What $5 Million Can Buy in Restaurant Real Estate
When looking for investment restaurant real estate, the typical approach often leans toward big brand names: McDonald’s, Panera Bread, Chili’s and Maggiano’s, to name a few.
But there are other options if you want something a little different. Perhaps a property with a long history in a trendy area strikes your fancy. Maybe it means saddling up with a strong regional restaurant player.
Whatever you choose to do, real estate brokers likely will tell you that location is vital. A good location means you stand a better chance of finding a new tenant if your existing one vanishes.
Here’s a sample of what you can buy for $5 million:
1352 Sibley Memorial Hwy., Mendota, Minnesota: $4.96 million
Lucky’s 13 Pub is a restaurant and bar chain based in the Minneapolis area. It has eight locations, two of which are in North Dakota.
This deal is a sale-leaseback with the company. When the deal closes, the investor gets a 15-year net lease with 5% rent increases every five years.
With a net lease, the tenant covers all property expenses. The landlord just collects a rent check for an annual return on investment estimated at 7.25%, also known as a capitalization rate.
The restaurant sits in a high-dollar area. Annual household incomes in the area average $100,000. Its biggest selling point may be that it’s 10 minutes from the Minnesota Vikings headquarters and training facility.
225 State St., Santa Barbara, California: $4.95 million
Buying this restaurant space will get you a little piece of Santa Barbara’s Funk Zone, an area that features restaurants and tasting rooms for local wineries.
Enterprise Fish Co. is along Santa Barbara’s Urban Wine Trail and near Stearns Wharf, a major tourist attract in on the area.
The restaurant, which has a second location in Santa Monica, landed in the renovated historic building 42 years ago.
4180 Belt Line Road, Addison, Texas: $5.1 million
The property includes two restaurants, Snuffer’s Restaurant & Bar and Taqueria La Ventana, owned by Dallas-based Firebird Restaurant Group. Firebird’s owns several other restaurant concepts, including El Fenix, a chain started in 1918 that has been credited with originating the Tex-Mex cuisine.
Snuffer’s has been around since 1978. Taqueria La Ventana is a fast-casual concept offering Mexico City street food that has grown to multiple locations over the past several years.
The location sits in heavy retail area in the heart of this Texas town north of Dallas.
