Fast-casual and coffee chains are some of the most sought-after restaurant tenants in net lease. Strong brands, however, are not the same as strong credit ratings: many leading fast-casual companies have no public debt rating at all. This page separates brand strength from investment grade credit, shows live asking cap rates for major names, and covers the risks behind restaurant failures and private equity ownership. For the rating scale, see the investment grade guide.
Brand Strength vs. Credit Rating
| Tenant | S&P / Moody’s | What it means for a lease |
|---|---|---|
| Starbucks | BBB+/Baa1 | Publicly rated investment grade; confirm that Starbucks Corporation signs or guarantees the lease |
| Chipotle | no verified rating | Not rated by the major agencies because it has no rated debt; underwrite its public financial statements and the lease |
| Dutch Bros | Not rated | Not rated by the major agencies; underwrite the company’s financials, lease, and any franchise structure |
An unrated company can still be financially strong. Chipotle, for example, reports its results publicly and has historically operated without funded debt. But “unrated” is not the same as “investment grade,” and lenders and some buyers treat the two differently. Check the tenant ratings database for current ratings.
Live Asking Cap Rates
| Tenant | S&P / Moody’s | Median asking cap rate | Middle half of listings | Listings | Median vs. 10-year Treasury |
|---|---|---|---|---|---|
| McDonald's | BBB+ / Baa1 | 4.00% | 3.75% to 4.15% | 43 | −124 bps |
| Chick-fil-A | n/a / n/a | 4.22% | 4.00% to 4.50% | 45 | −102 bps |
| Chipotle | n/a / n/a | 5.00% | 4.75% to 5.25% | 89 | −24 bps |
| Dutch Bros | NR / NR | 5.50% | 5.25% to 5.60% | 97 | +26 bps |
| Starbucks | BBB+ / Baa1 | 5.75% | 5.35% to 6.19% | 118 | +51 bps |
Active listings InvestmentGrade.com tracks with an asking cap rate (stated in the listing, or computed from its stated income and price when no rate is stated), listings last observed October 9, 2026. Asking cap rates are not closed-sale cap rates. The middle half is the range from the 25th to the 75th percentile of listings. The 10-year Treasury yield is 5.24% as of October 1, 2026 (FRED series DGS10). Ratings are the agency ratings in our ratings database for the entity shown, which may be a parent company; the rating type (for example issuer, senior unsecured debt, long-term debt or revenue bond ratings) varies by company and is shown on each tenant page. A rating applies to a lease only if the rated entity signs or guarantees it, so confirm the tenant and any guarantor in the lease. n/a means no verified rating is on file.
McDonald’s and Chick-fil-A are quick-service rather than fast-casual, shown for comparison. Strong brands with long ground leases can ask low cap rates even without a public rating, because buyers price the brand, the location, and the lease as well as the credit.
What Separates Durable Brands
- Unit economics: sales and margins per restaurant that support rent comfortably.
- Balance sheet: low debt or strong credit at the entity that signs the lease.
- Corporate vs. franchise operation: company-operated restaurants with corporate leases differ from franchisee leases backed by a local operator.
- Adaptability: brands that recover from setbacks, such as Chipotle after its 2015 food safety outbreaks, show resilience, but past recoveries do not guarantee future ones.
Why Restaurants Close
Restaurants fail often, though the rate depends on the market, period, and definition of failure. A widely cited study of restaurants in Columbus, Ohio found that about 26% closed in their first year and about 59% within three years (Parsa and others, Cornell Hotel and Restaurant Administration Quarterly, 2005). Results for national chains with established unit economics differ from those for independent restaurants, so treat any single statistic with care. Common causes include weak sales, high occupancy and labor costs, and too much debt.
Private Equity in Fast Casual
Private equity firms have been active buyers of restaurant brands. In 2024, Blackstone agreed to acquire Tropical Smoothie Cafe, the franchisor of a network of more than 1,400 locations; that is an acquisition of the franchisor, not of the franchisee-operated locations. Private equity ownership can bring capital and operating discipline, but buyouts often add debt, so for a landlord the key questions are which entity signs the lease and how leveraged it is.
If a Restaurant Goes Dark
Freestanding restaurant buildings, especially those with drive-thrus on well-located pads, can often be re-leased to another restaurant, coffee, or service user, though conversion costs and timing vary. Underwrite the site as if the current tenant might leave at lease end.
Buying or Selling a Restaurant Net Lease Property?
We can review the tenant, guarantor, and lease and price the property against current listings. On the majority of transactions, there is no separate fee to you as the buyer for representation; the listing broker pays a cooperating commission.
Frequently Asked Questions
Is Chipotle investment grade?
Chipotle is not rated by S&P, Moody’s, or Fitch, so it is not investment grade in the ratings sense, though it reports strong financial results publicly. Underwrite its financial statements and the lease directly.
Is Starbucks investment grade?
Yes. Starbucks is rated BBB+/Baa1 by S&P and Moody’s.
What percentage of restaurants fail in the first year?
It depends on the market and period. One widely cited Columbus, Ohio study found about 26% closed in their first year and about 59% within three years; national chains differ from independent restaurants.
Educational content only. InvestmentGrade.com is a commercial real estate brokerage and educational publisher. We do not sell, broker, underwrite, or solicit any bonds, securities, or investment products. Yields, ratings, and prices referenced fluctuate continuously and are sourced from public market data as of the date noted. Nothing on this page constitutes investment advice, an offer to sell, or a solicitation to buy any security. Consult a licensed broker-dealer, registered investment advisor, or tax professional before making any investment decision. For SEC investor education, visit investor.gov.
