Chick-fil-A TENANT OVERVIEW


Pros

  • Corporate guaranteed
  • Ground leases
  • Increases in primary term

Cons

  • Private company
  • Low cap rates

Tenant Description

Chick-fil-A, Inc. is the largest quick-service chicken restaurant chain in the United States, based on domestic annual sales. Supported by a strong brand and award-winning restaurant designs and architecture, the family-owned, privately-held company is strategically expanding and uniquely positioned for continued future growth.

Chick-fil-A is notorious for having strong franchised restaurant operators, proven by the fact that Chick-fil-A maintains a franchisee turnover rate of less than 5% per year. The company only accepts about 0.4% of the applicants who apply every year. For net lease investors, it is reassuring to know that Chick-fil-A NNN leases have a corporate guarantee by Chick-fil-A, Inc.

When purchasing a Chick-fil-A ground-leased property, investors are buying the real estate upon which the Chick-fil-A restaurant sits. These ground-leased properties provide additional investment security given the nature of the real estate investment made by Chick-fil-A's real estate team, which generally pays for the design, construction, and equipment for all new stores. Finally, from a real estate fundamentals perspective, knowing that store locations and developments are chosen based on corporate goals for target markets; it is not surprising that new stores are typically located in high-traffic areas and are often found as outparcel/pad sites at major shopping centers
.
Ever since Truett Cathy invented the chicken sandwich in 1964, the name Chick-Fil-A has become as synonymous with Atlanta as Coca-Cola. The chicken sandwich recipe has remained relatively unchanged: a hand-breaded chicken breast stuffed in a soft buttered bun and garnished with a couple of pickle chips. Cathy sold it for less than a buck at his Dwarf House in Hapeville, a place so small it had only 10 stools and four tables. The first Chick-fil-A restaurant arrived in 1967, and today the fast-chicken giant boasts more than 2,100 locations in 46 states and Washington, DC.

Average Cap Rate
4.15%
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $3,096,769
NOI $126,631
$/Square Foot $450 - $650
Building SF 4,500
Lot Size 1.0 - 2.0 Acres
Lease Term 15 Years
Escalations 10% Every 5 Years & Options
Stock Symbol N/A
Credit Rating
S&P N/A
Moody's N/A
Average Cap Rate Trend
4.54%
2015
4.22%
2016
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
League City, TX 4.00%
Countryside, IL 4.13%