Popeyes NNN For Sale
In the quick-service restaurant (QSR) industry, it’s not uncommon to feel like the food options are redundant, but Popeyes has set itself apart from other restaurants with its unique recipes, offerings, and cooking techniques
Its recipes are inspired by Cajun and Creole cuisine, which the company describes as being “unmistakably Louisiana” flavors. It is this fusion of flavors — alongside other international flavor pairings — that set this restaurant apart from other QSR fried chicken establishments.
Thanks to this, Popeyes has seen considerable growth since its opening in the early 70s, having more than 3,700 locations internationally. It's able to stay competitive and relevant in an ever-evolving market.
Tenant Overview
Popeyes Lousiana Kitchen is an established brand with more than fifty years in business. In 2021, it became part of Restaurant Brands International (RBI) — the parent company of Burger King, Tim Horton’s, and Firehouse Subs.
It is primarily operated by franchisees and has grown beyond its home in New Orleans, Louisiana, to encompass international locations across the United States, Canada, Malaysia, and more.
When it comes to choosing its restaurant locations, Popeyes prefers urban and suburban areas, with an average household income starting at $45,000. This ensures foot traffic and visibility by a more significant number of people. Their locations vary from walk-in to drive-thru restaurants, allowing them to fit into different development styles and commercial locations.
| Popeyes NNN Lease at a Glance | |
| Average sale price | $2,585,800 |
| Average NOI (net operating income) | $132,000 |
| Average square feet | 800 - 1,200 |
| Average lot size | 0.5 - 1.0 acres |
| Typical lease term | 20 years |
| Escalators | 1.75% annually |
| Typical location | Urban and suburban locations average household income between $45,000-$54,000 |
| Ticker symbol | NASDAQ: PLKI |
Popeyes Lease Structure
Popeyes typically offers an NNN lease (the most common lease type within QSR leasings) with a twenty-year term. With an NNN lease (also known as a triple net lease), the tenant has more responsibilities than the landowner.
The tenant will be the one to take on maintenance fees, insurance costs, property taxes, utilities, repairs, and even snow removal and landscaping costs, making it a more passive investment option to help you increase your overall cash flow without the fear of unexpected maintenance or repairs arising.
Typically, the rent sees an escalation of 1.75% every year. The average cap rate, which indicates what you can expect in return for your investment, is between 5% and 6% — which is generally considered a good rate of return on a real estate investment. In other words—your NNN Popeyes property investment could hypothetically be paid off within 16.67 - 20 years, if all profit goes towards paying off your lease financing.
Why Choose a Net Lease Over a Gross Lease When Investing in Commercial Real Estate?
When it comes to commercial real estate investments, there are typically three categories: gross leases, net leases (ranging from single net to triple net leases), and percentage leases. Usually, the lease you obtain has to do with the industry you’re looking to invest in.
Gross leases are typically used for commercial office spaces. They offer tenants a flat monthly fee for the use of the space. The result of this? Landowners absorb more of the costs around things such as maintenance fees, repairs, and insurance.
On the other hand, net leases offer the landlord a more passive option with little to no unexpected costs because they don’t have to worry about expenses like maintenance fees and repairs. Instead, this responsibility falls to the tenant — with the advantage for the tenant being that they get more flexibility in the operation of the commercial space.
The qualities and more passive investment of a net lease make it a more desirable investment option for those looking for a lower-risk commercial real estate option.
What Types of Net Leases Does Popeyes Operate Under?
Popeyes operates primarily under NNN leases. This is one of three categories within net leases, the other two being single net leases (aka an N lease) and double net leases (aka an NN lease).
The advantages of Popeyes NNN lease options are that they’re a safer, lower-risk, and more passive investment option in terms of how predictable the expenses will be and how hands-on you, as a landowner, would have to be.
As mentioned earlier, net lease investing is considered more predictable because the tenant takes on the majority of expenses and even unexpected costs.
This allows you to more accurately predict your investment input and output while enjoying a more passive investment option that could gain you a five to six-percent cap rate with relatively little responsibility falling on you.
How to Evaluate a Popeyes Net Lease
When evaluating Popeyes net lease for sale, there are several key factors you want to take into consideration. These considerations include property value, location, tenant creditworthiness, lease terms, and Popeyes requirements.
It’s no surprise that property value should be considered when evaluating a Popeyes lease; it is, after all, an investment, and you want to be sure it’s sound. Each Popeyes lease listing includes essential details relating to property value, such as the location, area demographics, and year the property was built.
What Makes Burger King an Attractive NNN Tenant?
While Burger King’s credit rating , according to Standard & Poor’s, is only a B+u, the company has many promising years ahead. Burger King’s modernization plan, called “Reclaim the Flame,” has been a success, driving strong results with over 20% growth in system-wide sales for the third quarter of 2022.
With net lease commercial real estate, you want to evaluate how creditworthy a potential client is carefully. In this case, it will vary as Popeyes primarily operates as a franchise. That being said, Popeyes does have strict requirements and expectations of its franchisees, so you can rest assured that the Popeyes franchise has carefully vetted the franchisee.
You should also look at the company's overall performance, performance in the area, and if there are other Popeyes to understand this potential tenant's creditworthiness further.
In addition, carefully review Popeyes investing requirements and lease terms to determine if they align with you and your investment goals. For example, do the cap rate and lease term align with your investment comfort level and long-term goals?
What Makes Popeyes an Attractive NNN Tenant?
Popeyes boasts many qualities that make it an attractive tenant, including the fact that Popeyes has a very high brand awareness across the US. In a survey of about 1,200 participants, 90% already knew about the brand.
But, one of the key reasons this restaurant can be considered an attractive client is that the restaurant has seen a growth rate of nearly 10% over the entire course of 2022 and a 16% growth rate through the third quarter of 2023.
These numbers indicate an upward trend for the establishment, making Popeyes commercial real estate a less risky investment option and a creditworthy tenant.
The recent acquisition of the Popeyes brand by RBI also indicates the value in Popeyes. Now, rather than making an investment in purely a single-restaurant business, you have the security that a well-known and established parent company is supporting the brand.
