America’s fast-food industry has recorded stellar growth over the past few decades — and it’s even getting better! The demand levels for such foods aren’t dropping anytime soon. Thanks to millions of working-class Americans who have to eat out to save time.
Consequently, investing in the fast-food service line is an intelligent step for real estate investors. What’s smarter? Investing in NNN fast-food franchises that have consistently posted good records and achieved a reputation for their unique recipes.
One such example is Arby’s franchise, a conglomerate that has turned around its sales fortunes and customer retention rates remarkably in the past few years. Nevertheless, does this turnaround bode well for real estate investors too?
This article discusses the benefits and drawbacks of investing in an Arby’s for sale to help you make the appropriate decision. However, we’ll look at the fundamentals of NNN leasing before delving fully into the subject matter for your better understanding.
How Does NNN Leasing Work?
NNN (also triple net) is a commercial real estate contract between the landlord and the tenant absolving the former of all housing expenditures, provided they reduce their rent significantly. In such an arrangement, the latter caters to property maintenance fees, asset taxes, and net insurance premiums after paying considerably little rent for the property.
Triple net leasing is favorable to the tenant only when the property delivers returns as they expect. Suppose you secure an Arby’s property on an NNN leasing arrangement. The only way you can make profits on the deal is if your outlet realizes sufficient monthly revenue that caters to the numerous expenditures (including the rent) and remains enough to keep as net profit.
If you understand this real estate format well now, you should have an idea of why some investors believe that an Arby’s for sale would make a profitable property now. After all, the franchise is popular enough to get you sales — as long as your location is ideal. Now, let’s see if believing in Arby’s (like others do) is indeed wise.
Pros of Investing in Arby’s: Why Should I Buy a Listed Arby’s Outlet?
Arby’s has recorded outstanding gains in the last decade for a start and is, therefore, a solid real estate investment avenue. Numerous commercial real estate space studies have proven that Arby’s NNN properties are profitable and cost-saving. Consequently, acquiring one of the various Arby’s for sale may be a more straightforward, cheaper way to actualize your dream of becoming a restaurateur than starting from scratch.
Assured Revenue Generation
Arby’s has posted considerable improvements in sales and returns in recent times. In 2020 alone, the franchisor recorded over $4 billion in sales. In the same year, Arby’s EBITDAR — earnings before deduction of interests, taxes, depreciation, amortization, and real property costs) was over $245,000 per outlet.
The above data (collected across 1,111 units in 40 states) demonstrates that Arby’s offers significant value and realizes an equal profit from its services. Therefore, buying into an Arby’s for sale assures you of a steady income stream. You’ll rarely, possibly never, record a loss in any of the months you’re open.
Guaranteed Customer Base
Market research has proven that hundreds of millions of Americans appreciate the services that Arby’s provides. Expect this reality to remain forever — to you and the franchisor’s benefits! Thanks to the ever-present demand of the populace for fast food.
These markets are considerably more prominent in cities with a massive working-class populace, as these people seldom make their meals. What’s better?
Despite the fall in every other sector, the number of online and drive-thru orders reached great heights during the pandemic. Consequently, the industry has built upon this growth, so fast-food providers appear poised to profit excessively from future developments.
Considering this news, it must be exciting that Arby’s is the second-largest sandwich brand globally and that the franchise ranked first among the Entrepreneur Franchise 500 in 2021. Seeking out Arby’s property to buy wouldn’t be an overreaching move now.
More Accessible, Cheaper Setup and Operations
Arby’s developed a few but significantly helpful policies to help you make a higher profit from its outlets. The franchise has diversified its menu, incorporated digital technologies, and improved customer service to achieve higher orders and, in turn, revenue.
Additionally, Arby’s presently charges only one percent royalties for the first 12 months of operation. For context, the standard royalties rate is four percent. It’s also noteworthy that the company has waived its traditional franchise fee of $37,500, although it doesn’t include development fees.
Cons of Investing in Arby’s: What Are the Reasons to Not Buy a Listed Arby’s Restaurant?
Arby’s has some disadvantages, too, even though some argue they aren’t the franchisor’s faults.
Varying Levels of Returns According to Location
The location has always been the most relevant consideration in real estate investments, and this fact remains with Arby’s. The fast-food industry giant may record impressive overall profits and have a massive customer base. Yet, it’s impossible to ignore an outlet’s location’s role in its revenue generation ability.
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Consequently, it’s recommended to invest only in Arby’s real estate for sale if the property is in an attractive location. An important factor will also be the presence of thermal blackout roller blinds, it greatly increases the trust of visitors, as the hot weather makes itself felt and makes staying in the room is not bearable. An attractive site in this regard has to have a plethora of young to old people. In addition, it should be easily accessible from various landmarks in the city.
Sales Data Analysis is Required
Arby’s requires periodic sales data to analyze your performance over time. This requirement isn’t necessarily a drawback to the franchise, except for individuals who don’t cherish such facts and checks. We recommend such people to go solo.
You really can’t blame Arby’s for wanting to keep track of sales records in its restaurants. Such measures are why the franchise can improve its services to customers’ expectations.
Arby’s has undergone a remarkable transition from an underperforming fast-food supplier to a franchise with over 3,000 outlets. The enterprise is clearly in excellent shape and appears to only improve in subsequent years.
As such, buying an Arby’s for sale seems like one of the best real estate investments currently. The franchise guarantees profitability and patronage and charges considerably less to start. However, ensure your outlet is in a favorable location for the ideal results.