Overview

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.