Restaurants continue to be a highly desired asset among net lease investors. With QSR & Casual Dining restaurants leading the way, cap rates continue to decline - average QSR cap rates dropped from 6.61% in 2013 to 6.38% in 2014 and Casual Dining from 7.29% to 7.03%. Driven by a stronger economy and historically high levels of pentup demand among consumers, restaurant-industry sales are expected to hit a record high in 2014. According to the National Restaurant Association's Restaurant Industry Forecast report, restaurant-and-foodservice sales are projected to total $683.4 billion in 2014, up 3.6 percent from 2013. Restaurant consumer spending has already increased 1.7% in the first quarter of 2014 according to the NPD Group despite first quarter foot traffic declining by 1%. This increase in spending is attributed to the industry wide average check increasing to $6.62 per person.

From a net lease investment perspective, restaurants and especially well known chains such as McDonald's, have always appealed to investors. Following from the mantra “everyone's got to eat” well located restaurant properties are some of the most sought after assets. While other retailers such as banks and big boxes have to worry about the impact of online retail, restaurants are naturally protected as they deal with perishable goods (much like grocery stores). A strong restaurant location will always generate sales, so even if the space goes dark, it's easy to in-fill with another tenant. Restaurant properties also feature some of the most well known brands - McDonald's, Burger King, IHOP, Applebee's etc. The name recognition these brands confer on the underlying asset is appealing to investors.

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