Fast Food feeds Insatiable Investor Appetite

Published on: 14/09/2023

Our hunger for fast food is rocketing and ravenous investors will finally be able to fill up on a rarely offered selection of assets in Burgess Rawson’s August Portfolio.

As market leaders in the sale of fast food properties, Burgess Rawson has witnessed unprecedented investor demand for Australia’s most tightly held assets.

And it’s no surprise that nearly 80% of us consume fast food every day.

Fast food is undoubtedly a robust, recession-proof product that has continued to show trading growth during economic uncertainty. It’s for this reason that generally, fast food owners don’t want to relinquish them.

Innovation, fresher options, and convenience have also been key factors in driving the demand, with major retailers fully equipped to cater to consumers with busy lifestyles.

Burgess Rawson Partner and National Head of Agency, Raoul Holderhead said fast food assets appeal to investors because they offer long-term, low-risk options that require minimal input from the owner, coupled with solid and reliable returns over time.

“Fast food assets house prominent and innovative tenants. These industry heavyweights invest in extensive research before opening a new location and will upgrade their stores at significant costs. They will also generally seek long-term lease commitments to maximise their own returns.” he said.

Major retailers are adapting to consumer needs through offerings such as plant-based options and drive-through-only restaurants, as well as expanding their footprint across the country.

In the last 12 months, 179 new sites have opened, including 20 McDonald’s, 14 Guzman y Gomez, and 10 KFC stores.

This investment by major players is certainly paying off, with many recording strong revenue growth.

McDonald’s hit a record $2 billion in revenue in 2022, thanks to McCafé and their home delivery offering.

The fast food giant confirmed that one in every four coffees sold in Australia is from one of its McCafé’s, which sells an average of 600,000 cups a day.

Likewise, KFC franchises in Australia have continued to perform well, achieving strong revenue growth of 10.6 percent to $479.6 million in the second half of 2022.

According to IBISWorld, there are now over 27,250 fast food and takeaway food services businesses in Australia, with this figure forecast to grow.

Increased population and immigration are also feeding the frenzy and both global and local brands are expanding their footprint.

The shift towards healthier options and more diversity has seen the fast food trend evolve, opening up opportunities for new operators to enter the industry.

Local icons, Guzman y Gomez and El Jannah have been appearing across the country at a phenomenal rate. Guzman y Gomez or ‘GyG’ has been one of the fastest growing quick service restaurants in recent times.

The single fast food store which began in a trendy Sydney suburb in 2006, is responsible for a company that is now set to reach unicorn status. The popular Mexican restaurant franchise is projected to hit an eye-watering $1 billion in revenue by 2025.

Mr Holderhead said that fast food retail properties are among the most tightly-held investments, so when offered to the market, they’re generally snapped up quickly.

Burgess Rawson NSW Partner, Yosh Mendis said, “Fast food assets have proven to be recession-proof as convenience remains a key factor in the growing demand for these products.”

“Solid fundamentals such as having a highly regarded established tenant serve to strengthen the success of these assets.” he said.

Investors will finally get to feast on one of their favourite asset classes, with our August Portfolio offering several premium opportunities leased to leading national tenants.

Standout opportunities include a prime McDonald’s asset in Wollongong, featuring an ultra rare 20 + 20-year triple net ground lease. Two NSW Guzman y Gomez leased assets, both built this year and boasting brand new 20-year leases, will also be hotly contested, as well as a Hungry Jack’s built-in 2020, located in booming Albury NSW.