Chick-fil-A

Net Lease Advisor Overview

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.

Chick-fil-A

Pros

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

Cons

  • 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.