QSR overview

The Quick Service Restaurant (QSR) sector, more commonly known as “fast-food,” is a wide-ranging sector comprised of restaurant concepts known for their speed and convenience. The sector is ever changing, with new players consistently entering and exiting the fold, vying for additional market share, often coinciding with broader consumer patterns.

QSRs comprise a significant portion of the net lease real estate market. From an investment perspective, QSRs offer easy access into the niche market as the price point is significantly less than traditional CRE. The average sale price is roughly $2.5 million. At this price point, like many other single tenant net lease sectors, turbulent financial markets present less of a headwind, with most transactions being at a low enough price point that debt markets, and the present uncertainty that comes with those, are not a major consideration facing investors.

The average observed cap rate on QSR transactions sits at 4.84% currently, which is about 62 basis points lower than average single tenant net lease (STNL) transaction average of 5.46%. What is particularly noteworthy about this figure is the lack of dependence on the rising 10-Year Treasury yield, which often correlates with cap rates. This is a true testament to the resilience of the sector in times of economic uncertainty.

Average cap rates by tenant (last 12 months)

Sourced by AVANT, Crexi and Costar

Average cap rates by term remaining (last 12 months)

Sourced by AVANT, Crexi and CoStar

Despite recent volatility, cap rates have compressed in the net lease arena. Overall STNL and QSR cap rates seemed to stay in lock step with each other, both seeing a slight compression in bases points from Q4 2022.

STNL dropped 19 basis points from 5.65% to 5.46%

QSR dropped 14 basis points from 4.98% to 4.85%

STNL cap rates vs. 10-year treasury

Sourced by AVANT, Crexi and CoStar

Cap rates by region (last 12 months)

Sourced by AVANT, Crexi and CoStar

Roughly 54% of all QSR net lease transactions are happening in the Southeast and Southwest, clearly areas where a tremendous amount of development is occurring. Rounding out the top five states with the most transactions, Texas led the pack, followed by Florida, California, Georgia and Tennessee.

Active listings

As of 4/12/23, 856 QSRs are on the market. Source: Crexi

$2,660,991 Average asking price

5.29% Average asking cap rate

14 Years Average term remaining

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