Commercial Property Investment: What makes a good restaurant purchase

restaurant

Find out what makes a good restaurant investment with our expert advice.

The economic climate has changed a lot in the last 20 years, and digitisation has forced many businesses to either evolve or fold. However, through all this change one thing remains true: people still need to eat. Which is just one of the reasons why a restaurant can be a great commercial property investment. At The Prideview Group we have over 30 years experience in helping our clients secure blue chip restaurant investments that net solid returns for years to come.

And this is not restricted to conventional restaurants but also fast food joints, drive-throughs, takeaways, coffee shops, pubs, dessert parlours and juice bars. Below, we have outlined the reasons why we believe restaurants are a great quality commercial property investment, and why you should consider it for your next investment.

Restaurant investment: Costa Coffee, Crediton

Restaurants aren’t affected by online

Unlike the retail sector, the online revolution hasn’t hindered sales and restaurants aren’t losing out to online options. In fact, the surge of online apps like Uber eats, or Deliveroo have only helped add another element to these businesses, and provided another income stream. In addition, the economy has been performing better in recent years so people have more disposable income, and they like to spend it on nice things like going out for dinner.

They have long leases

As an investor, one of the key things to look for in a potential purchase is the length of the lease. Restaurants commonly sign leases of over 10 years (and sometimes up to 30 years), providing a solid, long-term income stream.

They are found in key locations

Restaurants are generally found in the most covetable locations: either roadside in the case of a drive through fast food restaurant, or more often than not, on the high street. These are high traffic areas and highly populated meaning they are ideal locations for an investment property.

Restaurant investment: Mcdonalds, Leicester

What to look for

Sold on the idea of a restaurant as your commercial property investment? You still need to do your research, as not all restaurants were created equal. With over 30 years experience in acquiring and selling restaurants for our clients, this is where the friendly team at Prideview Properties can help.

Look for an established name:

Obviously there are a lot of restaurants out there and for us it’s important to trade with caution and choose restaurant chains that are stable rather than those that are growing too rapidly. Instead, look for options that are established and have grown over several decades as these represent a safer investment.

Understand the company

This piece of advice applies to all commercial property investment: before you purchase be comfortable with the company, how they’re structured and with the business itself. It’s important to understand who the restaurant is and who has backed them, and of course how well it’s trading. We also suggest looking at the rent that’s being paid to make sure it’s sustainable.

Location, location

Another important factor to look for is obviously location. The High Street is where restaurants typically succeed, are competition here can actually be good because consumers want choice and this can help footfall.

The key is that the location should suit the nature of the restaurant’s business. So takeaway restaurants like pizza places need to be in residential locations close to their catchment area and coffee shops may work well near places of work or public transport. Perhaps the most lucrative restaurant, however, is the drive through chain. These are hot property because they’re on busy roadside locations and on large plots with plenty of parking.

Restaurant investment: Pizza Hut, Bromley

Interested in taking the next step towards a restaurant commercial property investment? The friendly team at Prideview Properties can help. With over 30 years experience in acquiring blue chip restaurant investments for our clients, we know how to source not only a good deal – but the right deal for you. To view some of our recent restaurant acquisitions, click here, or visit our current opportunities page to see if there’s a commercial property investment to suit you. Don’t see what you’re looking for? Register your details with us here and our helpful team will contact you with opportunities tailored to your specific investment.

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