Most businesses are unprofitable or just enough to break even.
That's not the concern though.
There will always be demand for these types of businesses as there will always be ambitious young businessmen trying to succeed. Therefore as soon as one tenant moves out the next will move in with a new brand and plan.
The example above would allow you to test the water in a safe way without exhausting all your funds; hence I believe that to be the superior option rather than spending all your money on one site.
It'll be a big concern - for us at least - if our tenants keep breaking even or lose their money. Sure there's always some ambitious, young guy out there thinking he can do it where other people can't.
But really, there's not many of those. And in between waiting for one, you have to provide various incentives to lure them in because the guy across the road is offering 6 months rent free One of my friends opened a restaurant a few years ago at a newly developed shopping centre (which we tried to buy but got outbid, but that's another story) and was given 6-months rent free. He took this site over another one right on the corner of Chinatown and Russell St in Melbourne CBD because of the favourable terms. Anyway my friend ended up selling his business in 6 months (at a small loss) and the place has been vacant since and the new tenant has taken the shopping center to court to sue for misleading and deceptive conduct and hasn't paid rent for a good year now.
Indeed quality of tenant is important. Some of our places go to people like Nandos or Subway. And that makes a big difference. In contrast, another tenant operating a Chinese restaurant at a place of ours recently left. He brought in one of these young ambitious guys (we didn't offer him any incentives as he simply bought the lease from the previous tenant). To be honest, we were pretty reluctant to sign over to him as the guy was inexperienced, but the good thing was he had millions to waste and we upped the rent and got an unusual bond term etc out of him. But still, if you give me the choice I'd cut rent by $10k and get another Nandos in.