Chick-fil-A Tenant Overview
Updated: January 31, 2023
Pros
- Corporate guarantee
- Ground leases
- Increases in primary term
- High barriers of entry for new locations
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 design 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 2,300 locations in 47 states and Washington, DC.
Average Cap Rate
3.60%
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price |
$4,923,762 |
NOI |
$187,244 |
$/Square Foot |
$1,094 |
Building SF |
4,500 |
Lot Size |
1.0 - 2.0 Acres |
Lease Term |
20 Years |
Escalations |
10% Every 5 Years & Options |
Stock Symbol |
N/A |
Average Cap Rate Trend
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Plant City, FL |
3.35% |
Downey, CA |
3.60% |
Huntington Station, NY |
3.68% |
Nottingham, MD |
4.04% |
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