McDonald’s and Starbucks are the two most liquid QSR credits in all of net lease, and they arrive at the same agency ratings from opposite directions. Both are investment grade tenants at BBB+/Baa1, yet the market prices McDonald’s real estate 50 to 100 basis points tighter than Starbucks on otherwise comparable corners. The rating framework in our investment grade guide says the credits are equals; the cap rate gap says the leases are not. Understanding why identical ratings produce different pricing is the entire lesson of this comparison.
Quick verdict: McDonald’s (BBB+/Baa1) is the tightest-priced tenant in QSR, with corporate ground leases trading at roughly 4.0%–4.75% cap rates. Starbucks (BBB+/Baa1) trades at 4.75%–5.5% on 10-year corporate drive-thru leases. The spread is not a credit spread; it is a structure spread: 20-year ground leases with land ownership economics versus 10-year building leases with shorter weighted term. Both fit the $2M–$4M private buyer and 1031 exchange sweet spot.
McDonald’s vs Starbucks: Side-by-Side Comparison
| Metric | McDonald’s | Starbucks |
|---|---|---|
| S&P / Moody’s Rating | BBB+ / Baa1 (Stable) | BBB+ / Baa1 |
| US Store Count | ~13,500 | ~17,000 (company + licensed) |
| Cap Rate Range (2026) | 4.0%–4.75% (ground lease) | 4.75%–5.5% |
| Typical Primary Lease Term | 20 years (ground lease) | 10 years |
| Escalations | ~10% every 5 years (typical) | ~10% every 5 years, incl. options |
| Guarantee | Corporate (McDonald’s Corporation / USA, LLC) | Corporate (Starbucks Corporation) |
| Operating Model | ~95% franchised; corporate controls real estate | Company-operated (no US franchising) |
| Typical Price Point | $2M–$4M | $2M–$3.5M |
| Building Format | ~4,000–4,500 sq ft on ~1 acre pad | ~2,200–2,500 sq ft drive-thru pad |
Ranges reflect current market conditions per our tenant profiles; McDonald’s single-tenant assets averaged 4.09%–4.38% in recent Boulder Group surveys, the lowest cap rates in all of net lease.
Credit Rating Comparison: The Same Grade, Different Engines
McDonald’s carries BBB+ from S&P and Baa1 from Moody’s, both Stable. The rating reflects a deliberate capital structure choice rather than business weakness: McDonald’s runs substantial leverage against one of the most durable royalty-plus-rent cash flow models in the world, collecting rent and fees from roughly 95% franchised units while keeping control of the underlying real estate. Landlords are effectively senior to a franchise system that has operated through every recession since 1955.
Starbucks holds the same BBB+/Baa1 profile, earned through enormous brand cash flow offset by shareholder-return leverage and a US turnaround investment cycle. Unlike McDonald’s, Starbucks does not franchise in the United States: every standalone drive-thru lease is a direct corporate obligation of Starbucks Corporation, with no franchisee credit to underwrite. Both tenants sit three notches above the BBB‑/Baa3 investment grade cutoff and are tracked with the rest of the rated retail universe on our credit tenant ratings index.
Cap Rates: Why McDonald’s Trades Through Everything
McDonald’s ground leases trade at roughly 4.0%–4.75%, the tightest pricing in single-tenant net lease. Three forces compress the range: the leases are true ground leases where the tenant owns and maintains its building, landlord obligations are zero, and McDonald’s site selection is treated by the market as the gold standard of retail location science. An investor buying a McDonald’s pad is buying the dirt under a store the company almost never leaves; average remaining lease terms in the high teens are common on new listings.
Starbucks trades at 4.75%–5.5%. The wider range prices the shorter 10-year primary term, the building (not just land) risk, and lease forms where landlords can retain roof and structure responsibility. Within the range, new-construction drive-thrus with 10% escalators and full option stacks price at the tight end; older cafes with under five years of term price wide. Underwriting detail on each tenant: McDonald’s credit rating & NNN cap rate and Starbucks credit rating & NNN cap rate.
Lease Structure: Ground Lease vs Building Lease
The McDonald’s structure is the cleanest obligation in net lease. A typical deal is a 20-year ground lease signed by a McDonald’s corporate entity, with rent increases of roughly 10% every five years and multiple five-year options. The tenant owns its improvements, pays taxes, insurance, and all maintenance, and the landlord’s role is to deposit rent. Even at franchised locations, it is generally the McDonald’s real estate entity, not the franchisee, standing behind the ground lease.
Starbucks signs 10-year primary terms with typically four five-year options and ~10% bumps every five years, including through the option periods. The obligation is pure corporate credit, which is a genuine strength, but the shorter primary term means a buyer is underwriting renewal probability at year 10 rather than year 20. Renewal behavior is strong at high-performing drive-thrus and materially weaker at legacy in-line cafes, which is why format selection matters more for Starbucks than for almost any other credit tenant.
Footprint, Store Strategy, and Residual Risk
McDonald’s operates about 13,500 US restaurants and continues to densify rather than retrench, with remodels and rebuilds on existing pads reinforcing the renewal thesis. Starbucks operates roughly 17,000 US locations between company-operated stores and licensed units, and its current strategy explicitly prioritizes drive-thru and pickup formats while pruning underperforming cafes, a net positive for owners of modern drive-thru pads and a caution flag for owners of older formats.
Residual value favors McDonald’s on structure alone: a ground lease owner holds a hard-corner commercial pad with no building risk, and a dark McDonald’s pad re-leases to any QSR at market rent. A Starbucks drive-thru building is small, modern, and highly re-tenantable to coffee, QSR, or medical users, but the owner carries the building through any vacancy. Neither asset has meaningful functional obsolescence risk at current formats.
Bond Yields vs NNN Cap Rates: The Pivot
Both companies are benchmark bond issuers, and the comparison here is unusually honest about what NNN buyers are really paying for. McDonald’s intermediate bonds have recently yielded around 5%, meaning its ground leases trade through its own bond curve, sometimes by 50 basis points or more. Investors knowingly accept a lower going-in yield than the bond because the ground lease adds what the bond cannot: land ownership under an irreplaceable corner, rent escalations, 1031 exchange eligibility, and depreciation where improvements exist. Starbucks bonds in the low-5% area against 4.75%–5.5% cap rates put the real estate roughly at or slightly above the bond yield before tax, and clearly ahead after tax.
Full comparisons: McDonald’s bonds vs NNN and Starbucks bonds vs NNN.
Which Tenant Fits Which Buyer?
Choose McDonald’s if you want the closest thing net lease offers to a perpetual bond secured by land: zero landlord responsibilities, a 20-year term, the strongest renewal history in retail, and the deepest resale market at exit. You will pay for it with the lowest going-in yield in the sector.
Choose Starbucks if you want the same BBB+/Baa1 credit at 50–100 basis points more yield and a smaller absolute price point, and you are comfortable underwriting a 10-year primary term. A new-construction drive-thru with a full option stack captures most of the McDonald’s safety story at meaningfully better cash flow.
Evaluating a QSR net lease acquisition? We benchmark McDonald’s and Starbucks offerings against live comps, ground lease vs fee structures, and current financing quotes, and can produce a Broker Opinion of Value within 48 hours. Request a buyer consultation.
Frequently Asked Questions
Is McDonald’s or Starbucks a better NNN investment?
Both carry BBB+/Baa1 ratings. McDonald’s offers 20-year ground leases with zero landlord obligations at 4.0%–4.75% cap rates, while Starbucks offers 10-year corporate drive-thru leases at 4.75%–5.5%. Buyers prioritizing maximum safety and term choose McDonald’s; buyers wanting the same credit rating with more yield choose a modern Starbucks drive-thru.
What are the credit ratings of McDonald’s and Starbucks?
McDonald’s is rated BBB+ by S&P and Baa1 by Moody’s, both with Stable outlooks. Starbucks carries the same BBB+ and Baa1 ratings. Both sit three notches above the BBB‑/Baa3 investment grade threshold.
What cap rates do McDonald’s and Starbucks NNN properties trade at?
McDonald’s corporate ground leases trade at roughly 4.0%–4.75%, the lowest cap rates in net lease, with recent survey averages near 4.1%–4.4%. Starbucks drive-thru properties trade at roughly 4.75%–5.5% depending on remaining term, format, and escalation schedule.
Why do McDonald’s ground leases trade below McDonald’s bond yields?
Because the buyer receives assets the bond cannot deliver: ownership of hard-corner land, contractual rent escalations, 1031 exchange eligibility, and a claim that historically renews for decades. Investors accept a going-in yield below the company’s bond curve in exchange for land residual value and tax treatment, which is the clearest proof that NNN pricing is more than a credit spread.
Does a franchisee or the corporation guarantee these leases?
On the assets covered here, both are corporate obligations. McDonald’s ground leases are typically held by a McDonald’s corporate real estate entity even where a franchisee operates the restaurant. Starbucks does not franchise in the US, so every standalone Starbucks lease is signed by Starbucks Corporation. Franchisee-guaranteed McDonald’s leases exist but trade at wider cap rates and require operator-level underwriting.
