Demand for fast food outlets in undersupplied market

JLL’s Sales & Investments team has sold two NSW fast food outlets for a combined $10 million demonstrating the ongoing demand from investors.

JLL sold a Hungry Jacks leased investment in Lithgow for $7.25 million reflecting a 5.1% net return by way of public auction, to an interstate Victorian investor. JLL Joint Heads of Metropolitan Sales - NSW Gordan McFadyen, Dylan McEvoy along with Sebastian Fahey and David Mahood from JLL’s Retail investments negotiated the sales.

Mr McFadyen said “the long lease, strategic location to Lithgow’s premier regional corridor and the Hungry Jacks strength of covenant were the attractive aspects that suited the private investor.”

Mr McEvoy said “we are witnessing increased interstate interest from investors, in particular from Victoria, with investors seeking to diversify their portfolio along with reduce their exposure to higher land tax and investment based charges for investing in Victoria.”

That same month, JLL sold KFC Ingleburn off-market to a private purchaser for $3.06 million, on a sharp yield of 4.4%, representing the first Sydney metropolitan fast-food drive-through investment sale in 2024.

JLL Retail Investments Executive - NSW, Sebastian Fahey said “the sale was a strategic sell down for the shopping centre owner to realise liquidity for future development opportunities at the centre. The sale allowed the owners to realise the sharp yields that fast food continues to achieve and demonstrates the demand for other shopping centre owners.”

The JLL team sold the KFC through JLL’s private database which has seen a 45% increase in active purchasers looking specifically for fast food investments in the past 12 months.

JLL Retail Investments Executive – NSW, David Mahood stated, “We are seeing a trend of investors pivoting from service station investments and focusing purely on fast food opportunities which we have seen in the recent Lithgow transaction which shows the growth in the fast-food sector over the last 5 years.”

JLL’s recent fast-food report highlights those metropolitan yields across Australia averaged 4.42% over the first half of 2024 with the recent results of Griffith Group’s “Warrawong” portfolio realising an average yield of 4.49% further cementing the theme of hungry investors looking for bond like safe haven investments.