Taco Bell Tenant Overview
Updated: November 13, 2023
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
Earnings Summary
- 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 Cap Rate
5.10%
Trailing 12-month average
Average Property & Lease
Average Sale Price |
$2,223,736 |
NOI |
$112,584 |
$/Square Foot |
$855 - $1,190 |
Building SF |
2,200 - 2,600 |
Lot Size |
0.5 - 1.2 Acres |
Lease Term |
20 Years |
Escalations |
Varies |
Stock Symbol |
YUM |
Average Cap Rate Trend
Rates reflect year-over-year comparison
Recent Sales Comps
Overland Park, KS |
5.04% |
Sequim, WA |
5.50% |
Cave City, KY |
5.80% |
Hillsboro, MO |
6.88% |
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