How to Finance a Costa Vida Franchise: Fresh-Mex Build-Out Costs
By Chris Cornella
A Costa Vida franchise loan pays for a fast casual restaurant built around a scratch kitchen: the build-out of leased space, a serving line, cooking and refrigeration equipment, signage, opening inventory and the working capital to carry staff through the first months. Because Costa Vida is not listed on the SBA Franchise Directory, most buyers should plan around conventional financing, and that changes how much equity and documentation they need to bring.
US Professional Funding is not affiliated with, sponsored by or endorsed by Costa Vida; the name is used only to describe the business. Figures from the franchisor’s disclosure document and website can change, loan programs and terms vary by lender and borrower, and every loan is subject to approval. Nothing here is legal, tax or investment advice. Review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant before you commit.
Costa Vida Franchise Loan at a Glance
- Concept: fresh Mexican food with a coastal influence, with recipes the company says are made from scratch daily
- Founded: 2003, when the first restaurant opened in Layton, Utah
- System size: the company’s website lists 94 locations
- Ownership history: the brand’s first franchisees later acquired a controlling interest in the company and lead it today
- Revenue channels: dine-in, online ordering, catering and a rewards program
- Fees and investment: the franchisor does not publish its fees or investment range on its website; confirm them in Items 5, 6 and 7 of the current FDD
- SBA Franchise Directory: not listed, so conventional loans are the primary route for most buyers
What Is Costa Vida?
Costa Vida opened its first restaurant in Layton, Utah, in 2003. Founders Kenny Prestwich and JD Gardner built the brand around community, family and fresh food inspired by coastal Mexican cuisine. The company says its ingredients are chosen for quality and that its recipes are made from scratch every day.
The brand’s growth has a distinctly franchise-driven story. According to the company, Sean Collins and Dave Rutter became Costa Vida’s first franchisees, opened a restaurant in Provo, Utah, became active in franchise sales and acquired a controlling interest in the company by 2008. They now serve as co-CEOs. The company’s website lists 94 locations.
The restaurant format. A Costa Vida restaurant is a fast casual unit, usually in an inline or end-cap space in a shopping center. Guests order along a serving line and eat in the dining room or take food to go, and the company also offers catering, online ordering and a rewards program. Behind the line, the kitchen handles daily fresh prep and cooking, which makes it more equipment- and labor-intensive than a simple assembly concept.
Why lenders view Costa Vida the way they do. Lenders generally see a regional brand with roots in Utah, a long operating history and leadership that came up through franchising. They will also note that it is a mid-size system without an SBA directory listing, so a Costa Vida franchise loan request leans heavily on the borrower’s own capital, restaurant experience and the specific site. For a resale, the restaurant’s own financial history carries the most weight.
Costa Vida Franchise Costs
Costa Vida does not post its franchise fee or estimated initial investment on its consumer website, and we do not quote figures we could not confirm in the franchisor’s own current materials. The exact amounts appear in Items 5 and 7 of the current FDD, which the franchisor provides during the discovery process.
Initial franchise fee. Paid when you sign the franchise agreement. If you sign a development agreement for multiple restaurants, review how development fees are paid and credited.
Real estate and build-out. Most fast casual restaurants occupy leased space. Build-out typically includes the kitchen hood and fire suppression, grease management, plumbing, electrical service, walk-in cooler and freezer space, the serving line, restrooms, dining room finishes and patio work where available. A second-generation restaurant space can lower costs; a former retail shell usually raises them.
Equipment and FF&E. Expect ranges, ovens, griddles, steam tables, prep tables, refrigeration, smallwares, dining furniture, point-of-sale and digital ordering hardware.
Opening costs and working capital. Opening food and paper inventory, training, pre-opening payroll, grand opening marketing and reserves to cover operating costs while sales build.
Total investment. When you receive the FDD, look for these Item 7 line items and check that they add up to the stated range:
- Initial franchise fee
- Real estate, lease deposits and rent before opening
- Leasehold improvements and construction
- Kitchen equipment, smallwares and furniture
- Signage and décor
- Point-of-sale and technology systems
- Opening inventory
- Training travel and expenses
- Grand opening marketing
- Insurance, licenses, permits and professional fees
- Additional funds for the initial operating period
An existing restaurant is priced on its sales, cash flow, lease terms, equipment condition and remaining franchise term.
Ongoing Fees and How They Affect Your Loan
Royalty. Franchisees typically pay a royalty based on gross sales. Confirm the rate and how sales are defined in Item 6.
Brand and marketing fund. Look for a system marketing contribution and any local advertising requirement, including the grand opening spend.
Technology fees. Online ordering, the rewards program and point-of-sale systems often carry recurring fees. Check Item 6 and Item 11.
Remodels and refreshes. Ask how often restaurants must update their décor and equipment, and what a transfer or renewal triggers.
How lenders factor these costs in. In fast casual, food and labor usually absorb the largest share of sales, followed by rent. Royalty and marketing come off the top before debt service. Lenders build a cash flow model with every percentage-of-sales fee, then test whether the restaurant can cover the loan payment with a cushion if sales come in lower than expected.
Franchisor Requirements for New Owners
The franchisor does not post minimum net worth or liquid capital figures on its website, so ask for the current criteria during discovery and read the FDD. Restaurant franchisors in this segment typically evaluate:
- Financial strength: net worth and liquid funds sufficient for the equity injection, working capital and reserves
- Restaurant or multi-unit experience: operating background, or a plan to hire an experienced general manager
- Market and development plans: the trade area you want and how many restaurants you can open over time
- Commitment to training: completing the franchisor’s training before opening
The approval process. Expect an initial inquiry, delivery of the FDD, conversations with leadership and existing franchisees, a review of your finances and approval of you and your site. Your lender’s process should run alongside, not after, these steps.
Ways to Own a Costa Vida
A new restaurant. You sign a franchise agreement, secure a site, build out the space and open. Lenders underwrite projections, your experience and the trade area, and they typically ask for more equity on a new build than on a resale. Our restaurant start-up financing page explains what goes into these requests.
Buying an existing restaurant. Buying from a current franchisee gives a lender actual sales and cash flow to evaluate, which often makes the deal easier to finance. The franchisor must approve the transfer, and the lease must be assigned or renewed. Read about buying a franchise resale.
Multi-unit development. Committing to several restaurants in a market can improve economies of scale but raises the total capital needed. Lenders will typically finance one restaurant at a time as the development schedule unfolds.
Second-generation conversions. Taking over a closed restaurant space with existing hood, grease and plumbing infrastructure can lower build-out costs, subject to the franchisor’s site approval and design standards.
Financing Options for a Costa Vida Franchise
Conventional term loans. For a brand that is not on the SBA Franchise Directory, a conventional business loan is usually the primary tool. Conventional lenders size the loan to projected or historical cash flow, secure it with business assets and the owner’s personal guaranty, and often expect a larger cash contribution and shorter repayment than SBA programs.
SBA 7(a) loans. The SBA 7(a) program is widely used for franchise purchases, but SBA lenders generally require the brand to appear on the SBA Franchise Directory. Unless Costa Vida is added, plan on conventional financing.
SBA 504 loans. The 504 program finances owner-occupied real estate and long-lived fixed assets, and it carries the same directory requirement for franchise borrowers. Because most restaurants are leased, SBA 504 financing would only be relevant if the brand were listed and you were buying the building.
Equipment financing. Ranges, griddles, steam tables, prep tables, walk-in coolers, ice machines and point-of-sale systems can often be financed separately, which reduces the cash needed at opening. See our restaurant equipment financing and leasing options.
Working capital and lines of credit. A new fast casual restaurant needs cash for payroll during training, opening inventory and several months of operating costs. Catering orders can create receivables, and sales can swing with school calendars and weather. A line of credit or restaurant working capital facility helps manage those gaps.
Seller financing on resales. A selling franchisee may carry part of the price as a note. Seller notes are typically subordinate to the senior lender and must fit that lender’s terms.
SBA Loans for Costa Vida Franchisees
SBA franchise lending relies on the SBA Franchise Directory, a list of brands whose franchise agreements have been reviewed for SBA eligibility. SBA lenders generally require a brand to appear on the directory before making an SBA-guaranteed loan to one of its franchisees. A listing does not approve any borrower; it only clears the franchise relationship.
Costa Vida is not on the SBA Franchise Directory. In plain English, SBA 7(a) and 504 loans are generally not available for a Costa Vida restaurant as things stand. That is not a judgment about the brand. It means the brand is not currently on the list, and buyers should plan on conventional financing.
What you can do. Ask the franchisor whether it plans to seek a listing, and confirm directory status with your lender when you apply, since listings can change. If the brand were added, the SBA 7(a) program maximum is currently $5 million, though program rules can change.
How Lenders Evaluate a Costa Vida Deal
Personal credit and financial history. Lenders review your credit, tax returns and personal financial statement and typically require a personal guaranty.
Net worth and liquidity. Without SBA support, the cash contribution is usually larger, and lenders also want reserves after closing. Plan for both.
Industry and management experience. Restaurant operations experience, especially in fast casual or multi-unit settings, materially strengthens a request. If you are new to restaurants, name an experienced general manager.
Business plan and projections. Projections should reflect a ramp-up period, food and labor costs for a scratch kitchen, catering and online ordering mix, royalty and marketing fees and rent. Avoid relying on system averages; build from the specific trade area.
The FDD and franchise agreement. Lenders review the term, renewal rights, transfer conditions and any development obligations. Our guide to how lenders read a Franchise Disclosure Document explains which items matter.
Site and lease. Expect scrutiny of rent, tenant improvement allowance, lease term and renewal options, co-tenancy and parking. The lease should run at least as long as the loan.
Historical financials for resales. Several years of profit and loss statements, sales reports and tax returns let the lender verify the restaurant’s cash flow.
Kitchen Equipment and the Scratch-Cooking Model
Scratch cooking shapes the equipment list. A Costa Vida kitchen relies on cooking equipment for proteins and rice, holding equipment for the serving line, refrigeration for fresh produce and prepared ingredients, and ventilation sized for the cooking load. Each piece is both a cost and a source of collateral.
New builds. Equipment typically makes up a significant share of the opening budget, and financing it separately can preserve cash for working capital.
Resales. Inspect hoods, walk-ins and cooking equipment before closing. If replacements are needed soon, fold them into the acquisition loan rather than paying from operating cash.
Multi-Unit Growth and Development Agreements
Fast casual operators often grow by clustering restaurants in one market, sharing management and marketing. Before signing a development agreement, compare the opening schedule with how quickly you can raise equity and qualify for each loan.
Financing the next restaurant. Once your first Costa Vida is operating, lenders can underwrite its cash flow alongside the new one. Some owners finance each opening separately; others later consolidate into a single facility. Our article on multi-unit franchise financing explains how lenders view a growing group.
Real-World Scenarios
An experienced operator opening a first unit. A former multi-unit restaurant manager signs a franchise agreement and leases a second-generation restaurant space. A conventional term loan covers build-out, equipment financing covers the kitchen package, and the owner’s cash covers the franchise fee, opening costs and reserves.
A buyer acquiring an established restaurant. A buyer purchases a restaurant from a franchisee who is relocating. The lender underwrites several years of financial statements, the seller carries a small subordinate note, and the lease is extended to match the loan term.
An owner adding a second location. A franchisee with a year of operating history opens a second restaurant nearby. The lender reviews combined cash flow and asks for a management plan covering both units.
Common Mistakes to Avoid
- Assuming an SBA loan will be available for a brand that is not on the SBA Franchise Directory
- Underestimating build-out costs when converting a non-restaurant space
- Leaving too little working capital for training payroll and the ramp-up period
- Building projections from system averages rather than the specific site
- Signing a development schedule your capital cannot support
- Overlooking equipment condition and lease term on a resale
For more pitfalls, see the restaurant loan mistakes that cost owners the most.
Next Steps to Finance Your Costa Vida Franchise
Step 1: Request and study the FDD. Review Items 5, 6, 7, 10, 17 and 19 with a franchise attorney and accountant.
Step 2: Confirm the franchisor’s requirements. Ask for the current net worth, liquidity and experience criteria.
Step 3: Decide how you will enter. Compare a new build, a resale and a development commitment.
Step 4: Talk with a financing specialist early. Learn how conventional lenders will size your loan. Our conventional loan calculator provides planning estimates only, not an offer or approval.
Step 5: Secure your site or target restaurant. Gather the lease, build-out estimates or the seller’s financial records.
Step 6: Apply and coordinate approvals. Submit your projections, personal financials and franchise documents, and align the lender’s timeline with the franchisor’s.
Step 7: Close and prepare to open. Line up working capital, equipment delivery and staffing for training and opening.
Costa Vida Franchise Loan FAQs
How much does it cost to open a Costa Vida franchise?
The franchisor does not publish its investment range on its website. Item 7 of the current FDD gives the estimated range and line items, which vary with site condition, size and local construction costs.
What is the Costa Vida franchise fee?
The fee is disclosed in Item 5 of the FDD. Ask about any development fees if you plan multiple restaurants.
What royalty does Costa Vida charge?
Royalty and marketing contributions are disclosed in Item 6 of the FDD and are typically based on gross sales.
Can I get an SBA loan for a Costa Vida?
Costa Vida is not listed on the SBA Franchise Directory, and SBA lenders generally require a listing, so most buyers use conventional financing. Confirm current status with your lender.
How much money do I need to qualify?
The franchisor does not post net worth or liquidity minimums on its website. Ask during discovery, and expect conventional lenders to want a meaningful cash contribution plus reserves.
Can I finance kitchen equipment separately?
Yes. Cooking, holding and refrigeration equipment and point-of-sale systems can often be financed through equipment loans or leases.
Can I buy an existing Costa Vida restaurant?
Yes, with franchisor approval of the transfer. A resale gives lenders actual financials to underwrite, which often makes financing easier.
Can a first-time restaurant owner get a Costa Vida franchise loan?
Possibly, but lenders weigh restaurant experience heavily. First-time owners strengthen a request by hiring an experienced general manager and bringing extra liquidity.
Does Costa Vida offer financing?
Check Item 10 of the current FDD for any franchisor financing. Most buyers arrange their own loans.
How long is the franchise term?
The term and renewal rights are set out in Item 17 of the FDD and the franchise agreement. Lenders prefer a remaining term at least as long as the loan.
What documents will a lender ask for?
Personal tax returns, a personal financial statement, a résumé, the FDD and franchise agreement, the lease, projections and, for a resale, the restaurant’s financial statements and tax returns.
Does the FDD include financial performance information?
Review Item 19 of the current FDD to see whether it includes financial performance representations, and rely on actual statements when buying an existing restaurant.
Final Thoughts
Costa Vida offers a scratch-kitchen fast casual concept with a long franchising history, but the lack of an SBA directory listing makes preparation even more important. Buyers who arrive with solid equity, restaurant experience and a site-specific plan put themselves in the best position for a Costa Vida franchise loan.
US Professional Funding helps franchise owners and buyers finance start-ups, acquisitions, equipment and working capital. Learn more about our franchise financing and restaurant financing solutions.
