Armando Pedroza: Lenders Are Lining Up for Restaurants

Armando Pedroza clearly remembers the first restaurant loan he ever made. It was Dec. 20, 1995. Not only was it the start of a new chapter in his finance career, but it was a vastly different financing climate for restaurant operators than what exists today.

The deal involved setting up a program for a large restaurant chain looking for lending to provide its franchisees. What is interesting is that for a national chain of that size there would be plenty of lenders today that would jump at the chance to make those loans. But back in the mid-1990s, there were relatively few national restaurant lenders, and even fewer willing to lend to a restaurant, especially to a restaurant franchisee with less than 20 stores, says Pedroza.

These days, restaurant operators have dozens of choices when it comes to accessing both debt and equity due to the amount of capital in the market. "Capital has found the restaurant industry, and that has driven a lot of the development and M&A activity in this last business cycle," says Pedroza. 

Pedroza currently serves as managing director of restaurant finance at Citizens Bank where he leads a team of seven restaurant bankers who provide financing for both franchisors and franchisees, as well as regional and national chains.

His initial "boot camp" into finance was a first job for a big accounting firm specializing in audit after graduating from UCLA in the early 1980s with a business degree. "It was a great start where I learned a lot, but I wanted a role that was closer to the operational front line working directly with customers and clients," says Pedroza. 

He ended up going to grad school, earning an MBA from the UCLA in 1988 and landed a job in the specialty finance group at Citicorp. There were several businesses within that division, and the one that floated to the top for Pedroza was the restaurant lending practice where he eventually did get to have a more hands-on role working with clients.

Although there has been a growing lender appetite to do restaurant deals in the past decade, there have been headwinds emerging over the past 12 to 24 months. Casual dining is one sector that has struggled with competition and overbuilding in some cases. "As things tighten up as we have seen some of the headwinds in the industry, it is important for borrowers to understand where we are in the cycle and find the lender that is best suited for their brand, their size and their segment," says Pedroza.

Some advice for new entrants, emerging brands and smaller operators is to find out what lenders are focused on their brand or particular segment. "The biggest challenge I have seen with smaller operators over my career as they grow and move into a commercial bank market, is that in addition to being a strong operator, they need to begin to focus on consistent and reliable financial reporting especially as it relates to lender reporting requirements," adds Pedroza. For more information, contact Armando Pedroza at

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