Original Buddys location up for sale

Printable View

July-13-18, 11:33 AM
Casual

Original Buddys location up for sale

☰
Buddy Pizza Owners List Original Restaurant Building for $1.5M
The iconic Detroit-based chain wants to continue operating in the building under a new owner
By Brenna Houck on July 12, 2018 2:37 pm

Buddy’s started serving Detroit-style pizza in the 1946. Michelle and Chris Gerard
The owners of Buddy’s Pizza — Detroit’s iconic square pizza slinger — have listed the chain’s original Conant Street building for sale for $1.5 million as the chain prepares for a major expansion. The property originally appeared on Loopnet in June seeking a sale-leaseback, an arrangement in which Buddy’s would continue to operate the Detroit restaurant as normal. Buddy’s would lease the property from the buyer and cover all the costs associated with the building and business.

Reached by Eater, Buddy’s confirmed that it has listed the property for sale and that business is still strong. “All Buddy’s locations are doing well and will remain open,” the company said in a statement. The popular Southeast Michigan pizza chain announced plans to expand beyond Michigan’s borders in January and received an undisclosed investment to “recapitalize” the business. Listing the original Detroit property is another step in the company’s efforts to raise money for that expansion.

“Buddy’s is exploring a sale of certain owned real estate properties in an effort to focus resources on managing existing stores and opening new Buddy’s Pizza locations,” the restaurant group said. “Our owners and leadership are excited to expand the brand throughout the Midwest and believe focusing our operations will allow us to better deliver memorable experiences to our guests and serve the communities in which we operate.”

RELATED

Detroit-Style Pizza: The Definitive Guide
Under the terms of the sale-leaseback agreement, Buddy’s would have a 20-year lease on the 3,571-square-foot property with a base rent of $86,250 a year and 10 percent rent increases every 5 years. Buddy’s does not have plans to list other properties at this time, according to a representative for the chain.

Buddy’s has been slowly growing its locations over the years and currently operates 12 restaurants in metro Detroit and Ann Arbor. A new outpost at the Detroit Zoo is poised to open very soon and in April there were rumors the company was in talks to open inside the former Angelina Italian Bistro space.

https://detroit.eater.com/platform/a...mpression=true
July-13-18, 11:54 AM
EastsideAl

They seem to be trying to raise capital by cashing out on their owned properties. But the only way that building is worth anywhere near what they're asking for it is if it has Buddy's in it. Otherwise it's just another large commercial building in a nowhere location with limited potential traffic, like so many other commercial buildings in the city.
July-13-18, 10:40 PM
mikefmich

Quote:

Originally Posted by EastsideAl

They seem to be trying to raise capital by cashing out on their owned properties. But the only way that building is worth anywhere near what they're asking for it is if it has Buddy's in it. Otherwise it's just another large commercial building in a nowhere location with limited potential traffic, like so many other commercial buildings in the city.

I agree. If Buddy's were to tank out, the buyer would be left holding a large bag. Even if they didn't, that would be a lousy return on 1.5 mil investment for 20 yrs.
July-13-18, 11:40 PM
professorscott

Quote:

Originally Posted by mikefmich

I agree. If Buddy's were to tank out, the buyer would be left holding a large bag. Even if they didn't, that would be a lousy return on 1.5 mil investment for 20 yrs.

If that building and property is worth $1.5M then so am I. Although I suppose one of the basic tenets of real estate is that you can ask whatever the hell you want.
July-14-18, 06:52 AM
Zacha341

^^^ Yep, just like eBay you can ask for whatever you want, and the item just sits there unsold, as the fees add up! Hah. If Buddies goes so goes that building I think.
July-16-18, 02:00 AM
Wesley Mouch

Quote:

Originally Posted by mikefmich

I agree. If Buddy's were to tank out, the buyer would be left holding a large bag. Even if they didn't, that would be a lousy return on 1.5 mil investment for 20 yrs.

On the face, a $1.5m investment returning .086m [[$86k) is about 6%. And if Buddy's tanks, if could go to a 0% return.

But I think we are making a big assumption here about the income value of a large parcel on a moderately well-placed Detroit intersection.

If Buddys were to tank, what might you make on that lot? What would a CVS pay? Or how about a Dollar Store? Remember that you would not only be buying the current cash flow from Buddy's... bug also the future value of the lot. If the Detroit neighbouhoods rebound over 20 years your children might be very happy.