Practice Notes

This practice note covers all restaurants that are situated outside the traditional high street / retail parades and which are suited, by virtue of their location and physical characteristics, to occupation by the major restaurant chains. Whilst this practice note covers both drive through and non drive through subjects it should be noted that these are two different classes of property and for valuation purposes they will require to be dealt with differently. Typical examples of these are listed below. 

• Purpose built units within a retail / leisure park with sit in, table service and no drive through.

•  Purpose built units in a stand alone location with sit in, table service and no drive through.

• Purpose built units within a retail / leisure park with counter service and drive through.

• Purpose built units in a stand alone location with counter service and drive through. 

This category of subject should be valued by application of the comparative principle using the rates/m² derived from local evidence. Rentals should be analysed in accordance with Basic Principles Report No.1.

 

For sites with only one restaurant, the individual nature of the location, size and type (drive through or non drive through) of these subjects means that the passing rent, suitably adjusted for fitting out where applicable, is considered to be the best evidence.  

 These should be valued on local evidence. 

2.2 Valuation of Drive Through Restaurants

The general expectation is that a drive through unit will command a premium value above that of a non drive through unit in a comparable location. Ultimately, the value difference should be determined by a consideration of relevant local evidence. In the absence of such evidence, it is recommended that the premium addition to value of a restaurant benefiting from a drive through facility should be 20%.

Where there is more than one drive through on a site and one of these is occupied by one of the burger operators, the rent passing on that unit may not be reliable. It may reflect a level of rent to ensure similar competitors are kept off site. In these circumstances it may be prudent to look at the rent rate of other drive through operators on the site to establish the appropriate rent level for this type of unit. 

The standard purpose built unit is generally let as shell whether on a Retail Park or in a Stand Alone location. In these cases an adjustment should be made to the basic rent to reflect fitting out (which includes air conditioning). Where this applies fitting out should be added as 10% of the basic rent. The size of a basic unit is typically in the order of 250/374m². 

The table below offers guidance on the adjustments that should be made to the appropriate “standard rate” when valuing larger Restaurants. This guidance should only be adopted in cases where there is insufficient reliable local rental evidence upon which the quantum effect can be judged.

Notes:  Standard size unit is taken as 250-374m

 Interpolate between points

 Size refers to total area GIA of all main areas except;