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National  + Net Lease  | 
Casual dining chains such as Olive Garden have recently announced significant expansion plans

Casual Dining Sector Sees 70-BP Cap Rate Compression 

National asking cap rates in the single-tenant casual dining sector decreased to 6.03% in the first quarter of 2022, according to the Boulder Group’s 2022 Net Lease Casual Dining Report. This represented a 70-basis-point decrease year over year. 

Casual dining properties with corporately guaranteed leases generated cap rates of 5.75%, while franchisee-leased properties had cap rates of 6.40%. Cap rates for corporate guaranteed leases compressed by 40 bps, while franchisee-lease properties decreased by 72 bps. 

“Cap rate compression in the casual dining space was primarily attributed to better overall market conditions for the restaurant sector post-pandemic” said Randy Blankstein, president, The Boulder Group. “Investor interest and transaction velocity increased due to recovery for casual dining restaurants following the pandemic.” 

Casual dining sales rose more than 30% Y-O-Y in 2021, according to Technomic’s Top 500. Strong corporate brands including Olive Garden and Texas Roadhouse have announced significant expansion plans. 

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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