Order Up: Restaurants Serving Up Growth

July 13, 2015

Investors are placing their orders among restaurant industry offerings and getting a taste of success in 2015. According to the NRN Restaurant Index, a dedicated stock tracker for the industry, stocks are up more than 10 percent for the year, easily topping last year’s 3.5 percent growth.

This trend is fueled primarily by fast casual concepts like Shake Shack and Wingstop, dedicated pizza brands such as Domino’s, Papa John’s and Papa Murphy’s, and even family dining favorites including Denny’s and Cracker Barrel. As for Quick Service Restaurants, the segment is riding high on Wendy’s 25 percent increase and the performance of Jack in the Box, which is up 10 percent.

While stock investors nationwide are giving the category rave reviews, those who look to back restaurant development on the local level are finding ways to capitalize on the segment’s growth as well. Chains that show responsible growth can create outstanding opportunities for development. And, since occupancy costs are often the third biggest payable for a restaurant, this segment can become a potentially rich source of profit if approached in the proper manner.

Restaurant expansion can give commercial real estate investors the opportunity to create favorable lease agreements. For instance, buyers can find potential rent improvements by looking for leases that are nearing expiration. In those cases, a chain can work with the landlord to lower lease costs in exchange for an extension. The chain gets a lower rent payment, and the landlord enjoys greater certainty for the extended term of the lease.

When commercial real estate moves are informed by market trends as well as the guidance of a trusted, professional resource like Intelica Commercial Real Estate, they can be a tremendous source of income. Contact us today to learn more about potential investments in the restaurant category and beyond.