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By Root 1251 0

fast food industry has used the Small Business Administration (SBA) to finance new restaurants — thereby turning a federal agency that was created to help independent, small businesses into one that eliminates them. A 1981 study by the General Accounting Office found that the SBA had guaranteed 18,000 franchise loans between 1967 and 1979, subsidizing the launch of new Burger Kings and McDonald’s, among others. Ten percent of these franchise loans ended in default. During the same period, only 4 per-cent of the independent businesses receiving SBA loans defaulted. In New York City, the SBA backed thirteen loans to Burger King franchisees; eleven of them defaulted. The chain was “experimenting,” according to a congressional investigation, using government-backed loans to open restaurants in marginal locations. Burger King did not lose money when these restaurants closed. American taxpayers had covered the franchise fees, paid for the buildings, real estate, equipment, and supplies.

According to a recent study by the Heritage Foundation, the SBA is still providing free investment capital to some of the nation’s largest corporations. In 1996, the SBA guaranteed almost $1 billion in loans to new franchisees. More of those loans went to the fast food industry than to any other industry. Almost six hundred new fast food restaurants, representing fifty-two different national chains, were launched in 1996 thanks to government-backed loans. The chain that benefited the most from SBA loans was Subway. Of the 755 new Subways opened that year, 109 relied upon the U.S. government for financing.

the world beyond pueblo

THE FRANCHISE AGREEMENT THAT Dave Feamster signed in 1984 gave him the exclusive right to open Little Caesars restaurants in the Pueblo area. In addition to the franchise fee, he had to promise the company 5 percent of his annual revenues and contribute an additional 4 percent to an advertising pool. Most Little Caesars franchisees have to supply the capital for the purchase or construction of their own restaurants. Since Feamster did not have the money, the company gave him a loan. Before selling a single pizza, he was $200,000 in debt.

Although Feamster had spent four years in college at Colorado Springs, less than an hour away, he’d never visited Pueblo. He rented a small house near his new restaurant, on a block full of steelworkers. It was the sort of neighborhood where he’d grown up. Feamster expected to stay there for just a few months, but wound up living there alone for six years, pouring all his energy into his business. He opened the restaurant every morning and closed it at night, made pizzas, delivered pizzas, swept the floors, did whatever needed to be done. His lack of experience in the restaurant business was offset by his skill at getting along with all sorts of different people. When an elderly customer phoned him and complained about the quality of a pizza, Feamster listened patiently and then hired her to handle future customer complaints.

It took Feamster three years to pay off his initial debt. Today he owns five Little Caesars restaurants: four in Pueblo and one in the nearby town of Lamar. His annual revenues are about $2.5 million. He earns a good income, but lives modestly. When I visited a Colorado Springs restaurant operated by a rival pizza chain, the company flew in a publicist from New York City to accompany me at all times. Feamster gave me free rein to interview his employees in private and to poke around his business for as long as I liked. He says there’s nothing to hide. His small office behind the Belmont store, however, is in an advanced state of disarray, crammed with stacks of sagging banker’s boxes. While his competitors use highly computerized operating systems that instantaneously display a customer’s order on TV monitors in the kitchen, Feamster’s restaurants remain firmly planted in the era of ballpoint pens and yellow paper receipts.

Feamster has established strong roots in Pueblo. His wife is a schoolteacher, a fifth-generation native of the city. His community work occupies