Wendy’s Tenant Overview

Net Lease Advisor Tenant Wendys


  • Higher cap rates available
  • Engaged in heavy advertising to improve brand image and market penetration
  • Often new favorable NNN leases with good increases


  • Non-investment grade credit
  • Must look closely at performance of franchisor across all locations
  • Must review sales history at subject location
  • Not all leases require sales reporting

Earnings Highlights

Earnings Summary
  • Robust growth continued in Q2 2021, as sales significantly exceeded their expectations, leading to restaurant level margins of more than 20 percent and record profits
  • Wendy's reported $0.27 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.18 by $0.09
  • Earnings for Wendy's are expected to grow by 10.98% in the coming year, from $0.82 to $0.91 per share

Tenant Description

Wendy’s is one of the largest quick-service hamburger restaurant chains.

Wendy’s is an attractive investment due to the underlying asset. Restaurants are typically in a 3,000 square foot building with a drive-thru window, and situated on 0.5 - 1.0 acre of land. It is important to note that Wendy's franchises the majority of its locations. There are a number of various lease agreements and guarantors operating under the Wendy's 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. Generally the lease term is 20 years with four (4), five (5) year options with increases of 5-10% every 5 years.

When Wendy's International and Arby's parent company, Triarc Companies, merged in September 2008, they created the third-largest US fast-food chain (behind only McDonald's and Yum! Brands). This merger formed the Wendy's/Arby's Group, the parent company of Wendy’s International, Inc. and Arby’s Restaurant Group, Inc. which are the franchisors of the Wendy’s and Arby’s restaurant systems. Wendy’s/Arby’s Group creation has altered the perception of both Wendy's and Arby’s net lease properties with the introduction of new management and new menu concepts.

Wendy's is engaged in the quick-service restaurant (QSR) business, operating, developing and franchising Wendy's restaurants. The revenues from its restaurant business are derived from four principal sources: sales at Wendy's-owned restaurants; sales of bakery items and kid's meal promotional items to franchisees; franchise royalties received from all Wendy's franchised restaurants, and up-front franchise fees from restaurant operators for each new unit opened.

Each Wendy's restaurant offers a relatively standard menu featuring hamburgers and filet of chicken breast sandwiches and wraps, which are prepared to order with the customer's choice of condiments. Wendy's menu also includes chicken nuggets, chili, baked and French fried potatoes, freshly prepared salads, soft drinks, milk, Frosty desserts, floats and kids meals.

Average Cap Rate
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $2,400,000
NOI $132,000
$/Square Foot $800
Building SF 3,000
Lot Size 0.5 - 1.0 Acres
Lease Term 20 Years
Escalations 5 - 10% Every 5 Years
Stock Symbol WEN
Credit Rating
S&P B+
Moody's B3
Average Cap Rate Trend
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Atlantic Beach, FL 5.24%
Salina, KS 5.50%
Clifton Park, NY 5.58%
Chicago, IL 6.00%