NEW YORK CITY (May 15, 2023) — As the U.S. economy reported growth in Q3 of 2022, it was tempered by the effect of trade and inventory numbers. With economic caution and the strain of inflation, interest rates rose. Amid this turmoil, several quick-service restaurant (QSR) operators continued to present plans for expansion and reported surprising sales and earnings.
Tom Georges, vice president at Northmarq, pointed to Northmarq’s Q1 2023 “Top 100 tenant expansion trends” report in the Northeast REBusiness article and presented the growth of brands like YumBrands, McDonald’s and Raising Cane’s. As brands like these have demonstrated sustained strength, QSRs offer a popular opportunity for net-lease investors wanting conservative and predictable investments between a $1 million to $4 million price range.
Northmarq illustrated this level of investment demand and pricing with a recent acquisition of a newly constructed Burger King in southern New Jersey. The property offered a corporate guarantee from a 29-unit franchisee and a triple-net lease with 20 years remaining and rental increases every five years. Georges believes that across the Northeast, investors will see a continued increase in QSR supply and more brands expanding brands.
For example, Bojangles announced long-term plans to open approximately 250 new locations over the next few years, and Panda Express has identified New Jersey as a target growth market. Raising Cane’s plans to expand in New Jersey and Massachusetts, and Checkers and Rally’s is looking at Rhode Island.
Georges recommends that investors who are pursuing stable cash flow investments should consider QSR opportunities in the Northeast. The sector will provide a variety of investments, especially for those moving equity via 1031 exchanges toward single-tenant net lease assets.