REAL ESTATE NEWS

Drive-thrus are becoming a flashpoint between fast-food tenants, cities and the passive owners who depend on them, and a Culver City In-N-Out proposal is showing investors how quickly local backlash can threaten a core part of net-lease value. As more municipalities move to restrict or ban new drive-thrus, brokers tell GlobeSt.com that investors can no longer assume the format is a permanent fixture of retail underwriting.

In-N-Out's Mega Drive-Thru Moment

The inventor of the modern drive-thru — In-N-Out, which launched the format in 1948 in Los Angeles — is now at the center of what the New York Times describes as a "mega-drive-thru" fight that has helped some local leaders openly discuss ending the drive-thru window altogether. The battleground is Culver City, where traffic at an existing In-N-Out reportedly spills into a "jammed parking lot" at a retail site anchored by Costco, snarling circulation across the property.

Drive-thrus have become a basic part of busy daily life, letting people move from home to office to meetings while grabbing coffee or a meal without leaving their cars. In 2026, the drive-thru is the dominant channel for fast food, accounting for 60% of transactions, according to QSR Pro, and that share does not include other categories such as pharmacies, dry cleaners, banks and convenience stores that also rely on car queues. Eliminating or even curbing those lanes would directly hurt many food operators.

"It's a necessity to these fast food restaurants to have people drive through," Jonathan Hipp, head of Avison Young's U.S. net lease group, tells GlobeSt.com, adding that drive-thru use has become ingrained in the American population.

At the same time, he says, extensive drive-thru use in dense urban settings at peak hours can create "access nightmares with people backing up the lines," forcing cities to ask whether the price of convenience has grown too high.

The tension is playing out in real time in Culver City, where In-N-Out proposed another location with 61 parking spaces and a 26-car queue at the intersection of three major streets. The reaction from neighbors and the city council was strong enough that officials voted to extend a moratorium on new drive-thrus for another 10.5 months.

Culver City Vice Mayor Bryan Fish, who also serves as a transportation deputy for a member of the Los Angeles County Board of Supervisors, told the Times that in his 18 months on the City Council, nothing else had drawn as much attention, with residents writing in over traffic, air quality, safety and mobility.

For customers, however, the value proposition remains clear. "This traffic is insane," professional photographer Pierre Amoore said while eating a $6.35 Double-Double in the front seat of a Hyundai, according to the Times. "But this is the best burger in the world to me."

A Long Build-Up To City Pushback

The Culver City fight sits on top of decades of growing discomfort with drive-thru formats in some markets. San Luis Obispo, California, adopted restrictions on drive-throughs as far back as 1982. More recently, Minneapolis banned new drive-through facilities in 2019, closing the door on additional drive-through lanes in that city.

Even as these sentiments were building, the pandemic pushed people straight back to their cars. Data the Times obtained from food service research firm Technomic shows that between 2019 and 2022, drive-thru traffic jumped 30%, underscoring how valuable the format became when in-store visits were constrained. The surge reinforced operators' dependence on drive-thru sales, even in markets where regulators were already uneasy about congestion, emissions and pedestrian conflicts.

Cities have continued to tighten rules. Atlanta — home to Chick-fil-A — banned new drive-thru and drive-in facilities in its Beltline district in 2023. Some retailers have also opted to close or reconfigure problematic locations rather than fight recurring traffic complaints.

Starbucks made the closure of one Minneapolis drive-thru permanent, where queues were backing into a major intersection, and is replacing it with a new pedestrian patio. In late 2024, the Annapolis City Council adopted a ban on new drive-thru windows in its final meeting of the year.

For investors, a once-routine entitlement — a drive-thru lane attached to a strong credit tenant — increasingly depends on shifting local political and planning dynamics. What Culver City and other cities are showing is that any drive-thru-heavy retail strategy must now be examined market by market, block by block, with an eye toward how quickly sentiment can turn.

What Drive-Thru Risk Means For Owners

Hipp says many owners of drive-thru sites are passive investors who have counted on long-term income streams backed by strong net-lease tenants. Those investors may not have anticipated how contentious drive-thru could become or how local rules might evolve over a typical lease term.

"It's probably more impactful in certain markets than others, but it's something they'll have to figure out because it's so ingrained in the American culture," Hipp says. "It's another thing you have to be aware of in the business as you're buying assets."

For commercial real estate investors, that awareness now needs to include detailed due diligence on drive-thru exposure. That can mean tracking moratoria like Culver City's, understanding existing bans in markets such as Minneapolis, Atlanta and Annapolis, and weighing how neighborhood opposition could affect entitlements or future expansions. It also means recognizing that while drive-thrus remain a dominant revenue channel for fast food and other retail uses, the local politics around traffic, air quality and pedestrian safety are becoming central underwriting questions instead of afterthoughts.

Source: GlobeSt/ALM