Casual dining properties with corporately guaranteed leases generated cap rates of 6.25 percent, while franchisee-leased properties had cap rates of 7 percent, according to The Boulder Group in its Net Lease Casual Dining Report. Both corporate and franchisee guaranteed leases experienced increases of 10 basis points and 15 basis points, respectively, over the past year. Cap rates for casual dining properties leased to franchisees can vary depending on the strength of the guarantor.
“The sector is heavily bifurcated amongst casual dining brands,” said Randy Blankstein, president, The Boulder Group. “National brands with sustainable business models are still generating interest amongst investors who are active within the sector.”
The primary factor contributing to the increase in cap rates was the softening of the casual dining segment. This is especially true for certain tenants including Applebee’s, which experienced a 25 basis point increase in cap