Cheddar’s Scratch Kitchen TENANT OVERVIEW


Pros

  • Passive leases
  • Increases during the primary lease term
  • Growing concept

Cons

  • Not a major chain yet
  • Mix of Franchisee and Corporate locations

Tenant Description

Cheddar’s was acquired by Darden Restaurants in fiscal year 2017. The chain puts Darden’s total restaurant count up to 1,695. A property leased by Cheddar’s is an attractive asset because of the hands off nature of the lease. Cheddar’s often signs triple net leases, requiring no landlord responsibilities from the investor. Many of the Cheddar’s that have traded recently have been sale leasebacks and have included various forms of rental increases allowing investors to see their returns grow with time. The spaces occupied by Cheddar’s restaurants have a fairly common and easily adaptable layout. If Cheddar’s decides to vacate, the property could easily be re-tenanted by another casual dining tenant with minimal, if any, renovations.

Cheddar’s Scratch Kitchen is a chain focusing on made-from-scratch meals. Favorites include Smoked Baby Back Ribs, hand-battered Country Fried Chicken, Scratch Burgers, and Homemade Onion Rings. Founded by Aubrey Good and Doug Rogers in Texas in 1979 now has 140 locations across Southern, Midwestern, and Mid-Atlantic regions.

Average Cap Rate
6.03%
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $4,569,092
NOI $275,516
$/Square Foot $525 - $575
Building SF 8,000 - 8,500 SF
Lot Size 1.00 - 2.50 acres
Lease Term 15 - 20 Years
Escalations Varies
Stock Symbol DRI
Credit Rating
S&P BBB
Moody's Baa3
Average Cap Rate Trend
5.45%
2016
5.89%
2017
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Cincinnati, OH 5.50%
Asheville, NC 6.50%
Fort Wayne, IN 5.85%