Taco Bell typically features a 2,000 – 3,000 +/- SF building with a drive-thru window, situated on .5 - 1.0 acre of land. It is important to note that Taco Bell franchises the majority of its locations. There are a number of various lease agreements and guarantors operating under the Taco Bell banner. As a result, lease terms vary as do cap rates based on the size and strength of the operator and sales at a particular location. Generally the lease term is 20 years with 4 five year options with increases of 10% every 5 years.
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Pros:
- Higher cap rates available
- Engaged in heavy advertising to improve brand image and market penetration
- Often new favorable NNN leases with good increases
Cons:
- Non-investment grade credit
- Must look closely at performance of franchisor across all locations
- Must review sales history at subject location
- Not all leases require sales reporting
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