Olive Garden Tenant Overview



Pros

  • Well-known chain
  • Follows common layout
  • Annual rent increases

Cons

  • Competitive sector
  • Ground leases do not allow investors to depreciate building value

Earnings Highlights

Earnings Summary
  • Total sales increased 13.8% to $2.8 billion driven by a blended same-restaurant sales increase of 11.7% and sales from 35 net new restaurants
  • Reported diluted net earnings per share increased 21.2% to $2.34 as compared to last year's reported diluted net earnings per share

Tenant Description

Italian themed chain restaurant seeking to provide family friendly atmosphere along with delicious food.

Founded in Orlando, FL in 1982, Olive Garden started with the mission to provide a fun, welcoming atmosphere to patrons alongside exciting Italian dishes. Nowadays we recognize Olive Garden as one of the largest chains of Italian themed restaurants in the US and around the world.

This type of instant recognition in the consumer market can be an invaluable asset, but there are other reasons why Olive Garden represents a good net lease investment for prospective buyers. One of the primary reasons is that their leases will incorporate rental increases, usually annually, to offset inflation in the market. Typically, the leases will also be on the longer side, and include options to extend, usually 6 options at 5 years. The leases will tend to be structured as a ground or NNN lease, relieving the property owner of any worries about maintaining the structure.

Almost always, Olive Garden restaurants are in prime locations with high visibility and easy access, these properties are quick to be noticed by potential consumers. The restaurants will also follow a common layout for casual dining, making it easy to move another tenant in should Olive Garden vacate. Additionally, if it’s a ground lease, the ownership will get the building when the tenant leaves.
Owned by Darden Restaurants, the corporate guarantee will give assurances to the landlord, as Darden is publicly traded and rated at Baa2 and BBB for Moody’s and S&P respectively. Currently, there are over 900+ Olive Garden locations operating around the world.

Average Cap Rate
5.05%
Trailing 12-month average
Average Property & Lease
Average Sale Price $2,822,857
NOI $141,621
$/Square Foot $353 - $376
Building SF 7,500 - 8,000
Lot Size 1 - 2 acres
Lease Term Varies
Escalations 1.5% annually
Stock Symbol DRI
Credit Rating
S&P BBB
Moody's Baa2
Average Cap Rate Trend
4.86%
2022
5.05%
2023
Rates reflect year-over-year comparison
Recent Sales Comps
Clermont, Fl 4.99%
Lincoln, NE 5.25%
Hixson, TN 5.50%