The Quick Service Restaurant (QSR) Fund

The reason why it provides true diversification from real estate investing is, any vertical of real estate, multifamily, industrial, retail, hotels, even development, that is a very capital-intensive business, in the sense that you have to keep feeding the machine. It’s like a manufacturing concern, where you have to keep pumping cash into the business to have any hope of extracting cash or returns out.

With QSRs, the idea here was that, at least starting out, we wanted to have an asset-light model where we didn’t want to own the underlying real estate, we wanted to capitalize on the trends towards healthier foods, catering to the middle class, but also to capitalize on the fact that the retail market across America is going through a bit of a challenging time. Landlords, even in great retail locations are basically desperate for quality tenants because retail as a whole industry is suffering in America, from a returns point of view. So this way, we don’t have to go buy the underlying real estate, we get to enjoy the tailwinds of basically being in a business that is asset-light, and we can focus on the target niches that we have. We basically have to use our brains and experience to generate more returns, that’s why it’s operationally more intensive, as opposed to just being in a cookie cutter copy of a real estate business.

Balance your investor portfolio. Have a stream of uncorrelated returns. Whether the market is up or down, you continue to make money, basically, in one shape or form. If you’re after diversification, you can’t go from multifamily to (for example) self-storage because that keeps you in the wider real estate field. You remain exposed to similar factors.

On one side you could continue to invest in multifamily and other real estate ventures to get to the capital appreciation that helps you develop your wealth, but also when you invest in the fund you get current income to pay your bills and all of that, so your cash-on-cash component gets really heavy as well.

This additional cash can then be re-invested in tax-friendly equity-building ventures or to chase riskier investments with much higher upside potential.

Their first year average sales right now, and average sales are from people who are not even professional restaurateurs, is about $1M. And it costs about $350K-$400K to open up a location. A lot of these newer, more efficient concepts like Clean Eatz, they have basically turned the business model around, and this is why legacy companies are getting such stiff competition these days.

It’s not set up like McDonald’s in the sense that with Clean Eatz your upfront cost of investing is very low, and for every dollar you invest you might get $2 to $2.50 worth of sales (as opposed to $0.75 worth of sales in a McDonald’s, Wendy’s, Taco Bell). There’s a couple of reasons. Number one, it is the natural evolution of the industry. When you have legacy companies, they are stuck in their ways. Rightly or wrongly, they can’t just pivot and completely change their business model. These newer businesses, what they’re realizing is that what you don’t want to be doing is to be saddled with really expensive real estate, because you can make such higher returns operationally that when you get saddled with all this real estate it actually drags your overall returns down.

Additionally, Clean Eatz locations are not open at 2pm at night. These are open from 10:00am to 7:00pm or so. Because staffing at night is a big problem. No matter what you’re paying, if you want staff to work at night there are issues like child care, for instance. Working at night can be dangerous, you can get robbed, there’s a higher chance for that. So the night shift, that whole model, it’s just too much extra stuff you have to worry about for not a whole lot more money.

Finally, Clean Eatz mastered this model of catering to the niche customers, finding out what the customers actually care about and catering to them but also nailing the cost component down. Because it’s no good having a higher-end product if your costs are out of whack or your customers don’t agree to it. 

Our senior management has several decades operating QSRs in this area. This goes beyond simple location knowledge, extending into deep relationships with personnel and vendors. These critical aspects will allow us to quickly gain scale.

Boardwalk Wealth also holds real estate in the surrounding areas of Jacksonville and Orlando. So we are all comfortable operating in Florida, and have been doing so successfully for many years.

The Surf Coast to the Space Coast is a beloved part of the state, including the popular Daytona Beach. And while the tourism may help our restaurants, it is the underlying resident population that make this a great fit for Clean Eatz.

The franchise matches a few key area demographics/psychographics:

• middle to upper middle class
• larger families (especially where a busy mother is balancing taste and health considerations for both parents and children)
• a vibrant gym culture that desires done-for-them weekly meal prep
• a growing interest in “healthy eating” while still demanding convenience