NNN Insights:

Fast-food Brands to Invest In

Fast-food franchising remains to this day as one of the most popular options for entrepreneurs when starting a new business. The combination of owning an established brand and not having to build a customer base is attractive to anyone looking to see an immediate return on their profit. The following is a listing of the most popular fast-food chain restaurant options. The goal of this guide is to cover each chain including their reputation, what makes them popular, their real estate status, and the pros and cons of owning one, so that you can decide which NNN investment is the best one for your needs.

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Well known for its great fast-food dining and quick-serve sandwich restaurants, Arby’s independent buildings are privately owned. Standard location sizes average about three thousand square feet, with architecture unique to each location. They also stay true to the fast-food experience with a drive-through window.

Typically located on 1/2 to 1 acre, the leasing terms are usually twenty years with between 2 and 4 five-year options. Annual increases may be found ranging from one to two percent, or even from five to ten percent every five years. Although keep in mind that for many Arby restaurants, lease terms and capitalization rates are variables depending on size, sales, and operations per individual location. This is further due to the fact that most Arby’s properties are franchised, so each will contain a unique guarantor with an associated leasing arrangement.


  • NNN leasing with substantial increases
  • Arby branding and marketing for improved image and outreach
  • Availability for high capitalization rates


  • Requirements of sales data analysis per restaurant
  • Variable franchise performance depending on locations
  • Sales reports not always requisite for leasing

Tenant Description

Arby’s continues to be one of the most popular franchises going after 52 years in operation. Being well known for providing a unique and tasty assortment of burgers and sliders, healthy salads, and delicious beverages, Arby’s Restaurant Group, Inc. is currently experiencing another wave of popularity with catchy advertising slogans like ‘We Have the Meats’.

Founded in 1964, Arby’s Restaurant Group, Inc. owns and franchises operations from Atlanta, GA. As part of its long corporate history, Roark Capital Group acquired the company in 2011. They now hold over 80 percent of the company. Interesting to note that Wendy's owns the other near twenty percent. 

With a typical structure measuring 3000 plus sq. ft., Arby’s new free-standing designs will be utilizing smaller dimensions at around 2000 sq. ft. This will open up new opportunities for restaurant owners as expansion continues. Whether it might be a minimal city inline spot, or end-caps featuring a drive-through, the sky is really the limit. Considering travel plazas and other unusual locations, they will become more accessible to franchisees and investors alike.

At this time, there are currently 3300 locations in operation with plans to expand. By the year 2020, the U.S. Beef Corp. (United States Beef Corporation) expects to open four hundred more locales, already owning 330 restaurants as of this writing.

Smaller holders include the likes of AEG Group LLC with plans to expand by 2025. AEG is owned by John Wade, former president of RTM Restaurant Group, with twenty-one restaurants being held at present. Add to this list Joe Brumit, a restaurant aficionado who started working at a burger franchise early in his life. Later, he successfully made his way to owning over forty-four franchises by 2015.


In the world of net leasing, Bojangles’ properties are generally considered long-term investments without landlord accountabilities to the usual infrastructure maintenance costs. Being publically traded, they are a unique fast-food chain in high demand, seeing continuous sales growth that has now spanned 23 straight quarters.

Bojangles has also been rated by Zagat in the top five chains, with restaurants averaging between 3500 and 3800 square feet per location. Each property is typically sitting on 4/5 to 1 1/2 acres with standard leasing terms of a fifteen-year NNN, which means no landlord accountabilities. Each NNN will see two to four separate 5-year options, alongside rental bumps of seven to ten percent every 5 years. In some cases, rental escalations can be found anywhere between 1 1/4 to 1 1/2 percent per annum.


  • Growth expected to continue with one thousand units planned through 2020
  • Popular Chicken & Biscuit idea has continued to increase per unit volumes
  • No landlord ownership accountability due to NNN leasing


  • Creditworthiness is not applicable
  • Heavy competitors

Tenant Description

Expanding to over 662 restaurants since going public in May 2015, Bojangles’ has operations throughout 11 states, ranging from NC, SC, GA, VA, TN, AL, MD, FL, KT, WV, PA, and Washington D.C. They have approximately 378 franchised properties in those states while owning and operating 281 fast-food restaurants directly. Their operations are heavily focused in North and South Carolina, as they continue growth expansion into new markets.

Net lease investors will find the standard 3800 sq. ft. restaurant sizing, which houses up to seventy customers at a time. Normally, buildings are situated on one acre of land. Each property features a modern look with drive-through window, with generous parking for over forty vehicles at a time.

Regardless of city or rural location, property developing costs typically factor in the land, building structure, and restaurant assets requisite for operations. To this end, an average upfront cost of over two million dollars is required, allotting around a half million for the grounds, closer to 1.5 million for the restaurant structure including soft costs, and roughly $300,000 in approximate equipment costs.

The primary means of construction is ‘build-to-suit’, with the equipment lease being a minimal requirement for upfront investing. This is usually offered at the financed rate of $85k with 1 year cash-on-cash back of 129 percent.

Bojangles' mission is all about unmatched customer service, with quality sourced and made foods and a Southern styled recipe theme. Being popular for their ‘Chicken ‘n Biscuits’ phrase, they have remained true to this famous slogan with their branding. Whenever you stop to eat, expect fresh biscuits baked from scratch every twenty minutes. They pride on non-frozen chicken legs served with delicious iced teas. They have always stayed true to their values ever since being founded in Charlotte, NC in 1977.

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Burger King

A behemoth in the fast-food industry, Burger King is historically one of the most trusted investment properties for net leasing. Coming in a close second behind the iconic McDonald’s brand with respect to comparing sales revenues, the ability for Burger King to ride out unstable markets is quite reassuring. This holds especially true for non-investor grade net leasing tenants.

Burger King, like other fast-food chains (also referred to as QSR) operations, tend to select prime property locations in areas with maximum levels of visibility and traffic, alongside the need for easy access.

Backed by time-tested real estate principles, Burger King’s physical building properties tend to have a standard average size of 3500 square feet. Typically, they will sit on one half to one acre of surrounding property. Given the fact that corporate run Burger Kings account for only fifteen percent of total restaurants, the majority are franchised out, so there are many variables within the leasing agreements and associated guarantors who operate them.

With respect to company operated locations, they usually consist of ten to fifteen year ground leases, offering rental bumps ranging from 8-10 percent every five years.

Leasing terms of franchises will fluctuate on the individual credit ratings of owner-operators, and such terms may be more favorably negotiated based on location and sales strength. This may include annual rental increases or percentages bumps per annum.


  • Landlord accountability relinquished via NNN leasing
  • Highly desirable property locations and branding


  • Operators are franchisees
  • Creditworthiness is non-investor grade

Tenant Description

For well over fifty years, Burger King stands as the 2nd biggest quick-service restaurant across the globe.Statistics show over 15,000 Burger King different restaurants established in roughly one hundred countries around the world. Out of these, approximately 76 are corporate owned, showing how reliant they have actually been on the franchise business (nearly 100%).

Back in 2010, Burger King quadrupled annual revenues, doing so well that they added 631 brand new locations in 2015. This was up from 173 units constructed in 2010, recording the fastest QSR growth in all of international retail history.

Then in 2014, an entity called Restaurant Brands International Inc. became the indirect parent company of Tim Horton’s and subsidiaries, which included Burger King Worldwide and all of its consolidated subsidiaries. 

Just last year in 2016, Burger King offered to renovate U.S. franchisee operations to boost a more modernized image. It’s interesting to note the large variety of revenue sources Burger King produces, including everything from franchise sales and revenues, to property income through leasing with sub-leasing to franchisees, and of course overall retail sales.

Captain D's

Captain D’s makes for a highly desirable net leasing opportunity, given that the overall quick-service food and dining market in the United States is among the most promising for long term stability. Additionally, many seafood franchises have strong records of success in the various locations they are placed, whether it’s city, rural, or right in the heart of suburbia. 

The average Captain D’s leasing terms are absolute NNN, which may range anywhere from fifty to twenty years. While corporate owned locations will often yield lower capitalization rates than their franchised counterparts, yearly price bumps of one to two percent, or even 7 to 10 percent every three to five years, these are not uncommon. In fact, many recent property transactions have been found with under ten years left, while all new Captain D’s leasing opportunities are hitting the market as fresh as their seafood.


  • Leasing will often undergo yearly price bumps
  • Landlord accountabilities relinquished through NNN leasing


  • Franchisor performance standards require inspection
  • Privately held corporation

Tenant Description

Once upon a time in 1969, Captain D’s was first known as Mr. D’s Seafood and Hamburgers. The very first location opened in Donelson, TN that year. With the success of their popular hand-battered fish and chips, they opened up fifteen stores in 4 years and never looked back.

During the eighties and nineties, the Southeast United States began to experience new franchise opportunities.  With a considerable amount of locations spread throughout, Captain D’s was primed for success. At that time, they totaled 513 quick-service locations across twenty one states. Out of that number, franchisees had owned approximately half.

With a newly concerted effort to work with franchisees, Captain D's underwent a fresh influx of franchise growth while riding the waves of their own success into the present day. The success being self-evident given that in the past 2 years, average sales revenues broke $1.4 million.

In 2016, the Q2 report marked Captain D’s nineteenth straight quarter of consistent sales growth. They are now looking forward with plans to expand, being on track to open 5 more locations in the region of Savannah, GA, 3 more restaurants in Dallas, TX, and yet another to be built in Hopewell, VA.

With delicious menus that are cooked-to-order, Captain D’s entrees continue to include freshly grilled foods like surf n’ turf, hush puppies, shrimp, Southern flavored sweet teas and tasty desserts. Today, they remain the top franchisor for seafood as found QSR magazine’s top fifty best restaurants.

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With yearly sales figures boosting positive growth in past years, Chick-fil-A, Inc. has earned its place as one of the fastest fast-food service chains across the U.S.A. They currently operate over two thousand restaurants spread throughout forty six states, including the District of Columbia. Backed by great branding with uniquely designed building structures to attract customers, Chick-fil-A, Inc. started as a private family run operation. They continue to anticipate new growth and expansion into the future.


  • Ground leasing availability
  • Guaranteed by corporate
  • Initial term increases


  • Privately-held corporation
  • Lower capitalization rates

Tenant Description

It’s a little known fact that the first Chick-fil-A was opened back in 1967, and with humble beginnings to boot. At the Dwarf House in Hapeville, Truett Cathy invented a unique sandwich combination that would be a household in time, comparable to the branding power of Coca-Cola.

It was the simplicity of chicken breast, breaded and packed with a buttery bread and pickle chips that really started it all. When made for customers in a quaint room with only 4 tables and ten stools, the sandwich became an instant hit. Little did they know it would end up taking America by storm the way it has. Today we can find over 2k restaurants across most of the continental U.S.A.

When looking at their real estate strategy, they tend to choose new locations wisely.  They are often designed as out-parcels and sit on pads near major shopping plazas. These decisions are thoughtfully based on analyzing the target markets beforehand at corporate.

Ground leasing properties is an added hedge of protection for investing, since Chick-fil-A generally pays for the building, planning, and operational assets for most new locations up front. Essentially investors are only acquiring the real estate property itself with a ground lease.

Net leasing investments are quite an opportunity with Chick-fil-A, since triple leasing is backed and guaranteed by the company. In fact, only a very small margin (.4 percent) of potential franchisees are accepted annually. They do believe in heavy franchising for retail operations, which becomes self-evident when reviewing the numbers. In their case, a five percent rate of turnover per annum.


Thanks to high demand for high quality Mexican cuisine, Chipotle is looked upon as a great investment in the overall QSR market. In the last 10 years, they have reported increasing sales revenue and continue to see upward trends.

In light of this, they are also considered highly regarded when it comes to net leasing opportunities. Chipotle real estate locations can be found alongside educational institutions, regional malls, and local businesses, therefore properties command an excellent value.

With NNN ground leasing and no landlord accountability, Chipotle offers 4 separate 5 year options to renew with a 7 1/2 to 12 percent increase every five years. Common dimensions for buildings range from 2100-4200 square feet in size, sitting on .43-1.55 acre lots and backed by a solid company guarantee.


  • Quickest growth sector of food industry, ‘fast casual’ property
  • Relinquished landlord accountability due to NNN leasing
  • Standard fifteen year NNN ground leasing


  • Strong competition
  • No depreciation availability with ground lease
  • Creditworthiness non-investor graded

Tenant Description

Originating in Denver, CO back in 1993, Chipotle can be found in the NYSE: CMG and has properties throughout the U.S., U.K., Germany, France, and Canada. With cap rates in excess of twenty two billion dollars, sixteen hundred restaurants, and approximately forty five thousand employees, Chipotle has learned the art of making cooking count.

From unique recipe combinations to interior building designs, they have endeavored to push beyond the boundaries of being ‘plain’ and ‘normal’ on both fronts. Then taking the idea of expressing high quality and bringing it all into an affordable price point; one for all size wallets and pocketbooks.

For the founders, it was all quite simplistic. Good food served quickly and fast-food can be mutually exclusive concepts. They took the fast-food world by storm at the time, renovating the landscape of modern restaurant chains. 

Today with over sixteen hundred restaurants opened, they are classified in a unique way amongst industry leaders. The phrase “fast-casual” is now used, in terms of being favorable in both categories of fast-food and fine dining categories; where superior service and quality is blended into the experience.

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Church's Chicken

Church's Chicken is a United States fast-food restaurant chain that is well known for its tasty fried chicken, and also trades outside North America and Asia under the name “Texas Chicken”. Originating from Atlanta, they have plans to expand new franchises with their successful chicken lineup.


  • Multiple leasing extensions at 5 years a piece
  • Most leasing based in ground structuring
  • Elimination of landlord accountability via NNN leasing


  • Privately-held corporation
  • Review and analysis of franchisor performance recommended

Tenant Description

Church's® Chicken and Texas Chicken® (the international brand name), has been one the fastest growing restaurant chains in the world that focus on delivering only the best in freshly prepared chicken. Whether Original or Spicy, expect your chicken to be double breaded and battered by hand. Well known products include Tender Strips® with home style sides and sandwiches that always delight. Not to mention honey buttered biscuits freshly made throughout the day.

First opened in San Antonio, Texas by George W. Church in 1952, Church’s Chicken is now ranked number 57 out of the top 100 in the well-known Nation’s Restaurant News. In 2016, it was reported that Church’s Chicken grossed close to $840 million in sales revenue in the United States for year ending 2015. In the U.S.A., there are over 1150 franchises alongside corporate owned retail locales spread out between twenty nine states.

At present, they have construction plans for ten locations in the Southeastern U.S. in the following five years. Church's® Chicken operates in more than twenty five countries with a total of 1650 restaurants. This extends to include other global territories with revenues surpassing one billion dollars.

Dairy Queen

As one of the most well-known quick-service restaurant chains around the globe, Dairy Queen (now DQ® for short) has retail operations spanning approximately six thousand locations across the U.S.A. They have further secured real estate in various regional markets. Each store is wholly franchisee owned and operated. For net leasing investors, DQ continues to be a highly desirable opportunity whenever available.


  • NNN leasing available
  • Company guaranty NNN leases
  • Locations situated near complementary health services


  • If tenant relocates, leasing again may prove costly
  • Landlord accountability with NN leasing terms

Tenant Description

Known as the American Dairy Queen Corp., Dairy Queen is a subsidiary of Berkshire Hathaway, Inc. and is a considered to be part of the fabric of twentieth century American culture. John F. MCullough and Bradley MCullough, a father and son team had decided to open their first store with Sherb Noble in 1940. Based out of Joliet, Illinois, their unique formula for soft serve ice cream became very popular near the end of World War II.

Prior to 1941, only ten Dairy Queens were in operation and the concept of franchising was not an everyday term. The number of stores approached 1,500 by 1950, and then nearly doubled again by 1955. Known as the DQ® system for short, today there are over six thousand locations across the U.S., and is considered one of the biggest quick-service restaurants chains internationally.

Dunkin' Donuts

With excellent real estate locations providing high visibility, easy accessibility, and plenty of customer traffic, Dunkin’ Donuts is always a strong opportunity from the net leasing investment perspective.

Due to constant replenishment of food and beverage supply, inherent risks that may be found in other retail businesses are less of a concern. Dunk Donut’s lot sizes are usually smaller depending on property location, and are likewise able to be repurposed down the road.

Lower pricing and lower rents tend to go hand in hand, and this creates desirable opportunities for investors. Often times rent bumps will be found in the leases, adding another beneficial aspect for lease consideration.


  • Rental increases often found in leases
  • NNN or ground leasing usually accommodating to landlords
  • Ability to repurpose small lots
  • Typically desirable and highly visible locations


  • Creditworthiness non-investor graded
  • Leasing terms short length
  • Analysis required for franchised stores, credit and sales concerns

Tenant Description

Holding the number one rank for client loyalty 9 years straight (source: Brand Keys), Dunkin’ Donuts is the premier breakfast and coffee chain servicing over three million international customers daily. From freshly baked foods, bagels, and fifty two styles of donuts, they also offer an excellent assortment of flavored coffee.

A man by the name of Bill Rosenberg founded the first Dunkin’ Donuts back in 1950, opening a small place in Quincy, MA. His mission was to provide superior quality, fresh donuts and coffee, with a modernized store appearance. He also originated the first franchise restaurant in 1955.

Dunkin’ Donuts is truly industry leading in their market sector. To this day, the company utilizes their unique founder’s coffee recipe at every location with over 11,300 properties in operation across the globe. In the United States alone, eight thousand Dunkin’ Donuts can be found in forty one states including Washington D.C. In fact, over 3200 worldwide restaurants currently service thirty six different countries. Dunkin’ Brands, Inc. is the parent company of both Dunkin’ Donuts and Baskin-Robbins.

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Hardee’s QSR (quick-service restaurant) chain employs a standard building design, complete with drive-through window. Structures are available to be repurposed and modified for any number of purposes for long term considerations. Typical size dimensions will span anywhere from 2500-3000 square feet, while sitting on approximately 3/5 to 1 1/2 acre.

When negotiating potential lease agreements, Hardee’s will usually offer a twenty year, absolute triple net, with price increases generally seen every 5 years.

Having over 1900 separate locations serving thirty different states, Hardee’s has clearly built a reputation for being a top-leading burger chain. Most of their restaurants can be found spread out across the United States, with plans for expansion into Wisconsin, Michigan, and much of the Northeast.


  • Locations can be repurposed
  • Landlord accountability issues eliminated via NNN leasing
  • Prime locations with visibility


  • Privately-held corporation
  • Financial review needed due to franchised properties

Tenant Description

The popular Hardee’s restaurant chain is based on quick-service and delicious foods, being ranked #28 in total sales throughout the USA since 2011 (as reported by Nation’s Restaurant News in 2015). Favorite menus items include the Thickburger® line of 100 percent Black Angus beef, with Made-from-Scratch™ Biscuits, alongside their famous Ice Cream Shakes and Malts™ varieties.

In 2016, Hardee locations topped 5,812 properties in the United States, and partnered to franchise eighty four more locations in the state of Ohio during 2017.Their history goes back to 1960, when the famous Wilber Hardee founded the first store in Greenville, NC. Just 5 months later, his first burger chain franchise was created, and they quickly branched out through the Midwest and Southeast.

Hardee’s was eventually bought by Carl Junior’s parent corporation CKE Restaurant Holdings, Inc., to the tune of 327 million dollars back in 1997. Upon merging, there were close to 3200 Hardee’s restaurants in forty states, including ten international locations. Carl Junior’s properties were centralized in the state of California. At the time, their total chain count became 3828 as a result of the merger transaction.


For over seventy years and counting, the KFC Corporation continues to operate as an iconic, American treasure, largely due to the image of Colonel Sanders. Multiple generations know of him from television commercials, having long since entered into “fast-food nostalgia” territory. Founded in Korbin, KY with operations out of nearby Louisville, they are one of the few restaurant chains who continue experiencing record levels of sales success.

Regarding lease agreements, most KFC arrangements will be under NNN, as well as run by franchisees. Lease terms will see seven to eight percent bumps every five years, with many leases being secured by company guarantee. Typically they will offer 3-5 separate five year option renewal terms.


  • Multiple leasing extensions
  • NNN leasing relinquishes landlord accountability
  • Many leases see rent increases every year


  • Sales and credit review required for individual franchisors
  • Grade non-investor status by Moody’s and S&P

Tenant Description

Back in 1930, the great Harland ‘Colonel’ Sanders originated KFC in a tiny section of a Corbin, KY gas station. Fast forward to 1952, and we can see he was well on his way to success, having started the first KFC franchise.

Decades later, PepsiCo would take over in the mid-80s. Then in 1997, PepsiCo branded KFC, along with Taco Bell and Pizza Hut under the Yum! Brands, Inc. Today, they have closed in on spot #200 in the Fortune 500 list, now pushing over thirteen billion dollars in revenue per annum (statistic current as of 2012).

Counting seventeen thousand separate properties in the U.S. alone, with nearly fifteen thousand in over 120 countries internationally, Kentucky Fried Chicken (KFC) has become mammoth in annual sales revenues. KFC brought in over sixteen billion dollars per annum recently, growing their operational profits over the past 3 years with a nine percent growth rate compounded

With corporate operations based in Louisville, KY, the KFC brand continues to be famous for all things chicken. Everything from Crispy Kentucky Grilled Chicken®, fresh sandwiches, Hot Wings™ pieces, and Extra Crispy™ Tenders, to name a few.


The famous golden arches of McDonald’s are quite the prolific testament to the sheer volume of success that one company can have. That the McDonald’s franchise has experienced this success, and has seen it throughout the American twentieth and twenty first centuries is a phenomenon unto itself.

Famous for their ‘Dollar Menu’, the fast-food chain became synonymous with ‘Happy Meals’ and happy foods. Reaching into every market imaginable, McDonald's has leveraged all areas of growth over the decades to outperform their closest competitor Burger King and a host of others.

With respect to superior credit, brand strength, and solid operational revenues, net leasing investors can almost always expect a positive experience when performing due diligence. For the aforementioned reasons, one can also expect higher prices per property, especially when factoring in lower purchase price points and low supply side offerings. Combine this with corporate guarantees behind each franchisee with prime real estate selections, and it’s easy to see how they have become a textbook operation; specifically on “how build and brand a company successfully”.

McDonald’s typically requires from .75-1.15 acreage to build, selecting top notch real estate to do so.When net leases for a high demand McDonald’s property occurs, they usually prefer ground leasing with standard twenty year terms, alongside three to five separate options to renew.

Prior to current times, they would allow rent bumps upwards of ten to fifteen percent per 5 years; now they’ve cut back the percentage to ten at best. They now provide standard flat rates appropriated for the first 10 years of the initial lease. Tenants are also highly unlikely to vacate, due to the fact that each franchisee pays up front costs for the building.


  • Lower pricing
  • Initial term increases
  • Creditworthy


  • No depreciation with ground leasing
  • All new leases flat rate, first ten years
  • Lower capitalization rate

Tenant Description

As one of the most successful franchises in history, the McDonald’s Corporation serves a whopping forty seven million consumers per day, spanning thirty six thousand locations in one hundred countries with their signature fast-food menus.

Besides being the world’s largest QSR (quick-service restaurant), nearly ninety percent of the 14k locations throughout the U.S.A. are owned and operated by affiliates and franchisees. The remaining portion of restaurants are corporately owned.

Daily revenues are generated from a combination of sales from company owned properties, in addition to royalties, fees, and rental costs incurred by franchisees and affiliates.

Since 2003, McDonald’s began new strategic initiatives to maximize growth to stay abreast of evolving consumer demographics, spending habits, food choices, and started to incorporate healthier menus.

They continue to build on previous successes by understanding the novelty of current times, and how maintaining ‘king of the hill’ status will demand both fulfillment and recognition of consumer needs.

In the future, McDonald’s plans to create growth through franchising approximately four thousand new locations by 2018.

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The nature of the business concept behind Sheetz generally offers a level of stability when markets fluctuate. This is because they differentiate from the usual C-store concept with the addition of ready-to-go foods, integrating this added value into each retail location. This has the effect of boosting annual sales revenues, and makes them a higher quality net lease investment.

In fact, one of the most desirable reasons is due to tenants usually staying at the property when leases expire, inherent to the nature of the business. Ground leasing is also common and Sheetz corporate typically pays for the building and equipment installations costs in advance.


  • Company guaranty
  • Ground leasing


  • Operates regionally
  • Privately-held corp
  • Long term environmental concerns

Tenant Description

Founded in 1952, Sheetz, Inc. has been operating successfully for over sixty years with their unique family owned and run chain of convenience stores. It began in Altoona, PA, when Bob Sheetz decided to buy a dairy store in town, and the rest is history.

With superior customer service and optimal business practices from food delivery, management, and technological integrations, Sheetz has grown to over 535 properties operational along the East coast, including states like PA, NC, MD, VA, OH, and WV.

Named as ‘Top Place to Work in PA’ by the Team PA Foundation alongside the PA Dept. of Community and Economic Development in 2015, just one year prior in 2014 they showed up on Fortune’s yearly “One hundred best companies to work for”. Revenues exceed a staggering six billion dollars annually with over sixteen thousand workers employed at retail sites, support locations, and at their company headquarters.


Seeing a steady rise in popularity over the last few decades, Starbuck’s has filled out the high-end breakfast niche to become an industry leader. Offering superior coffee, branding, prime real estate, and a healthy balance sheet to boast, they continue to delight shareholders and net lease holders alike.

When net leasing, keep in mind that Starbuck’s path to market success is largely based on smart property selections, equally as important as the café experience is to enhancing consumer satisfaction.

This understanding has led to positive returns for net lease investors in the past. Generally speaking, Starbucks may offer either NN or NNN agreements with ten to twenty year lease terms, alongside rent price bumps every 5 years.

They are nearing twelve thousand different locations in the United States now, and can be found equally in both rural and city locations. Often times they are placed strategically to and from main commuter routes. Standard building sizes can span anywhere between 1900 to 2100 square feet, surrounded by approximately one half to one acre lots. These will also vary by property type and location, with a typical design integrating the drive-through window.


  • Easy for landlords to repurpose the structure
  • Tenant is investor graded
  • Prime real estate locations in major commuter thoroughfares


  • Starbucks right-to-cancellation option
  • NN leases make landlord responsible for structural costs
  • Future outlook is not always stable

Tenant Description

Labeled as one of the most admirable corporations in the United States by Fortune for a record number of years (2003-2015), Starbucks originally started up in 1971. Back then, they were just one small store, based in Seattle, WA’s Pike Place Market. Today, they’ve expanded outwards with near 8,700 corporate-owned properties and over 6,100 licensed stores inside the United States. Globally, they have surpassed twenty four thousand locations in over seventy countries.

Selling their unique designer coffee and latte’s, teas, and various fresh edibles, Starbuck’s has also established licensing through a network of grocery chains and food related retail businesses. In addition to their own recognized brand, some of their other trademarked goods can be found in super markets like Ethos, Evolution Fresh, Tazo, Teavana, and others.

Starbucks recently opened well over 600 new locations in 2015, and all within American borders. Growth has continued in 2016, with reports of constructing eighteen hundred new retail locations with roughly half of those built inside the U.S.A.

Steak 'n Shake

The Steak 'n Shake brand has become of one the premier leaders in the food franchising industry, with delicious, high quality steak cuts and its Steakburgers™ brand of excellence. Steak ‘n Shake have reinvented the idea of the 'better burger', and eating at one of their restaurant establishments will quickly prove their point.


  • Many leases experience yearly rent increase
  • Landlord accountability relinquished with NNN leasing
  • Extensions of 5 years with lease terms


  • Performance reviews required with franchisors
  • Graded non-investor by S&P and Moody’s

Tenant Description

Back in 1934, Gus Belt had the bright idea to change a gasoline service location doubling as a chicken joint into a burger flipping joint. Well that’s how Steak ‘n Shake got their start.

Founded in Normal, IL, and going by the name Steak ‘n Shake Operations, Inc., their parent company is called Biglari Holdings, Inc. You may recognize the name Sardar Biglari upon hearing he is also the owner of Maxim magazine.

So if you’re thinking that ‘shake’ might be associated with chicken breadcrumbs, well guess again. It actually stands for milk-shakes. By the way, we won’t even discuss the word steak unless you already know it means ‘steak-burger’. Yes, that’s right. There’s a difference, and that’s why Gus was on his mission to be the best.

Apparently he was brilliant in his approach to customers. He would wheel-barrow in fresh steaks and grind them in plain view to display just how tender and ready-to-eat his cuts were. Hence, their slogan being ‘In Sight It Must Be Right’.

At present, they are still expanding with over twenty thousand employees working at over five hundred fifty Steak ‘n Shake’s. There is also a mixture of corporate owned and franchised operations among them, altogether encompassing 28 states and even going global in recent years.

In fact, they are in the process of drawing up worldwide plans for expansion out of Monaco. They already have establishments located in the U.K., Italy, and France. Future plans will be to enter the European and Middle Eastern markets, as well as fill out previously established regions in the U.S.

Taco Bell

With around 350 of its restaurants franchised, there are a mixture of different lease arrangements with varying operators behind the Taco Bell name. Given this fact, net lease investors will often see variable terms associated with capitalization rates and the strength of the individual franchisee and its real estate.

The most common agreements are twenty year leases with four 5-year options to renew, and ten percent rent increases approximately every five years. Standard building sizes tend to be around 1800-200 square feet in dimension, and usually sit on half an acre to one and one half acre lot. 


  • NNN leasing with substantial rent increase
  • Branding and marketing consistency
  • High capitalization rate


  • Graded non-investment status
  • Statistical reviews recommended per franchisor and property
  • Sales data not always present

Tenant Description

Taco Bell is a leading QSR (quick-service restaurant) specializing in Mexican fast-foods and was the first to offer AVA (American Vegetarian Association) approved meals. With their tasty combinations of tacos, burritos, and ready-to-go dishes, they are now on track to hit eight thousand new retail locations by 2023. This may further lead to an economy-boosting, one hundred thousand new jobs across the United States.

Statistics show Taco Bell surpasses forty two million people on a weekly basis, with currently almost seven thousand stores in operation nationwide. This extends to include their integrated delivery technologies for smartphones and computer order placements.

The original Taco Bell was first opened in Downey, California, who then negotiated a deal with PepsiCo Inc. to sell 868 locations to them. This resulted in the Yum! Brand, now ranked near 200 on the Fortune 500 list and includes the likes of Kentucky Fried Chicken, Pizza Hut, and others. Yum! Brand recently reported gross sales figures of an estimated thirteen billion back in 2012.

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In recent years, both Wendy’s and Arby’s had completed a merger (2008) which impacted the quick-service restaurant industry considerably. Perspectives on leasing agreements were changed along with new management teams at the helm of the newly formed Wendy’s/Arby’s Group.

Typically, lease terms are twenty year with four separate 5 year options to renew, alongside ten percent rent increases every five years. With varying franchise owners and operators, agreements are also variable depending on sales figures and creditworthiness. Building structures will naturally feature a drive-through window with overall dimensions averaging four thousand square feet in size. Lot sizes tend to range between one half to one acre.


  • NNN leases with healthy rent increases
  • Branding and marketing boosts revenues
  • Availability of higher capitalization


  • Lack of sales figures in some cases
  • Performance reviews required on franchises
  • Sales figure reviews needed on varying properties
  • Credit non-investor graded

Tenant Description

As a famous name in fast-food, Wendy’s/Arby’s Group, Inc. is an industry-leading QSR (quick serve restaurant) and developer of all new Wendy’s and Arby’s locations throughout the United States. They currently rank as the third largest fast-food restaurant chain, trailing only to McDonald’s and Yum! Brands.

Back in 2008, Wendy's International and Triarc Companies (Arby's parent corp.), also known as Arby’s Restaurant Group, Inc. (ARG), would franchise their combined restaurants in operation going forward.

With an ever-delightful assortment of fast-food burgers, fries, chicken sandwiches, salads, and wraps ready-made for customers, their entire menu offerings including children’s menu and delicious desserts.

With construction of new franchises, Wendy’s maintains profitability from various sources, including direct from corporate-owned properties, franchisee promos and bake sale products, advance franchisor premiums whenever new stores open, and royalties received throughout their franchises.


For the last twenty five years, Zaxby’s has seen massive success in the United States, and particularly in the South with a growing number of franchised restaurants. Lease arrangements will often consist of a twenty year triple net term, featuring rent increases, and often will include three to five separate 5 year options to renew.

Most of their buildings also feature a drive-thru window, with sizes spanning anywhere from 3k-3500 square feet in dimension. Additionally, they tend to sit on 4/5 to 1 1/2 acre lots in highly populated retail locations.


  • Prime suburban locations with high visibility
  • No landlord accountability with NNN leases


  • Privately-held corp.
  • Franchisor reviews are recommended

Tenant Description

With the first Zaxby’s founded in Statesboro, GA back in 1990, Tony Townley and Zach McLeroy wanted to offer the best Buffalo wings and chicken fingers anywhere in America. They had a plan and stuck to it, with over 726 restaurant locations that can now be found primarily in the South.  You will find a Zaxby’s in over sixteen states, including AL, AK, FL, GA, IN, KY, LA, MS, MO, SC, NC, OK, TN, TX, UT, and VA.

Featuring a creatively designed, warm atmosphere complete with items that evoke nostalgia, they offer creatively-named dishes like Zalads, Zappetizers, Buffalo and Chicken Fingerz. Plus, they offer a range of hot sauces that can leave quite a lasting impression for Zaxby’s customers.

With corporate located in Athens, GA, they have nearly 600 franchised restaurants with a remaining number corporately-owned. In fact, they have plans to construct eighty new restaurants in hopes to expand to new territories. Their original idea turned out to be a success, given that the term ‘quick-casual’ is now a restaurant industry vertical. They continue to receive praise, in 2015 being ranked #9 in fastest growth according to Nation’s Restaurant News. They have also been featured in Entrepreneur, Technomic’s, and other publications as a testament to their brand’s success.

So, which business is the best investment?

As you can see, there are significant advantages to purchasing a fast-food restaurant franchise. However, as tempting as it may be to jump into owning a national brand, there are still several obstacles to overcome and areas to research. NNN Properties has over 1,300 property listings organized by type, tenant, and state. Their main goal is to eliminate all the guesswork and provide you with the information you need to make the best choice possible when considering your next property purchase.

To request your FREE property list and leverage the knowledge and information gathered by the experts and NNN Properties, please visit their official website.

Stay tuned for our next edition of NNN Industry Insights, where we cover convenience & general retail brands.

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