The 72-year-old Buddy’s Pizza announced a partnership with private-investment firm CapitalSpring that will recapitalize the Detroit-based pizza chain and accelerate new store growth, the company said Thursday.
CapitalSpring, a restaurant-focused private-investment firm managing more than $1.3 billion in assets, described the investment as significant but did not disclose specifics.
Buddy’s Pizza, which was founded in 1946, is widely considered the originator of the Detroit-style square pie with its red sauce on top.
“This partnership is a significant opportunity for us to introduce Buddy’s iconic pizza, rich culture and community roots to new customers in Detroit and beyond,” said Robert Jacobs, CEO of Buddy’s, in a statement. “We are extremely excited for this new chapter and to have found a partner that can not only maintain our commitment to quality food and an exceptional guest experience, but also offer substantial restaurant expertise.”
Buddy’s has 12 locations in and around Detroit with a 13th scheduled to open in the spring. With CapitalSpring’s investment, the company hopes to open locations across the Midwest and beyond.
“It’s rare to find a restaurant concept with such signature food, deep-rooted brand equity, and passionate customers, and we are honored to be their partner in accelerating the business,” said Erik Herrmann, managing director at CapitalSpring in a statement.
Pizzas at Buddy’s are generally between $10 to $13 for a four-square, and $12 to $22 for an eight-square pie.
The partnership comes at a time of upheaval for the pizza segment.
Chains like delivery giant Domino’s have driven growth with technology. Fast-casual pizza concepts like MOD Pizza, &pizza and Blaze Pizza are growing rapidly with higher-quality, more-customizable pies cooked in minutes. And, within the last few years, a handful of Detroit-style pizza restaurants have opened in cities outside of Michigan, including Emmy’s Squared in New York and Blue Pan Pizza in Colorado.
“It’s a very competitive landscape, but Buddy’s has defined themselves,” said Stephen Zagor, the dean of business management at the Institute of Culinary Education in New York. “The great thing about pizza is everyone loves pizza, but everyone has their own image of what pizza is. The challenge is to break people away from what we’ve always known and trusted.”
Deloitte Corporate Finance LLC served as lead financial advisory on the deal, and Jaffe Raitt Heuer & Weiss served as legal advisor to Buddy’s. CapitalSpring was represented by Latham & Watkins and Federman Steifman.
