Drive-to and drive-thru restaurants
Source: gov.uk (2025-02-21)

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

1. Scope

1.1 This practice note applies to all drive-to and drive-thru restaurants. The definitions of this class of restaurant are given in paragraphs 1.3 and 1.4 below. Drive-to and drive-thru restaurants are a specialist class.

1.2 Drive-to and drive-thru restaurants should be distinguished from ‘roadside restaurants’ which are covered separately by Rating Manual: section 6 part 3 - section 880. Roadside restaurants are SCat coded 238 and are a generalist class. However, many roadside restaurants are now occupied by the same national brands that occupy the drive-to (091) and drive-thru (092) restaurants. Thus, liaison and co-ordination between RVU and NVU is essential.

Definitions

Definition of drive-to restaurants

1.3 Drive-to restaurants are defined as stand-alone restaurants with on-site parking located mainly on retail parks, or leisure parks and adjacent to major road networks. Buildings are often modern purpose built and of modular construction which are built off site and assembled on site. They will have parking adjacent to the restaurant. They may also occupy units in terraces on retail and leisure sites with parking adjacent. This definition does not apply to high street shop units even though they are occupied by the major operators mentioned above. High street shop units will be valued on a zoned basis with comparable evidence derived from those locations. Rating Manual: section 6 part 3 - section 920 shops and shopping centres. Definition of drive-thru restaurants

1.4 Drive-thru restaurants are defined as stand-alone, mainly fast food restaurants which have a sign posted drive-thru facility. These often consist of a drive-thru lane around the main building with order and collection windows. The aim is to allow customers to order and collect food while staying in their cars. These premises will often have a car park and a seated restaurant. The traditional red and white meat operators have been joined in recent years by coffee and sandwich chains.

1.5 These operators occupy modern purpose built modular restaurants as well as converted former pubs. The main criteria is land where they can site the main building and incorporate the drive-thru lane around the building allowing for extra car parking for customers who wish to eat inside the restaurant.

2. List description and special category code (SCat)
- List description: restaurant and premises
- Scat code: drive-to 091, drive-thru 092
- Scat suffix: S
3. Responsible teams

3.1 Drive-to and drive-thru restaurants with a SCat Code 091 (Drive-to) or 092 (Drive-thru) are a specialist class of property and responsibility for ensuring effective co-ordination lies with the Class Co-ordination Team (CCT). The appropriate SCat suffix is ‘S’.

3.2 Responsibility for inspection, survey and valuation rests with caseworkers who have received specialist training and who have knowledge of this class. The Class Coordination team provides support.

4. Co-ordination

4.1 The ‘Retail 3’ Class Co-ordination team (CCT) has overall responsibility for the co-ordination of this class. The team are responsible for the approach to and the accuracy and consistency of drive-to/ drive-thru valuations. This instruction describes the valuation basis and National Valuation Unit (NVU) will provide advice as necessary during the life of the rating lists.

4.2 Caseworkers have a responsibility to:
- follow the advice given at all times – practice notes are mandatory.
- seek advice from the co-ordination team before valuing a new hereditament.
- not to depart from the guidance given on appeals or maintenance work, without approval from the Class Co-ordination team.
5. Legal framework

5.1 There is no specific legal framework in relation to this class of property.

6. Survey requirements

6.1 Inspections should be carried out in accordance with the Valuation Office Agency Code of Practice.

6.2 Drive-to and drive-thru Restaurants are measured to Gross Internal Area (GIA) in accordance with the RICS Code of Measuring Practice 6th Edition or its replacement.

6.3 An inspection checklist is appended to this section at Appendix 1. It should be completed for all new properties and updated for maintenance work and stored in the property folder of the Electronic Document Records Management (EDRM) system.

6.4 The Survey Template can be found in EDRM. This will need to be completed as part of the inspection process. The checklist at Appendix 1 identifies the information that will need to be gathered in order to properly complete the survey of a drive to or drive-thru restaurant.

6.5 One line entry should be recorded for the main space to include the restaurant, food preparation and kitchen areas to include all staff accommodation. For two-storey restaurants use Ground floor and First floor.

6.6 Where freezer and chiller pods are attached to the building these should also be measured to GIA but recorded as an ‘other addition’. These pods are attached to the main building and the cladding often matches the outside decor, however these pods are prefabricated off site and transported to the site and connected to the main building. See valuation approach in section 8.

6.7 Outside storage units, whether they are purpose built or comprise of shipping containers should be measured to GIA and recorded as a separate line entry.

6.8 Historically, many different sub-location codes have been used to value drive-to and drive-thru restaurants across the country. In future, each unit should use the relevant SCat code detailed in the Practice Note.

6.9 Car parking spaces and external areas should be recorded but their value will be reflected in the overall assessment and not valued as a separate item.

6.10 Air conditioning should be recorded where it exists.

6.11 Opening times should be recorded and whether open 24 hours.

7. Survey capture

7.1 Rating surveys should be captured on the Rating Support Application (RSA) and plans and surveys stored in the property folder of the Electronic Document Record Management system (EDRM).

8. Valuation approach

Rental Adjustment and Analysis

8.1 In the vast majority of cases leases relate to a ‘shell’ only and an adjustment to the rent paid will be needed to reflect the value of the tenant’s rateable fitting out. It is recommended that 10% be added to shell rents, to reflect the standard of fitting out typical of this class of property compared with the unfitted demise; this addition includes air-conditioning which is a normal feature and invariably a tenant’s improvement. Some tenants may have paid rents for buildings that have since been converted and it is important to analyse using the correct demised areas.

8.2 The Freezer / Chiller units (also referred to as ‘chiller pods’) which have traditionally been found attached to the rear of some drive-thru restaurants are almost invariably a tenant’s improvement and not included in the rent. The pod may be accessed wholly internally, either via a lobby or direct from the main area, or externally if no lobby exists, but the pod itself is not located within the main shell of the building. The recommended 10% addition for fitting out does not reflect this additional accommodation. As a consequence, the adjusted rent should be analysed against the GIA excluding the freezer/ chiller pod.

8.3 Valuation Issues

The following paragraphs offer guidance in respect of valuation issues. The guidance generally follows the approach adopted for rating lists since 2005.

Freezer/ Chiller Pods

8.3.1 The value of chiller/ freezer pods at Drive-thru restaurants are to be valued at the rate stated in the Practice Note. The rate has been derived from the cost to build and install the pod.

8.3.2 There have been extensions to some restaurants and replacement of the pods with larger chiller/ freezer units. When dealing with appeal and maintenance casework it will be necessary to undertake a full inspection of such restaurants to ensure our survey records are correct before the rating assessment is altered.

8.3.3 This guidance is in respect of pre-fabricated chiller/ freezer pods that can be delivered to the site as a modular unit. Such modular chiller/ freezer pods will be found in many of the restaurants operated by the fast food chains and the same rate should be applied throughout.

8.3.4 The area of the pod should be captured as an ‘other’ addition using codes ZO1 for Chiller and ZO2 for Freezer. Whichever code is used the description must be overwritten with ‘chiller/ freezer pod’ for example (if the pod combines the two functions). See Practice Note for valuation guidance.

8.3.5 Paragraphs 8.3.1 to 8.3.4 do not apply to Drive-to Restaurants or Drive-thru Restaurants where the cold room is within the structure of the building. Chiller/ Freezer units situated internally (ie under the main roof space) are to be valued at the restaurant rate.

8.3.6 Paragraphs 8.3.1 to 8.3.4 do not apply to cold rooms found in two-storey pre-fabricated Drive-to and Drive-thru restaurants where they form part of the main building.

Non Ground Floor Accommodation

8.3.7 The majority of upper floor accommodation is found in converted units such as former pubs. In these cases the first floors are often used for staff accommodation and administration use only. Some of this accommodation is often surplus to requirement comprising the living accommodation of the former public house. Unfitted/ Disused Accommodation

8.3.8 In a small number of cases, converted shops and public houses, areas of basement/ first floor accommodation, are disused, apart from occasional rough storage. This accommodation, which is unfitted/ shell quality should be valued at 25% of the appropriate £/m². Drive-thru adjustment for quantum

8.3.9 In certain instances it may be appropriate to make an adjustment to the ‘standard’ price per m² when valuing larger format Drive-thru Restaurants.

8.3.10 Adjustment for quantum does NOT apply to Drive-to restaurants, which are generally larger, often significantly, than Drive-thru restaurants and serve an increasingly identifiably different market.

8.3.11 A standard size Drive-thru restaurant is taken to be 250-350 m². However, operators new to the Drive thru market are constructing smaller units for their own occupation.

8.3.12 Care should be taken with quantum where local rental evidence is derived from smaller units. Where there is little evidence, some reference to previous agreements can be considered and whether the final rateable value seems fair and reasonable. External Stores

8.3.13 Stores within the enclosed yard area may either be of block or of pre-fabricated construction and may be attached to the corral walls. These stores will generally be valued at 25% of the restaurant rate. Play areas

8.3.14 In the absence of direct rental evidence to the contrary, dedicated play areas are to be valued in accordance with the following table. Areas must be separately recorded in RSA and reductions carried out within prescribed adjustments using QAL and a suitable description.

Parking

8.3.15 The basis of valuation reflects parking so an “inclusive” Car Parking table should be used. Where there is insufficient or shared parking only this will be reflected in the matrix price that has been derived from the evidence.

Diverse rental evidence

8.4 Where it is found that varying levels of rent have been agreed on units in the same location (usually Retail or Leisure Park) consideration should be given to whether such factors as the relative positions and size of the units provide explanation. If there is no clear reason for the difference, it is reasonable to assume that negotiating strengths and the requirements of the Park ‘mix’ have played a part. In such instances it is recommended that all the adjusted rents are included in the ‘basket’ and, having considered the weighting that should be attributed to each, a ‘fair and reasonable’ rental level should be determined.

8.5 Key rents

All properties where a key rent has been identified must be inspected.

9. Valuation support

9.1 The following sources are available to Property Inspectors and Valuers dealing with the maintenance and defence of Drive-to, Drive-thru and Roadside restaurants.
- Rating Support Application (RSA)
- Survaid
- Retail 3 Class Coordination team for Drive-to, Drive-thru and Roadside Restaurants
- National Valuation Unit (NVU)
Appendix 1 - Inspection checklist

Drive-to, drive-thru and roadside restaurants inspection checklist (https://assets.publishing.service.gov.uk/media/5cd569bd40f0b66052524631/Inspection_Check_List_Drive-To_Drive-Thru_and_Roadside_Restaurants.docx)

Practice note: 2023 - drive-to and drive-thru restaurants

1. Market appraisal

1.1 Drive-Thru restaurants

1.1.1 This sector is buoyant and operators are competing for the best sites. COVID has served to supercharge the UK’s drive through market. Changing consumer behaviour coupled with the lockdown restrictions have fuelled a surge in demand for quick service solutions.

1.1.2 According to data from global market research, £2.3 billion was spent at Britain’s 2,000 quick service restaurants during the 12 months to February 2021. Drive-thru spending represented 12% of total hospitality spend. Coffee chains with drive-thru facility saw a 14% increase in sales year on year compared with 2019 highlighting why a growing number of operators are looking to expand their portfolios. Competition for drive-thru sites has intensified in recent months and there are no signs of that easing off. Rents have held up well compared to other sectors and there is growth for the right site in the right location.

1.1.3 Covid may have accelerated the rise of the drive-thru but the trend looks set to continue as operators expand the offer to incorporate new types of cuisine. Consumer habits are unlikely to change and if operators can integrate home delivery hubs, these will remain prized assets.

1.1.4 Online and mobile ordering popularity is expected to be a key driver of growth. Convenience is key and this industry has already proved it is willing to embrace technology and adapt to keep up with consumer tastes and demands. Increasingly busy lifestyles support demand for quick, convenient meals.

1.2 Drive-to Restaurants

1.2.1 Increases in costs and weak consumer demand following the UK’s vote to leave the European Union and the Covid 19 pandemic have resulted in a difficult period for Drive tos.

1.2.2 Many prominent casual dining chains have come under pressure as the Industry has become saturated, particularly in widespread formats. Many well-known brands have been forced to close large proportions of their estates. Changing consumer tastes have shaped the Industry over the five years to 2021-2022. The growing popularity of alternative cuisine and new dining experiences have provided opportunities for new entrants to penetrate the market.

1.2.3 Unsustainably high operational expenses during the pandemic have driven many operators out of the industry. In 2021-2022 the gradual easing of restrictions is expected to mark the recovery of industry revenue attributed to eat in services. Following the easing of restrictions on indoor dining, industry revenue is anticipated to rise by 127.8% in the current year.

1.2.4 Over the next five years through 2026-2027 industry revenue is forecast at a compound annual rate of 8.2% to reach £26.9 billion. However pre- coronavirus revenue levels are not expected to be reached until 2024-2025. Operators are expected to face higher cost pressures as a result of ongoing increases in the National Living Wage, the introduction of EU-UK customs checks and the new skill based immigration system.

2. Changes from the last practice note

2.1 There have been no changes in approach from the 2017 Practice Note.

3. Ratepayer discussions

3.1 Initial discussions have taken place with representatives of the industry and are ongoing. Opinion is expressed that location is increasingly important and it is expected that there will be much larger differentials in value between the good and bad sites. Turnover based rents are expected to become more commonplace.

4. Valuation scheme

Drive-to Restaurants

4.1 Drive-to restaurants are defined as stand-alone restaurants with on-site parking located mainly on retail parks, or leisure parks and adjacent to major road networks. Buildings are often modern purpose built and of modular construction which are built off-site and assembled on-site. They will have parking adjacent to the restaurant. They may also occupy units in terraces on retail and leisure sites with parking adjacent. This definition does not apply to high street shop units occupied by the major operators which will be valued on a zoned basis with comparable evidence from those locations. Rating manual - Section 6: Part 3: Section 920 – Shops and Shopping Centres.

Drive-thru restaurants

4.2 Drive-thru restaurants are defined as stand-alone mainly fast- food restaurants which have a sign posted drive-thru facility. These often consist of a drive-thru lane around the main building with order and collection windows. The aim is to allow customers to order and collect food while staying in their cars. These premises will often have a car park and a seated restaurant. The traditional red and white meat operators have been joined in recent years by coffee and sandwich chains.

4.3 The Drive-thru operators occupy modern purpose- built modular restaurants as well as converted former pubs. The main criteria is land where they can site the main building and incorporate the drive-thru lane around the building allowing for extra car parking for customers who wish to eat inside the restaurant.

4.4 Historically, many different sub-location codes have been used to value drive-to and drive-thru restaurants across the country. In future, each unit should use the relevant SCat Code for drive-to use ‘91’ and for drive-thru use ‘92’), preceded by a Unit prefix as shown in the table below. For example all Drive-to restaurants in North West Unit would have a sub-location code of NW91.

4.5 Drive-to and drive-thru restaurants with a SCat Code 091 (Drive-to) or 092 (Drive-thru) are a specialist class of property and responsibility for ensuring effective co-ordination lies with the Class Co-ordination Team (CCT). The appropriate SCat suffix is ‘S’.

4.6 The scale to be adopted for the 2023 rating list is VVSDRIVEIN1. No other scales should be adopted for Drive-to or drive-thru restaurant assessment.

4.7 Drive-to and Drive-thru restaurants should use an address based matrix. It is recommended that one matrix per billing authority is used.

4.8 It is still expected that detailed rental schedules will be provided by the main operators (or their agents). Some of this information is being supplied by VORC to the Market Information Team.

4.9 Rents quoted may relate to franchise rents rather than the rent of the individual unit. A franchise rent includes payment for branding, goodwill, non-rateable items etc. Some rents are also tied such that the landlord agrees to buy the new building being constructed for the tenant, the purchase being either from the tenant or from a connected supplier. Care needs to be taken to fully understand the whole deal and to ensure that rents are adjusted in line with the statutory hypothesis.

4.10 Non Ground Floor Accommodation. In the absence of direct rental evidence to the contrary, first floor and basement/ lower ground floor accommodation should be valued at 50% of the ground floor £/m². These factors are present in the analysis and valuation scales.

4.10.1 Some fast- food operators have been opening two-storey purpose- built drive-thru restaurants known as ‘double deckers’. The first floors in these premises have lift access and often house two-thirds of the restaurant seating and customer washrooms. These are very different to converted properties.

4.10.2 Accommodation found on second floors, or in a basement of converted properties particularly in a unit which is a converted public house, should be analysed and valued using a scale factor of 25% - reference should be made to the CCT member for the particular unit, should there be any queries over relativities.

4.11 Quantum (Drive-thru Restaurants only). When valuing large format drive-thru restaurants (as opposed to drive-to restaurants) regard may be had (in the absence of evidence to the contrary) to the quantum scale agreed for the 2005 rating list. A standard size drive-thru is taken to be 250m² – 350m².

4.11.1 The quantum adjustment guidance is as follows (the allowance should be interpolated within size bands):

4.11.2 This guidance should only be adopted where there is insufficient reliable rental evidence upon which the quantum effect can be judged. This means that the rental evidence should be re-examined for the 2023 List. This is particularly important in relation to the new ‘double-decker’ units. The adjustment will be made as an end adjustment in the valuation.

Freezer/ Chiller Pods (drive-thru only)

4.12 ‘Other additions’ tables should be amended so that these items are valued at a rate of £90.00/m². The area of the pod should be captured as an ‘other addition’ using codes ZO1 for Chiller and ZO2 for Freezer.

4.13 Car parking should be reflected in the unit value and the car parking table WCREFLECT1 adopted.

Practice note 2017

1. Market Appraisal

1.1 General

Since 01-Apr-2008 the UK economy has experienced turbulent times in terms of economic performance, however, the A3 restaurant sector does not appear to have experienced difficulties to quite the same extent as other retail operators.

1.2 There has been a dramatic rise in discount vouchers and saver meal menu’s in many sections of the food retailing business. However restaurant openings have increased, seeing growth in the strength of popularity for both drive-to and drive-thru restaurants, with many landlords looking for the attractive covenant names.

1.3 Operators such as McDonalds, KFC, and now coffee company chains, such as Costa and Starbucks, continue to be active in the drive-thru market, whilst names such as Frankie and Benny’s, Chiquito’s, Nando’s and Prezzo have expanded their outlets in the drive-to sector of the market.

1.4 Rents show two different rental markets and it is best to look at these sectors separately:

Drive Thru:

1.5 The drive-thru sector as a whole has expanded. Both McDonalds and KFC have development site ‘hit lists’, with both looking to expand their drive-thru businesses by a reported 300-400 sites each within the next 10 years. Naturally, this may give rise to a future saturation of the market, however, at present, their expansion plans appear to be showing an increase in portfolio between 40-50 stores per year from 2014 - Market Knowledge Index

1.6 McDonalds particularly have been seeking planning permission to operate their drive-thru units for 24 hours per day, and currently have an extensive range of products on offer.

1.7 McDonalds have been relatively successful in obtaining former Little Chef units, and converting them into drive-thru units, and now appear to be looking to develop a new purpose built two-storey concept unit, with drive-thru facility throughout the country.

1.8 KFC on the other hand appear to be prepared to wait for a site that fits their particular model and in their target locations.

1.9 Some of the deals done have been by the coffee company operators. This may lead to an increase in rental levels on such retail/ leisure parks offering the coffee shop range, however, that remains to be seen. They have big expansion plans in their drive-thru market concept, and in 2013 were hoping to have 70 - 80 drive-thru branches within 5 years.

1.10 Likewise, 2014 saw a Starbucks drive-thru open in Milton Keynes, and they are to open a further 200 new drive-thru restaurants over the next 5 years. Starbucks have also taken on some vacant former Little Chef roadside restaurants guided by local rents. This appears to be a test to see if the market for their concept is viable. These rents should be treated with caution as they often relate to the former buildings.

Drive To:

1.11 The general increase in popularity of chain restaurants has seen a keen increase in new openings since 2008, particularly on retail/ leisure park locations.

1.12 All of the main brands are expanding into large leisure venues such as stand-alone restaurants at the O2 in Greenwich and other tourist attractions.

1.14 The Restaurant Group, formerly City Centre Restaurants, who operate Frankie’s, Chiquito’s, Garfunkel’s and Coast To Coast have been very busy in the market and continue to grow with 5 new F&B openings in December 2014 alone.

1.15 Prezzo, the Italian food chain, have moved from strength to strength since the last AVD, opening some 50 new stores since, putting themselves firmly in competition with the likes of Pizza Hut, Pizza Express, Zizzi and Ask.

2. Changes From The Last Practice Note

2.1 There have been no changes in approach from the 2010 Practice Note except with regard to the valuation of first floor restaurant accommodation in stand-alone restaurants.

3. Ratepayer Discussions

3.1 Initial discussions have taken place with representatives of the industry and are ongoing.

4. Valuation Scheme

4.1 Rental Information

It is still expected that detailed rental schedules will be provided by the main operators (or their agents). Some of this information is being supplied by VORC to the MIT. Headline rents on new lettings appear to have been holding up despite the economic downturn in previous years although these may include more incentives than granted previously.

4.2 Rents quoted may relate to franchise rents rather than the rent of the individual unit. A franchise rent includes payment for branding, goodwill, non-rateable items etc. Some rents are also tied such that the landlord agrees to buy the new building being constructed for the tenant, the purchase being either from the tenant or from a connected supplier. Care needs to be taken to fully understand the whole deal and to ensure that rents are adjusted in line with the statutory hypothesis.

4.3 Non Ground Floor Accommodation

In the absence of direct rental evidence to the contrary, first floor and basement/ lower ground floor accommodation should be valued at 50% of the ground floor £/m². These factors are present in the analysis and valuation scales.

4.4 Both McDonalds and KFC have been opening two-storey purpose built drive-thru restaurants known as ‘double deckers’. The first floors in these premises have lift access and often house two-thirds of the restaurant seating and customer washrooms. These are very different to converted properties.

4.5 Accommodation found on second floors, or in a basement, particularly in a unit which is a converted public house, should be analysed and valued using a scale factor of 25% - reference should be made to the CCT member for the particular unit, should there be any queries over relativities.

4.6 Quantum

Drive-thru Restaurants

When valuing large format drive-thru restaurants (as opposed to drive-to restaurants) regard may be had (in the absence of evidence to the contrary) to the quantum scale agreed for the 2005 and 2010 rating lists. A standard size drive-thru is taken to be 250 – 350m².

It is noted that operators new to the drive-thru market are constructing smaller units for their own occupation. The quantum adjustment guidance is as follows (the allowance should be interpolated within size bands):

This guidance should only be adopted where there is insufficient reliable rental evidence upon which the quantum effect can be judged. This means that the rental evidence should be re-examined for the 2017 List. This is particularly important in relation to the new “double-decker” units. The adjustment will be made as an end adjustment in the valuation.

4.7 Freezer/ Chiller Pods (drive-thru only)

‘Other additions’ tables should be amended so that these items are valued at a rate of £90.00/m². The area of the pod should be captured as an ‘other addition’ using codes ZO1 for Chiller and ZO2 for Freezer.

4.8 Valuations should be in an address based matrix across a range of Billing Authorities.

4.9 Car parking should be reflected in the unit value and the car parking table WCREFLECT1 adopted.