Introduction

For years, fast food places were key to single-tenant net lease investments. The single-tenant net lease world – it’s a pretty straightforward place to put money, bolstered by well-known brands. Sites geared toward quick service – with a focus on drive-throughs – appeal to large investors alongside individuals. Folks putting up money sometimes see big differences between fast food chains – specifically how much return they get. Differences show up in how good the loans are, what the leases look like, and also the property itself.

This report spotlights McDonald’s, Taco Bell, alongside Burger King. The real estate market is ruled by King, yet its value assessments, return rates, alongside costs based on area differ considerably.

McDonald’s

Cap Rates and Pricing

McDonald’s locations sell for the highest prices relative to earnings when compared to similar fast-food chains. This was true going into 2025. By 2025, expect cap rates around 3.96% – though many sales are happening nearer 4.0%. Similar properties have sold for roughly $525 to $675 per square foot; however, a few…

Leasing Land

Leasing land within cities now fetches remarkably better rates.

Building Size and Lease Terms

Typically, McDonald’s restaurants occupy between 3,500 and 4,500 square feet – situated on lots measuring roughly three-quarters to one and a half acres. Land spots boast convenient drive-through access. Agreements usually last two decades – often structured as long-term land leases. A setup where the person using the land – the tenant – holds ownership of anything built on it, yet still owes regular payments for just having the land itself to the actual landowner. It’s a rental situation. Rent hikes aren’t fixed; fresher agreements sometimes include a 10% jump after half a decade, yet others… Initially, previous agreements remain unchanged for ten years.

Credit and Risk Profile

McDonald’s boasts solid financial standing – S&P rates them BBB+, while Moody’s gives a Baa1 score, both indicating reliable creditworthiness. Often, leases come with a company backing them – like a ground lease arrangement – so landlords… Duties won’t overwhelm you. Though ground leases forgo tax advantages like depreciation, boost what remaining property is worth. Alongside solid financial support, this offers a lasting, McDonald’s often costs more because of its real estate deals – specifically, how they lease their land. Typical store prices.

Live Comp Example

A McDonald’s in Middletown, PA was listed on Crexi at a ~4.00% cap with ~3,886 SF. Similar to what’s happening across the country, a separate report by Net Lease Guy indicates roughly 3,919 square feet. Properties are trading near $2.9 million, yielding roughly a 4.06% capitalization rate – which suggests net operating income close to $117,000.

Conclusion on McDonald’s

If you want a safe bet, something unlikely to cause worry, McDonald’s stands out. Evaluating performance reveals a downside – returns are small. They behave similarly to bonds; however, this makes properties particularly appealing to those using 1031 exchanges, likewise investors who focus on… safety.

Taco Bell

Cap Rates and Pricing

Taco Bell lands squarely among fast-food restaurants. Investment returns typically hit around 5.55%, roughly 160 basis points. It yields a bit more than McDonald’s, yet costs more for the space it occupies. Costs shift between $788 and $931. That surprising price – for each square foot – shows the… New fast-food places are getting built smaller, yet cost a fortune to lease – especially those with drive-thru lanes.

Building Size and Lease Terms

Taco Bell restaurants generally occupy between 2,200 to 2,600 square feet, situated on lots ranging from half an acre up to 1.2 acres. They typically lease. Leases generally run for two decades, also offering several chances – at least four – to extend them by another five years. Most leases follow this pattern. Financing relies on promises from franchise owners, not the company itself. Rental costs go up differently each time. Typically, increases happen every five years – often between 5 to 10 percent – though this relies on how well each franchise is doing.

Credit and Risk Profile

Typically, individual Taco Bells operate thanks to franchise agreements. However, Yum! Brands stands behind them. Rated BB+ by S&P alongside a Ba2 from Moody’s – not quite top tier, yet Taco Bell remains a… The concept really shines within Yum! Brands – stores are doing well, so investors feel confident. Back both the name itself alongside how well franchisees are doing, especially those running several locations. Folks tended to trust chains over individual shopkeepers. It felt safer somehow. Consequently, businesses run by larger companies had a reputation for dependability – a feeling independent sellers struggled to match.

Live Comp Example

Net Lease Advisor data shows Taco Bell cap rates holding around 5.5% for new 20-year rental agreements. These properties are frequently priced between $3.2 to $3.5 million. They generally bring in about $180,000 net operating income, which translates to a price per square foot of nearly nine hundred dollars. Mostly brand-new test locations boasting double drive-through lanes, built to… Lots of work gets done quickly.

Conclusion on Taco Bell

Taco Bell delivers more return compared to McDonald’s, yet relies on a familiar idea. People really want these products, yet success hinges on franchisees having good finances. Those wanting to invest should be aware Taco Bell could benefit from investments offering decent returns alongside updated, costly real estate.

Burger King

Cap Rates and Pricing

Compared to the others, Burger King properties are changing hands for the lowest price relative to their income – around 6.38%. Costs run 2.4% more than McDonald’s, meanwhile exceeding Taco Bell’s by 0.8%. Each item… The cost per square foot generally falls between $439–$585, a good deal less than what you’d pay at Taco Bell or… McDonald’s.

Building Size and Lease Terms

Typically, Burger King spots range from 3,000 to 4,000 square feet, sitting on properties that measure between a half acre and up to 1.5 acres. Typically, leases run ten to fifteen years – less time than what Taco Bell or McDonald’s commit to for their land. Rental agreements are a thing. Expect rent hikes – roughly 8 to 10 percent – every half decade.

Credit and Risk Profile

Burger King is owned by Restaurant Brands International (RBI), which carries a BB rating. Originating from ratings below investment quality – think S&P’s lower tiers. Similar to how Taco Bell operates, a majority of Burger King locations aren’t company-owned but leased by franchisees. Assured, yet service depends on who’s running things – some franchise owners really deliver. Strong brands offer security; however, less established locations introduce greater potential for trouble.

Live Comp Example

NetLeaseFinder lists several Burger King NNN properties, typically with 10–15 years of borrowing costs hovering around 6.5%. Net Lease Advisor points out typical property dimensions. Details finalized – the deal confirms a 6.38% return on investment.

Conclusion on Burger King

Burger King offers big potential gains, yet comes with substantial uncertainty. Those comfortable with… Assess how a company’s money situation alongside property values impact profits, considering differences compared to… You might find McDonald’s appealing. Though, for shoppers who prefer sticking to what they know, Burger King could offer more. Didn’t quite hit the safety marks.

Market Backdrop

According to The Boulder Group’s Q2-2025 report, single-tenant net lease cap rates held steady. Generally, we saw a 6.79% rate; stores clocked in at 6.57%, barely a nudge higher – just one basis point. The numbers held steady from one three-month period to the next. Consequently, interest rates didn’t jump around much. The rapid growth seen from 2022 through 2023 has slowed.

Considering everything happening around us: McDonald’s stock, currently at 3.96%, is a bargain compared to typical rates – a pretty secure bet, really. Taco Bell, with a 5.55% rate, seems to be moving toward typical customer levels – however, it remains more focused than most restaurants folks sharing a meal together. Burger King’s 6.38% rate is a touch under what most stores charge, suggesting their prices take that into account. Despite some franchise challenges, quick-service restaurants generally hold steady.

Drivers of the Spread

Credit and Lease Structure

McDonald’s properties boast solid financial backing – think top ratings, commitments from the company itself, yet often involve long-term land agreements. Taco Bell alongside Burger King: Mostly, franchisees back these deals. How much income you get from them changes a lot based on… How well things run, how much stuff sells, whether the money coming in beats the costs – that’s what matters.

Unit Economics and Real Estate

Drive-thru designs now being tested, along with spots on corners or within existing city areas, require more careful size limits. Less reliable companies, aging properties, also trading on secondary exchanges – these factors contribute to larger discrepancies in assessed value. Taco Bell’s newer locations frequently cost more to lease, despite… Even so, they charge more than McDonald’s.

Lease Terms and Escalations

Extended lease lengths, alongside rent increases, offer investors greater security. Think McDonald’s or Taco Bell agreements. Typically, a restaurant sticks around for two decades. However, Burger King spots often have leases lasting just ten to fifteen years.

Key Takeaways

McDonald’s locations offer strong financial standing – good credit, leases where the tenant handles most property responsibilities – but returns aren’t huge, hovering around 4%. A place where traditional shoppers feel secure. Taco Bell delivers decent returns – around 5.5% – operates newer, expensive locations, boasts a solid brand idea. Strong results tempered by dependence on the financial health of franchise owners. Burger King offers potentially bigger returns – around 6 to 6.5 percent – however, investing comes with greater uncertainty because many restaurant owners aren’t considered top-tier financially. Offers assurances, flexible leases, also a range of service providers.

Building a Comp Set

Folks looking at quick-service restaurant investments need to: Gather current property details directly from Crexi, LoopNet, NetLeaseFinder, likewise Ten-X. To find what properties recently sold, tap into services such as CoStar or CompStak. Adjust comparable properties to reflect similar lease terms, rent increases, moreover tenant allowances. Explore how property values shift when rental income or investment return rates change; create charts showing these possibilities. Good comparisons feature top examples – like recent McDonald’s land deals yielding 4%. Comparable stores – like a Taco Bell seeing 5.5% growth – contrast with underperforming ones, such as some aging Burger King locations 6.75%+).

Conclusion

A look at quick service restaurants leased to one owner reveals that a strong name, solid finances, along with… How a lease is set up affects what investors will pay. People still look to McDonald’s as solid, while Taco Bell strikes a chord offering sensible returns alongside up-to-date spaces, while Burger King gets the job done. Greater returns come with greater chances of loss. Considering current single-tenant net lease retail rates hover around 6.6%, these charts show where people put their money depending on how comfortable they are with losing it, also considering… What people earn versus what they require to live.