Want Some Chick-Fil-A? Try Its Real Estate

Here’s a Sample of Locations Up for Sale

Chick-Fil-A’s ads with cows pushing the consumption of chicken have helped the chain’s popularity. (Phillip Pessar/Flickr)

It’s no secret that Chick-fil-A has become one of the most popular fast food chains.

Customers will camp out to be among the first through the doors of a town’s new location. Cheektowaga, New York police, for example, had to figure out a traffic plan to handle the lines on opening day for the Buffalo suburb’s first Chick-Fil-A last November.

Because customers are so fond of the chicken sandwiches, many investors like the real estate underneath the fast food chain’s buildings.

Chick-Fil-A, like many fast food chains, leases the ground from an owner – typically for 15-20 years with multiple five-year renewal options – and builds the structure itself. The company tends to back leases that also build in steady increases in rent to the owner.

Investors typically have little to no responsibilities for the property. They simply collect a rent check that delivers an annual return, known as the cap rate. A low cap rate suggests tenants are more stable, so risks are lower.

While many properties come up for sale when the restaurant is being built or just after construction wraps, existing stores can hit the market as well.

A new store tends to cost the most because it will have the full years on the lease, and they often have the lower cap rates. For older stores, price and cap rate can depend on the number of years left on the lease.

Chick-Fil-A’s cap rates consistently come in under the industry average of 5.51% for properties with at least 10 years left on the lease, according to real estate firm Calkain.

Here’s a few options if you want to own the dirt under a Chick-Fil-A:

This new Chick-Fil-A sits in a big retail area of Colorado Springs. (CoStar)

1620 S. Nevada Ave., Colorado Springs, Colorado: $3.8 million with a 3.95% cap rate

This property is newly built and comes with a 20-year ground lease that has eight, five-year renewal options. This means Chick-Fil-A potentially controls the property for 60 years.

Its direct neighbors include Five Guys and Zoe’s Kitchen. As a comparison, the property housing those two eateries sold in June for nearly $3.3 million with a 5.7% cap rate, according to CoStar. Each restaurant has a 10-year lease and four five-year options.

Natural Grocers, a decadesold Colorado-based grocery chain, has opened up a new location next to them. The surrounding area has a lot of retail.

Government is the lead employer and has made Colorado Springs a strong midsize city.

Buying the ground under this Chick-Fil-A would mean owning property in the North Georgia mountains. (CoStar)

152 Highway 515 East, Blairsville, Georgia: $2.9 million with a 4.35% cap rate

Blairsville is small town in the North Georgia mountains next to the Chattahoochee-Oconee National Forests. The 4-year-old Chick-Fil-A sits in the downtown area along the main highway that passes through Blairsville.

Its ground lease has 11 years left on a 15-year lease, but Chick-Fil-A has 13 five-year renewal options.

On Hilton Head Island, this Chick-Fil-A was built in 2002 but renovated in 2016. (CoStar)

9 Malphrus Road, Bluffton, South Carolina: $2.25 million with a 4.1% cap rate

This property is in a big retail area near Hilton Head Island, minutes from the entrance to the Hilton Head National Golf Club.

Chick-Fil-A built this store in 2002 and then significantly renovated it three years ago. The company recently renewed three, five-year options at once and there’s 14 years or more left on the lease. Chick-Fil A has 11 five-year options left.

https://www.loopnet.com/learn/want-some-chick-fil-a-try-its-real-estate/465812570/