehicle-per-day corridors that the public 7 Brew ground-lease listings describe.

Entitlement runs through the Olathe Unified Development Ordinance. Section 18.50.040 sets the drive-through standard that governs the site plan: 80 feet of stacking from the lane entrance to the menu board, 160 feet from the lane entrance to the service window, and a 12-foot lane. That is a geometric minimum, and the study treats it as one; the codes MMCG reviewed require four to six stacking spaces, local studies in Saint Paul found maximum coffee queues of 16 cars before the city adopted a 14-space coffee standard on March 4, 2026, and a traffic study required 37 spaces for a 7 Brew in Warrenville, Illinois. The ITE 11th edition rate for a coffee and donut shop with drive-through (land use 937) is 533.57 daily and 85.88 morning peak-hour trips per 1,000 SF with a 49 percent pass-by share, so a 650 SF kiosk generates about 347 daily and 56 morning peak-hour trips before pass-by credit on the Palm Beach County tabulation; the morning peak is where a coffee queue spills into the arterial, and the study models the queue from the peak-hour trip count rather than the code minimum. The traffic study, the site plan approval and the access permit are conditions.

Property tax follows the Kansas constitution: commercial real property is assessed at 25 percent of market value, and Johnson County's 2025 average levy is 109.474 mills on the Kansas Department of Revenue's February 2026 certification, an implied 2.74 percent of market value a year with no valuation cap. The kiosk building and site improvements on the leased pad are modeled as taxable improvements to the tenant at $16,558 in year 1 on $605,000 as restructured, pending the county appraiser's treatment of a modular building; commercial machinery and equipment acquired after June 30, 2006 is exempt from personal property tax in Kansas, so the equipment package carries no tax line. Sales tax in Olathe runs 9.125 to 9.6 percent combined and passes through. Kansas follows the federal minimum wage and tip credit, and a kiosk crew is not a tipped workforce in the statutory sense; the BLS NAICS 722 average hourly earnings of $21.89 is the wage frame.

Ground rent is the fixed cost that decides the format. Public 7 Brew pad listings show $90,000 to $125,000 of net operating income at asking cap rates of 5.85 to 6.75 percent, with 10 percent bumps every five years on 15- to 20-year primary terms; the Boulder Group's Starbucks asking cap was 6.50 percent in Q2 2026 and all net lease rose to 6.92 percent in Q3 2026. The model carries $75,000 for a Scooter's-class pad, 7.5 percent of brand-average sales and 5.2 percent of top-quartile sales, escalating 3 percent a year as a conservative stand-in for the five-year bumps. The lease term, the borrower-only options and the leasehold-mortgagee clauses are conditions.

Brand economics. The 2026 FDDs, reporting FY2025, draw the volume map for the format. 7 Brew averages $2,658,000 across 320 full-year stores (franchised $2,646,000, median $2,550,000, low $836,418), up from $2,041,000 across 180 stores in FY2024, with store-level EBITDAR of 29.34 percent and cost of goods of 26.31 percent in the prior year; it reports 283 openings and no closures in 2025, projects 437 franchised openings for 2026, sells ten-store commitments, and is reported to have closed applications. Scooter's reports a kiosk average of $998,869 with EBITDA of $134,457 and a top quartile of $1,433,875 at 20.7 percent, across 768 franchised kiosks at the end of 2025; its openings fell from 209 in 2023 to 121 in 2024 and 85 in 2025, and units that "ceased for other reasons" rose from 2 to 20 to 24, about 3 percent of the base. Human Bean affiliates averaged $896,744 with EBITDA of $112,992 (12.6 percent) across 11 stores, with cost of goods at 31.9 percent, payroll at 29.6 percent plus 3.0 percent of payroll taxes, bank charges at 1.7 percent, rent at 4.2 percent and utilities at 2.2 percent, and a range from $607,376 and $23,787 of EBITDA to $1,212,214 and $223,888. Biggby drive-thrus averaged $756,742 across 347 stores, with EBITDA of $108,651 (14.0 percent) on a 216-store P&L. Ziggi's averaged $836,332 across 90 franchised units. The public companies bracket the format: Dutch Bros at a $2,193,000 systemwide AUV with same-shop sales up 5.8 percent in Q2 2026 and capital cost per shop down to $1.3 million; Black Rock at a $1,288,000 AUV, a 30.2 percent store-level margin on 21.0 percent labor at scale, and same-store sales up 4.2 percent with transactions down 2.0 percent.

What the map says. Only the 7 Brew tier and Dutch Bros generate the sales that carry a $1.5 million kiosk, and neither sells a single unit to a first-time operator. The first-unit brands produce $750,000 to $1,000,000 on average and $1.2 million to $1.4 million in their top quartiles, and the difference between the two is the site: the Human Bean range runs from $607,376 to $1,212,214 on the same brand, the same building and the same menu. The sales case is therefore a site forecast, not a brand average, and the study for a fixed pad would build it from the corridor's traffic counts on both approaches, the inbound morning share, the signalized access, the visibility, the drive-time population and employment, the nearest drive-thru coffee competitor by brand and distance, and the pipeline, which in 2026 includes Dutch Bros and 7 Brew bidding over sites in the metro markets they are entering. For the model case the site evidence is a condition, and the sales case is carried at the Scooter's top quartile with the average and the Biggby figure as the downside rows.

Saturation. Comparable-store growth is positive but slowing, with transactions negative at Black Rock, and the Scooter's closure and opening trend shows the first-unit tier absorbing the metro-level competition the public companies describe. A kiosk's trade area is a two-mile corridor on the morning side, and the study counts every drive-thru coffee unit on it.

No manufacturer price list for a modular kiosk and no site-work cost guide were located in MMCG's October 2026 review; the building and site lines rest on FDD ranges and the executed quotes are a condition.

The operating statement is built from the disclosed cost structures of the first-unit brands and calibrated so that, at the Scooter's kiosk average, it reproduces the EBITDA Scooter's discloses.

At the brand average the same structure yields $131,000 in year-1 dollars against the $134,457 Scooter's discloses; the small difference is the ground rent, which Scooter's figure may carry at a lower pad rent. The ramp is 80 percent of stabilized sales in year 1, 95 percent in year 2 and stabilized from year 3, a model assumption on a format that opens fast; checks and costs escalate 3 percent a year.

The proposed structure never covers on the brand average; its cumulative shortfall over the ten-year note is $784,495. The restructured structure covers from year 1 on the site case, and the $40,000 reserve is three months of debt service against a slower opening.

On the stabilized year-3 statement with sales scaled and the fixed lines held, the restructured project covers debt service at $1,095,433 of stabilized sales in year-1 dollars, reaches 1.15x at $1,193,928 and 1.25x at $1,259,590; those figures sit 10 to 26 percent above the Scooter's kiosk average and 12 to 24 percent below its top quartile. As proposed, break-even is $1,331,594 and 1.15x needs $1,461,686, above the top quartile. The restructured cushion from the site case to the floor is 16.7 percent of sales, which is the margin the site evidence has to carry.

All rows start from the restructured base unless labeled otherwise.

Volume decides everything. The restructured project survives a 10 percent sales miss, a three-point cost move or a 10 percent labor move at or above the floor, and it does not survive the brand average. Cost, rate and equity are secondary: the proposed project at the top quartile is still short of the floor, and the proposed project at 7 Brew volume covers comfortably, which is the arithmetic behind both the format's growth and its first-unit failures.

The lender's collateral is a modular building on leased land, $185,000 of equipment, signs and the guarantors. A relocatable kiosk has a resale market that a built restaurant does not, but it is sold at a discount and moved at a cost, and the ground lease is worth nothing to the lender on default without the leasehold-mortgagee clauses that let it take over and reassign the pad. Used equipment brings 10 to 30 cents on the dollar at auction. The loan is a cash-flow loan on a first-unit operator, and the equity is set at 20 percent for that reason.

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.