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Research Report

Tenant Profile – Popeyes

Tenant Description

Ever since Popeyes opened its doors in Arabi, Louisiana in 1972 as “Chicken on the Run,” Popeyes has developed into a major player in the quick service industry. Known for their spicy chicken, Popeyes currently operates over 2,700 restaurants in the US and around the world. Popeyes is a subsidiary of Restaurant Brands International.

 

Net Lease Overview

Popeyes is able to promote itself as a positive investment for a few different reasons. Developing a cult following, Popeyes has grown into one of the largest chicken specialty fast food restaurants in the country, with a plan to continue growing. For marketing purposes, Popeyes will usually advertise their New Orleans heritage, which can especially be seen around Mardi Gras time. With an aggressive plan to add more sites, we see Popeyes making a serious push for growth in the sector. Additionally, as part of the site selection process, Popeyes will look for space that can make them easy to find.

Typically, Popeyes locations will come as a NNN investment, meaning the tenant will pay for all expenses including maintaining the structure allowing the owner to passively receive rent income. These leases also typically incorporate rent increases to help protect against inflation. The ownership group, Restaurant Brands International, currently has a credit rating of BB-, with a positive outlook.

Looking at cap rates from the past 12 months, we can see that Popeyes cap rates are more in-line with QSR sector averages.

Popeyes locations have the third highest sales per location, showing that they are a major player in the sector.

Popeyes deals in the past 12 months, for all sales and deals that have 10+ years remaining, possess significantly lower cap rates than the STNL Average. This demonstrates the strength of the tenant and their ability to “hold their own” in the sector.

 

Amanda WillisTenant Profile – Popeyes

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