Taco Bell Tenant Overview
Pros
- Higher cap rates available
- Engaged in heavy advertising to improve brand image and market penetration
- Often new favorable NNN leases with good increases
Cons
- Non-investment grade credit
- Must look closely at performance of franchisor across all locations
- Not all leases require sales reporting
Earnings Highlights
- Taco Bell Division opened 98 gross new restaurants in 16 countries.
- Taco Bell U.S. system sales grew 8% and Taco Bell International system sales grew 26%.
- Worldwide system sales grew 7%, excluding foreign currency translation, with Taco Bell at 9%
Tenant Description
Taco Bell is a Mexican-inspired quick service restaurant.
Taco Bell typically features a 2,000 - 2,600 square foot building with a drive-thru window, situated on 0.5 - 1.2 acre of land. It is important to note that Taco Bell franchises the majority of its locations. There are a number of various lease agreements and guarantors operating under the Taco Bell banner. As a result, lease terms vary as do cap rates based on the size and strength of the operator and sales at a particular location. The most common lease term is 20 years with four (4) five-year options.
Glen Bell opens his first Taco Bell restaurant in Downey, CA, serving what his customers called "Tay-Kohs." In 1978, Glen sold 868 Taco Bell restaurants to PepsiCo Inc., who then announced the spin-off of its quick service restaurants - KFC, Taco Bell, and Pizza Hut now known as Yum! Brands, Inc.
Taco Bell serves made-to-order and customizable tacos and burritos, among other choices, and is the first QSR restaurant to offer American Vegetarian Association (AVA)-certified menu items. Taco Bell and it's more than 350 franchise organizations proudly operate 7,000 restaurants across the world.
As the leading Mexican-inspired quick service restaurant brand, Taco Bell plans to have 8,000 restaurants by the year 2023 which they anticipate will add an estimated 100,000 jobs nationwide.
| Average Sale Price | $2,047,977 |
| NOI | $112,716 |
| $/Square Foot | $788 - $931 |
| Building SF | 2,200 - 2,600 |
| Lot Size | 0.5 - 1.2 Acres |
| Lease Term | 20 Years |
| Escalations | Varies |
| Stock Symbol | YUM |
| Brandywine, MD | 4.50% |
| Versailles, MO | 5.25% |
| Cave City, KY | 5.80% |
