McDonald’s Targets 50,000 Restaurants by 2027

Estimated read time: 3 minutes and 50 seconds

REAL ESTATE, NOT BURGERS

McDonald’s Targets 50,000 Restaurants by 2027 with Fastest Growth in Company History (Read Here)

McDonald’s plans 10,000 new stores and announces partnership with Google Cloud:

• Growth Goals: McDonald's aims for 1,000 new restaurant openings in the U.S. and international markets annually.

• Segment Breakdown: The fast-food giant plans to open approximately 900 locations in the U.S., 1,900 in international operated markets, and 7,000 in international developmental licensed markets.

• Capital Expenditures: McDonald's forecasts $2.5 billion in capital expenditures for 2024 and plans to increase expenditure from 2025 to 2027.

• Loyalty Program: McDonald's aims to have 250 million active customers in its loyalty program by 2027, generating $45 billion in annual sales.

• Ready on Arrival: The company will expand its technology pilot program to expedite mobile orders across its top six markets by 2025.

• Google Partnership: McDonald's will collaborate with Google Cloud to enhance operations and reduce disruptions through generative AI solutions.

• Universal Software: McDonald's will introduce a new universal software for its customer and restaurant digital platforms, improving innovation rollout and stability.

• Global Presence: McDonald's is the leading global foodservice retailer with over 40,000 locations in 100 countries.

🧠 EDITOR’S THOUGHTS

McDonald’s net leased cheat sheet:

• Investment Grade Credit: BBB+ | Baa1

• Low Rent: $90,000 - $100,000 Average

• Lease Type: Typically Ground Lease

• Rent Increases in Base Term: Typically 10% every five years

• Low Price Point: $2MM - $2.5MM Average

• Low Cap Rate: 3.5% - 4.75% Average

• Base Term: 20 Years plus 4 (5) Year Options

• Lot Size Requirement: 0.75 -1.25 Acres Average

• Building Size: 3,000 - 4,000 SF Average

TRIPLE NET TENDIES

🧠 Thought Leader: Danny Klein shares how Crumbl opened 900+ locations

👂 Ear Hustle: Michael Saylor discusses the future of money

💎 Web Gem: Ascension shares the parties involved in a Sale-Leaseback

NET LEASE NUGGIES

• KFC accelerates growth in UK and Ireland. KFC, a division of Yum! Brands, has agreed to acquire 218 KFC restaurants from EG Group, its largest franchisee in the region. This deal presents a significant opportunity for KFC to expand in the thriving UK and Ireland chicken market with strong sales and margins. KFC UK and Ireland has experienced consistent growth, with system sales up 7% and same-store sales up 5%. The transaction is set to be completed by the first half of 2024 and will be funded by Yum!'s cash flows. (Read More)

• Vornado Realty downgraded by Moody's over debt payment concerns. Moody's has downgraded Vornado's debt rating from investment grade to junk, citing concerns about the company's ability to pay off debt over the next two years. Vornado's fixed charge coverage ratio has declined, and higher interest rates are expected to increase financing costs. Despite the downgrade, Moody's upgraded Vornado's outlook to "stable," noting the company's predictable operating cash flows and strong liquidity. Vornado owns a significant amount of office space in New York City, Chicago, and San Francisco. (Read More)

• Falling interest rates prompt refinancing surge. Last week, falling mortgage rates led to a 14% increase in refinancing applications, with the average 30-year loan rate dropping to 7.17%. However, prospective home buyers remained cautious due to high prices caused by low inventory. Refinancing accounted for 34.7% of home loan applications. Despite the increase in refinancing activity from last year, it is expected to remain low as many homeowners already secured low-rate mortgages. Mortgage rates have dropped since peaking at 7.8% in late October. (Read More)

• Marcus & Millichap invests in crowdfunding platform EquityMultiple. Marcus & Millichap made an equity investment in EquityMultiple as part of a strategic partnership. The New York-based real estate financing platform allows accredited investors to invest and companies to raise private equity and credit through crowdfunding. Marcus & Millichap sees this partnership as an opportunity to expand its service line and broaden its spectrum of debt and equity sources. Last month, the brokerage firm also invested in proptech firm Archer. Despite recent losses, Marcus & Millichap plans to enhance its business through acquisitions and technology. (Read More)

BEAST TWEETS x POSTS

🐦 The Wolf of Real Estate: It seems more and more likely that there will be rate cuts at some point in 2024..…

🦅 Peterlikesgyros: Light capex. Drove rents to market. Kept expenses low. Built website + answered the phone.…

🦢 NNN Retail Guy: We bought an asset in 2018 and one of the lead tenants immediately went bankrupt and vacated 7,000SF of the building.…

🦆 John Andreini: GP acquires distress apartment building from lender. Tenants all stopped paying rent…

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