Fast-food freeholds are emerging as one of the main competitive commercial asset classes in 2025, as evidenced by two of Stonebridge Property Group’s recent campaigns.
The sales of Melbourne’s KFC Burwood East, which sold for $5.83 million on a razor-sharp 3.3 per cent yield, and Red Rooster Wodonga, which achieved $3.335 million on a 5.09 per cent yield, demonstrate just how fierce demand has become.
Both assets attracted deep bidding pools, including 19 registered bidders for KFC and seven for Red Rooster, with interest coming from Victoria, NSW, Queensland and, notably, a rising wave of Asian capital.
Stonebridge partner Kevin Tong says these results are a signal of the sector’s widening appeal.
“Fast food [outlets have] always been really attractive for buyers because they’re non-discretionary and household names,” he says. “Everyone knows these brands; they can see people eating at them, which makes it a comfortable investment.”
What’s driving fast-food real estate sales?
Tong says the sector is benefiting from economic shifts, with falling interest rates in 2025 being a key ingredient of the market’s resurgence.
“I think one of the big drivers … putting buyers back into the market is interest rates coming down,” he says. “With interest rates dropping a few times this year, buyers are probably thinking that instead of putting money in the bank, they’ll invest in a fast-food asset instead.”
The diversity of brands also continues to expand. While McDonald’s and KFC remain the gold standards for many investors, emerging operators like Guzman y Gomez, which is now ASX-listed, and El Jannah are widening the market.
“People know these brands now,” Tong says. “El Jannah has built a huge following in Sydney, and that’s flowing into Victoria. Buyers feel comfortable backing tenants they understand.”
The investors coming to the table
Unlike large-format retail or offices, the fast-food market is dominated by private investors and families, not institutions.
“This market is driven by private families – mums and dads looking for long leases and secure investments,” Tong says. “A lot of them are buying them to hold in the family for generations and pass them down to the kids.”
Many are first-time fast-food buyers who previously preferred retail strips or neighbourhood centres. Others are newer migrant families seeking stability and predictability.
“In my market, we’re seeing a lot of Asian capital,” Tong adds. “They might be newer to the country, but these are brands that they’re familiar with and at a good entry level price point, and a lot of these buyers are buying them for the long term.”
The sale of KFC Burwood East, which was bought by a locally based Asian investor, reflects this trend, and Stonebridge points to its long-standing relationships in that buyer community as a key driver behind the competitive result.
What are the risks and rewards?
Much of fast food’s appeal lies in its straightforward structure. When someone buys a McDonald’s or KFC freehold, for instance, they are buying the land and the building, not the business. There is one lease in place, usually 10-20 years, and the tenant (McDonald’s, KFC, etc) pays rent directly to the landlord.
Investors are not exposed to the franchise’s internal financial arrangements, royalties or operations.
Even if a local franchisee runs the restaurant day-to-day, the entity listed on the lease, often the head company, especially in the case of McDonald’s, is responsible for paying rent.
“McDonald’s is almost always a head-company lease,” Tong confirms. “KFC can be either head company or a large franchisee. The KFC we saw in Burwood East was a franchisee lease, but they’re a very big franchisee, so they’ve got a big following line as well.”
This structure means landlords receive predictable income from some of the strongest covenant tenants in Australia.
Importantly, most fast-food freeholds are not owned by the chains themselves. They sit with private owners, developers or family estates, creating opportunities when new developments complete or generational handovers occur.