Taco Bell Tenant Overview


Net Lease Advisor Tenant Taco Bell

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
5.55%
Trailing 12-month average
Average Property & Lease
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
Credit Rating
S&P BB+
Moody's Ba2
Average Cap Rate Trend
4.68%
2023
5.55%
2024
Rates reflect year-over-year comparison
Recent Sales Comps
Brandywine, MD 4.50%
Versailles, MO 5.25%
Cave City, KY 5.80%