REAL ESTATE NEWS

A recently expanded Chick-fil-A in Azusa, California, provides a useful case study in what may increasingly separate the most valuable drive-thru properties from the rest of the net lease market. An offering memorandum for the property shows how Chick-fil-A invested in additional vehicle capacity and followed that expansion with a long-term lease extension.

The 1.05-acre property was originally developed in 2012 and underwent a major renovation in 2025, replacing its single-lane drive-thru with Chick-fil-A's new double drive-thru prototype. Chick-fil-A subsequently extended its corporate ground lease for 11 years, through June 2036. The lease calls for $285,000 in annual rent, with a 10% increase in July 2030.

The combination of the expansion and lease extension is significant for net lease investors because it illustrates what restaurant operators increasingly need from their real estate. A drive-thru entitlement remains valuable, but simply having one may no longer be enough.

As restaurant volumes increase and digital ordering changes how customers use these properties, parcel size, stacking capacity and the ability to reconfigure a site for greater throughput can become important components of long-term real estate value.

The Azusa Site Shows The Value Of Capacity

Chick-fil-A had been operating at the Azusa property since 2012 before its recent expansion. The offering memorandum describes the location as a top 6% restaurant in California in the fast-food and QSR category and says average Chick-fil-A drive-thru restaurant sales exceeded $9 million in 2025.

Chris Rodriguez, co-founder of DealGround and a longtime retail investment sales broker, told GlobeSt.com that the Azusa restaurant had reached the point where the existing site configuration was limiting its ability to accommodate demand.

According to Rodriguez, Chick-fil-A occupied one of two adjacent outparcels in the shopping center. To create additional parking and stacking capacity, the neighboring building was removed and its space incorporated into the Chick-fil-A site.

Rodriguez estimated that Chick-fil-A ultimately agreed to pay roughly two-and-a-half times its previous rent in connection with the expansion. He described a scenario in which the landlord previously received rent from both Chick-fil-A and the neighboring tenant but could increase the property's combined income while consolidating the two parcels around a single restaurant operator.

The important point for investors is not simply that Chick-fil-A wanted more land. The additional real estate allowed the restaurant to process more vehicles and potentially support substantially higher sales.

The offering memorandum confirms the physical change, describing the former single-lane drive-thru as having been renovated and expanded into the company's new double drive-thru prototype.

That makes the property a useful example of how excess land and apparently inefficient layouts can have strategic value. A smaller parcel might support similar operations today but offer fewer options if a tenant needs additional stacking, pickup lanes or other changes in the future.

Drive-Thru Entitlements Are Difficult To Replicate

Those physical characteristics become more important because creating new drive-thru sites can be difficult.

Rodriguez said municipal opposition to drive-thrus over traffic and congestion is not new. He cited examples of In-N-Out and Chick-fil-A pursuing locations where local officials resisted drive-thru approvals because of concerns about the impact on nearby intersections.

That resistance can make an existing entitlement more valuable because another drive-thru cannot necessarily be developed nearby simply because a restaurant operator wants one.

"I still think that drive-through entitlement is the most valuable entitlement in retail real estate," Rodriguez said.

In effect, one of the features that makes a successful drive-thru attractive to restaurant operators — its ability to generate substantial vehicle traffic — can also make municipalities reluctant to approve new ones. Existing entitled properties can therefore benefit from a barrier to new supply.

Rodriguez sees evidence of their value in what some major restaurant operators have been willing to pay for locations.

Earlier in his career, he said, fast-food ground leases commonly ranged from roughly $40,000 to $70,000 annually. He has since seen a Raising Cane's ground lease above $600,000 annually even though the restaurant operator was also responsible for constructing its building, an investment he estimated at $2.5 million to $3 million at current construction costs.

Those figures are individual examples rather than market averages, but they demonstrate how aggressively a high-volume operator may pursue a location it considers particularly valuable.

The Next Drive-Thru Is About Throughput

The drive-thru itself is also evolving.

Digital ordering has created another stream of vehicles that restaurants need to move efficiently through their properties. Rodriguez pointed to Chipotle's pickup-oriented drive-thru format and Hawaiian Bros., which he said has used layouts that separate traditional drive-thru customers from digital-order pickups.

That means the drive-thru of the future may be less about a single queue leading to a speaker and window and more about managing several types of traffic. Customers ordering at the restaurant, app users picking up prepaid meals and third-party delivery drivers can place different demands on the same parcel.

"You're going to see, I think, a lot more innovation or modifications to drive-through operator site plans to create more throughput," Rodriguez said.

For net lease investors, that puts more weight on the property's physical characteristics.

Rodriguez said older fast-food locations built on parcels of roughly 18,000 to 25,000 square feet can be constrained by their size.

Even if demand exists, the site may not have enough room to stack and process the number of vehicles necessary to support the sales volumes that today's leading restaurant operators can generate.

The Azusa property illustrates the other side of that equation. Its 1.05 acres provided room for Chick-fil-A to expand the drive-thru rather than abandon a productive location in search of a larger parcel.

The surrounding real estate also helps explain the restaurant's demand. The property is at the signalized intersection of Alosta and Citrus Avenues, where the offering memorandum reports more than 46,500 cars per day. It sits across from Azusa Pacific University and near Citrus College, while the surrounding five-mile area has more than 417,000 residents.

The site therefore had both strong demand generators and the ability to be physically altered to accommodate additional traffic.

Investors May Need To Underwrite The Next Site Plan

For net lease buyers, the implications extend beyond restaurant sales, lease term and tenant credit.

A long corporate lease can make a drive-thru property appear relatively straightforward to underwrite. But an investor buying an asset with a 10, 15 or 20-year investment horizon is also betting that today's parcel can accommodate tomorrow's restaurant operating model.

That places more importance on characteristics that can be overshadowed by a strong tenant and a long lease. Investors need to consider how many vehicles can stack without spilling into surrounding streets or parking areas, whether another lane could be added, whether digital pickup traffic can be separated from conventional drive-thru traffic and whether parking or circulation patterns could be reconfigured.

Future reuse matters as well. If the existing tenant eventually leaves, a parcel large enough to accommodate multiple configurations could appeal to a broader range of replacement operators than a tightly constrained site designed around one particular restaurant format.

Rodriguez said investors evaluating freestanding drive-thru assets should pay particular attention to parcel size, future reuse, layout, stacking capacity and the number of vehicles the property can process.

"The processing cars is the name of the game," he said.

That changes the investment case for drive-thru real estate. Consumer demand for convenience remains part of the equation, but the asset's scarcity value increasingly comes from the combination of entitlement and physical capacity.

The Azusa Chick-fil-A brings those factors together. An established operator needed more capacity, the existing property could be reconfigured to provide it and Chick-fil-A followed its investment in the site with a long-term lease extension.

For net lease investors, that may be the more important lesson. The most defensible drive-thru properties will not necessarily be distinguished only by the credit of the tenant occupying them today. They may increasingly be the sites with the entitlement, land and flexibility to accommodate more cars and whatever operating model comes next.

Source: GlobeSt/ALM