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
  • Worldwide system sales excluding foreign currency translation grew 8%
  • Taco Bell Division opened 62 new restaurants, including 12 new international restaurants

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.

Yum! Brands is ranked number 472 on the Fortune 500 list, with revenues of $5.69 billion in 2018. Other QSRs under the Yum! Brands banner include Pizza Hut and KFC.

Average Cap Rate
5.17%
12 mo avg with 10+ yr lease term
Average Property & Lease
Average Sale Price $1,880,384
NOI $96,188
$/Square Foot $720 - $940
Building SF 2,000 - 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 Ba3
Average Cap Rate Trend
5.59%
2018
5.56%
2019
Rates reflect last 12 mos, short and long-term
Recent Sales Comps
Hyattsville, MD 5.00%
Patterson, CA 5.46%
Orlando, FL 5.50%