The fast-food industry has continued to be one of the thriving industries in the past years, even in the middle of the pandemic.
The reason is not far from the fact that food is a basic necessity among humans. Statistics show that about fifty million Americans patronize fast food outlets daily, accounting for about $270 billion in 2019.
Thus, this steady growth of the food industry provides excellent investment opportunities, especially in quick-service restaurants such as Starbucks. Most fast-food restaurants for lease are beginning to adopt the triple net leasing method due to its general profitability.
This article elaborates on the reason behind the success of NNN fast-food franchises in various cities and why it is profitable to invest in them. However, it is necessary to briefly discuss the concept of NNN properties and why they are so lucrative.
Triple Net Leases, popularly known as NNN Leases, are a form of commercial real estate lease structure that avails the tenant of the general additional rent expenses. These expenses are related to the management and operation of the property, such as property taxes, area maintenance, and building insurance.
The term "NNN," which stands for "net, net, net," stems from the additional expenses involved in this leasing form. The fees, including the rent, are usually paid to the landlord monthly. Triple Net Leases are becoming a common lease form in industries and offices, though they are predominantly common in retail properties.
Different forms of triple net leases exist, each varying in the tenant's responsibility for property costs and expenses. They include:
This lease form is known as the N lease. In this form, the tenants are responsible for their base rent alongside the property taxes only. N lease is one of the less utilized lease forms in the US as the landlord retains responsibility for paying insurance and maintenance expenses.
In a double net lease, also called NN lease, the tenant pays the base rent alongside the taxes for the property and the building insurance. It is regarded as a double net lease because it involves two other payments outside the base rent.
This term is our topic focus, and it involves the payment of the base rent, the property taxes, building insurance, and the area maintenance fees.
This form is more profitable to landlords as it leaves them with minimum responsibility for the property. All expenses can be passed over to the tenant as it is within the terms of the agreement.
Having discussed the concept of triple net leases briefly, let us dwell on the reason why fast-food restaurants are great triple net lease investments.
As the numbers have continued to show steady growth in the food business industry, investing is one of the best steps to ensure continuous profitability.
Those interested in growing their investment portfolios must support fast-food restaurants for lease in the US. There are over 200,000 quick-service restaurants (QSR) with total revenue running into trillions and trillions of dollars.
Numerous QSRs require the investment of triple net lease investors to push their businesses to different locations, creating a win-win profit situation for both property owners and fast-food corporations.
Studies have also shown that drive-through restaurants aim for more market growth, especially with the rising demand for inexpensive food.
Many QSRs are beginning to implement more decisive and profitable business approaches to adapt to the ever-changing consumer demand by infusing digital technologies and reinventing menus. In recent times, quick service restaurants have seen an increase in digital orders and the volume of drive-through traffic.
Hence, many restaurant businesses for sale plan to expand their locations to serve customers better, with the aid of inclusive lease options such as a triple net lease.
This way, tenants will begin long-term corporate-guaranteed leases with the cap rates of properties ranging from 4 to 8% at a median asking price of $1.5 million.
NNN fast-food properties are a good way of investing in building equity with a low-risk revenue stream. A triple net lease allows for real estate investment with high returns without the stress of being a landlord.
Hence, it has become popular for fast food restaurants for sale over the past few years. For viable NNN lease options, please review these fast food restaurants for sale.
Choosing the best NNN fast food lease option goes beyond a “restaurants for sale near me" search. It involves the careful evaluation of critical factors that influence the venture's profit outcome and overall revenue generation.
Here are a few tips that will help you make the right choice of triple net lease properties.
Careful market research never goes wrong in its ability to help investors identify the best options that suit their preferences. It is essential to understand the triple net market and the trends, which affect property pricing and valuation.
Furthermore, knowledge of current market value and possible product price lines allows you to examine whether the property option is best for you or not.
It is worthwhile to evaluate the prospects or viability of the service you wish to render in the location of your choice. This way, you’re saved from daunting losses and poor profit returns.
Nothing is more demoralizing than having a business with no customers. This scenario is familiar to investors who fail to research to identify the location of the market.
In triple net fast food properties, location plays a vital role in determining the lucrative nature of the investment and its long-term gain potential.
Areas with a high population, stable economy and many working-class individuals are usually the best locations for a triple-net lease fast food restaurant.
The ability of the market to pay for the offered service should always be a deciding factor for the establishment of such a business entity.
This exercise involves understanding the basic concept of a triple net lease and the type of contract it entails. It also consists of a background check on the client involved in the deal.
All these allow you to get an overview of what you’re getting into, thus giving you an insight into whether it is a good investment or not.
Most of the fast-food restaurants for lease are often triple net leased due to the numerous advantages associated with the lease option. The steady income generation with low risks allows for expense-free ownership with a corporate-backed lease guarantee for an extended period, usually ten years.
Thus, if you’re interested in building equity over a lease term, the NNN lease option is for you. You may schedule an appointment with Buy NNN Properties today to get on board and begin the leasing process.