12.5% Rent to Sales for a National Restaurant - is it worth it?

[Prithvi Sri]

I came across a national chain restaurant for close to 3M. The CAP rateis about 7.25 and has about 10 years of lease remaining. The Cap rate becomes 8% on purchase price in two years due to price escalation. From a return perspective, this all seems dandy but the sales are low for the rent they are collecting. The rent is around 11.25% of sales right now, and with increased rent in two years, if the sales don't improve, the rent to sales will be 12.5%. This seems very high for casual dining segment and my worry is, at the end of 10 years, either the tenant will leave or renegotiate the rent. There's always the possibility that the inflation will save the day by racking up the sales even though foot prints don't change.

What would your advice be for this? Is this worth investing?