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.
- ◦Sale/Acquisition
