The risk nobody's underwriting in fast-food NNN

[Nicholas Cokas]

Been chewing on this and want to pressure-test it with the NNN crowd here.

A lot of people park money in single-tenant net-lease fast food — the standalone Taco Bell, the McDonald's outparcel — because it's "recession-proof, mailbox money." Long lease, corporate guarantee, sleep at night.

Here's the variable I don't see in anyone's underwriting: 1 in 8 American adults is now on a GLP-1 weight-loss drug (Ozempic/Wegovy/Zepbound), projected to hit ~30M users by 2030. These drugs work by killing appetite. Early data already shows people on them eat ~21% fewer calories, and fast-food dinner traffic among regular users is down ~6% (Cornell; New Atlas).

A QSR keeps maybe 6-8 cents on the dollar. Lose 6% of traffic and you can lose half the store's profit — rent, staff, fryer all cost the same. That doesn't break a corporate-guaranteed lease tomorrow. But it shapes renewal risk and rent coverage at the 7-10 year mark — exactly the horizon a lot of NNN buyers hold to.

Cap rates on these haven't moved for it at all. So either the market's right that it's noise, or there's a mispricing forming in a "safe" asset class.

Genuinely curious how this forum thinks about it:

- Anyone underwriting GLP-1 / demand-shift risk into QSR or other retail NNN yet?

- Which formats are most exposed — value/drive-thru vs. fast-casual?

- Does renewal risk change your assumptions here, or is the corporate guarantee enough that you don't care?

[JD Martin]

The better fast-food operators will just start serving up Ozempic milkshakes and Wegovy burritos. Americans love big portions, cheap menus and fast food. The chains that make the adjustments will just keep chugging along.