Arby’s is a renowned fast-food chain that has expanded its presence and operations across the US and beyond. As this well-known, quick-service restaurant chain grows, potential investors and franchisees should understand Arby’s real estate requirements and lease investment options.
This article covers all you need to know about an Arby’s franchise and real estate investment, including the lease terms and conditions, site selection process, average Arby’s lease rate, and the financial investment necessary for securing a lease agreement.
Whether you’re a first-time franchisee looking to explore new business opportunities or a seasoned real estate investor considering diversifying your portfolio, this article will help you understand how Arby’s franchises work to enable you to make a final decision regarding joining the list of Arby’s franchisees.
How Arby’s Selects Their Site Location
When it comes to investing in Arby’s restaurant group, selecting an excellent site location is essential to the franchise’s success. Arby’s franchise owners employ a rigorous process for evaluating potential sites while considering demand, competition, demographics, accessibility, and visibility.
Here’s a detailed explanation of the factors influencing Arby’s restaurant site selection:
One significant consideration for Arby’s when choosing a site for its restaurants is visibility. Arby’s traditional restaurants offer drive-thru services, so they ensure the site is easily visible from high-traffic areas and roads to maximize exposure to prospective customers.
As an intending Arby’s franchise owner, you need to evaluate the location’s accessibility, ensuring it’s easy to exit and enter the establishment. Also, make sure the drive-thru window is well-positioned if you’re building your own building.
Market Demand and Demographics
As the franchisor, Arby’s approves of locations with high populations and different household mixes.
Arby’s also considers the competition in the neighborhood, prioritizing areas with low saturation of quick-service restaurants but high demand for fast food services.
Another crucial factor Arby’s considers when selecting a location for its franchising operation is the cost of leasing or acquiring the property and the upgrade or renovation costs.
A report from Franchise Gator shows that the initial investment capital for opening an Arby’s franchise is between $750,700 to $2,474,400 for purchase and $336,500 to $927,900 for lease. However, the amount depends on factors like equipment, size, and location.
Besides these factors, Arby’s also evaluates the location’s long-term profitability and growth potential. This quick-service restaurant uses market research and data analytics to project future revenue and demand, helping franchisees make informed investment decisions.
Average Arby’s Lease Rates
Arby’s is a renowned fast-food chain specializing in roast beef sandwiches, Curly Fries, and desserts like Jamocha Shakes. An offshoot of Inspire Brands, Arby’s was founded in Ohio in 1964 by Forrest and Leroy Raffel and headquartered in Sandy Springs, Atlanta, Georgia. Over time, the brand has enjoyed market penetration to countries outside the US, such as Canada and Mexico.
If you’re interested in exploring franchise opportunities at Arby’s, you need to consider some factors, such as the property leasing cost for your new restaurant. The average lease rate for Arby’s restaurants varies depending on the property size and location. However, it’s often between $2,500 and $8,500 monthly.
While an average Arby’s restaurant is about 3000 square feet, the new, free-standing designs are 2000 square feet.
Investors can explore other non-traditional Arby’s franchise options, including urban inline locations, travel plazas, airports, hospitals, and colleges, amongst others.
According to Arby’s Franchise Disclosure Document (FDD), the average lease term is 20 years with about two to four five-year renewal options. The FDD also outlines that the estimated initial investment for owning an Arby’s franchise is between $628,950 to $2,306,000. This amount includes equipment and inventory, franchise fees, working capital, and construction costs.
However, these estimates may vary depending on local market conditions, property size, and location. Do your due diligence and work with a real estate broker specializing in triple-net leases to help you get an accurate estimate for your investment.
Requirements Needed to Secure Arby’s Lease Agreement
Before securing an Arby’s lease agreement, you need to meet some requirements. Some of these requirements include the following:
Prospective franchisees will have to demonstrate their financial capability when it comes to utilities, insurance, and rent payments. Arby’s also requires its franchisees to have at least $500,000 in liquid assets with a $1 million net worth.
That way, they’re sure franchised restaurants have the necessary resources to operate and meet their leasing obligations.
Strict Adherence to Operating Standards
Arby’s is a popular fast-food brand with a great reputation, and maintaining the standard is crucial to the business’s success. Therefore, tenants must follow the company’s strict operating standards and procedures, including customer service, marketing, pricing, and menu offerings.
Licenses and Agreements
Franchisees will need certain licenses and agreements to operate Arby’s restaurants. One such license is the food service license, required by most states in the United States to ensure restaurants meet health and safety standards.
Aside from obtaining this license before opening your restaurant, you’ll need to maintain it throughout your lease duration. Franchisees will also need to sign Arby’s franchise agreement (a document outlining the franchise’s terms and conditions, including usage of the brand’s logos, trademarks, and name).
The agreement also outlines the obligations of the franchisee and franchisor, including advertising and marketing requirements, product and equipment standards, and training programs.
Additionally, franchisees might have to obtain other permits and licenses like business licenses, health permits, tax registration, development agreement, and building permits. However, these requirements vary depending on the restaurant’s location.
Is Arby’s a Good Investment?
As a popular fast-food chain with over 50 years in business, Arby’s has maintained a strong brand reputation and recognition that draws many potential investors. However, if you’re wondering if it’s a good investment for you, the following factors will help you decide:
When evaluating Arby’s investment potential, consider checking its financial performance. A report from Franchise Times shows that Arby’s has a 6.1% growth rate, so you’re sure of a profitable investment. Interestingly, franchisees are entitled to a 6.2% royalty for non-traditional restaurants’ gross sales and 4% gross sales for traditional restaurants.
Additionally, Arby’s has introduced various operational improvements and cost-saving measures to increase profitability, such as a technology for improving order accuracy, helping to reduce waste.
Arby’s has a robust brand strength as a popular and reputable fast food brand with a unique menu that distinguishes it from competitors and a loyal customer base.
The company has successfully adapted to changing consumer preferences, like the increasing demand for more sustainable and healthier food options. Therefore, consider its brand strength before deciding if it’ll make a good investment.
The Fast Food Industry’s Competitive Landscape
The last factor to consider is the fast food industry’s highly competitive landscape. Although Arby’s has unique menu offerings and strong brand recognition, it still faces stiff competition from popular fast food chains like Burger King, Wendy’s, and McDonald’s.
Therefore, consider Arby’s ability to adapt to ever-changing consumer preferences while remaining competitive.
Arby’s has a strong brand reputation, and records show a positive financial performance, making it a great investment opportunity. However, as with all investments, do your due diligence and evaluate the rewards and risks before making a decision.
Acquire Arby’s With NNN Deal Finder
Now you understand Arby’s real estate requirements for investments, if you’ve determined Arby’s is a sound investment and want to add a triple net lease to your portfolio, consider working with a professional NNN broker like NNN Deal Finder.
We adopt an individualized approach when working with clients to help them secure the best and most profitable triple-net properties in the real estate market.
Whether you’re an investor looking to own investment properties and collect rent or an intending franchisee, we have various Arby’s properties for sale at prime locations nationwide.