CapitalSpring

DETROIT&nbsp;— The Original Detroit-Style Pizza purveyor, Buddy’s Pizza, is ready to take a bite out of new markets thanks to the announcement of its new Chief Executive Officer, restaurant industry veteran and former Nando’s U.S. CEO, Burton Heiss. The pizza brand has been steadily leveraging an exciting development strategy <a href="https://www.restaurantbusinessonline.com/financing/capitalspring-hopes-take-buddys-pizza-out-detroit?utm_source=1851franchise.com&utm_medium=article&utm_campaign=buddys-pizza-the-detroit-style-pizza-originator-names-its-new-ceo-burton-heiss-plans-to-continue-to-deliver-on-promise-of-flavorful-pizza-for-all-2711774" target="_blank" rel="nofollow">since early 2019</a>, when restaurant financier and private equity firm CapitalSpring acquired a majority stake in Buddy’s Pizza. Heiss will take over the reins from former acting CEO, Jim Balis, who remains the Head of CapitalSpring’s Strategic Operations Group.In the last year, CapitalSpring has laid the groundwork for continued growth for Buddy’s Pizza, including introducing back-of-house technology, a new point-of-sale (POS) system and even delivery. The originally-12-unit Detroit-based pizza chain further innovated thanks to CapitalSpring, launching its 13th location as a nontraditional spot to grab a slice in none other than the Detroit Zoo. Other locations include Michigan’s Grand Rapids as well as downtown Detroit. With momentum building in recent months, CapitalSpring knew it was time to bring on Heiss.Heiss worked for half a decade as Vice President for Baja Fresh—a role in which he said he learned how to grow a team and scale operations—before serving as the CEO for the U.S. arm of peri-peri chicken chain, Nando’s, for eight years.“It was definitely a challenge at the time, because here we were trying to grow Portuguese-South African fast casual fare in the U.S. market,” said Heiss. “But we did it. By the time I left, we’d grown the footprint from two to 40-plus locations.”Heiss said he was drawn to Buddy’s thanks to “the brand’s palpable realness” and the opportunity to lead the beloved pizza concept into a new phase of growth and development.&nbsp;“ How do you protect the brand and guard against losing its essence, yet scale and grow into new markets and new opportunities?” Heiss said. “That was much like what I navigated at Nando’s—and that, to me, was incredibly challenging yet also incredibly fulfilling. I see that same opportunity with Buddy’s.”As of the end of August 2019, Buddy’s stood at 15 total locations, all presently corporate-owned. CapitalSpring has been at the helm for the preceding 18 months and, Heiss said, has focused on optimizing the partnership and fostering exceptional collaboration.“The CapitalSpring team has a lot of experience in the space. I think they will stay closely involved and continue to offer insight,” Heiss said. So what’s next for the Motor City pizza brand?“We’re committed to focusing on what makes Buddy’s special and leaning into that,” Heiss emphasized. “We’re all about Original Detroit-Style Pizza and how can we introduce more people to what we feel is a spectacular brand. I don’t see any limits to what we can do and where we can take Buddy’s. Again, because of our exceptional core product and our verifiable provenance around Detroit-style pizza, it’s about how can we grow thoughtfully and with purpose.”Heiss said that, under his leadership, the brand will continue to expand in Michigan while exploring similar markets in the Midwest.&nbsp;“It’s all part of our plan to take Detroit-style pizza nationwide,” said Heiss. “We’re already on our way.”ABOUT CAPITALSPRING Since its founding in 2005 as a source of structured financing to franchisees, CapitalSpring has been focused on providing creative capital solutions to the branded restaurant industry. Now, with over $1.5 billion invested in more than 60 brands across North America, CapitalSpring has become one of the most active institutional investors in the restaurant sector. While the firm’s strategy has broadened and capital base has grown, CapitalSpring remains exclusively dedicated to restaurant investing.ABOUT BUDDY’S PIZZAIn 1946, Buddy’s Pizza became the&nbsp;birthplace of&nbsp;the Original&nbsp;Detroit-Style&nbsp;Pizza. For&nbsp;more than&nbsp;seven decades,&nbsp;the restaurant has been feeding patrons and earning accolades from fans across the nation, including recognition from&nbsp;CBS This Morning,&nbsp;USA Today,&nbsp;Zagat, Food Network, Pizza Today, Eater, Travel Channel,&nbsp;and more.&nbsp;Consistently voted Detroit’s number one pizza locally, regionally and nationally, the Farmington Hills-based restaurant remains true to its Detroit roots, legacy and traditions that began on the corner of&nbsp;Six&nbsp;Mile and Conant years ago.&nbsp;For more information, visit&nbsp;<a href="http://www.buddyspizza.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=buddys-pizza-the-detroit-style-pizza-originator-names-its-new-ceo-burton-heiss-plans-to-continue-to-deliver-on-promise-of-flavorful-pizza-for-all-2711774" target="_blank" rel="nofollow">www.buddyspizza.com</a>&nbsp;or connect with Buddy’s on&nbsp;Facebook (<a href="http://www.facebook.com/buddyspizza?utm_source=1851franchise.com&utm_medium=article&utm_campaign=buddys-pizza-the-detroit-style-pizza-originator-names-its-new-ceo-burton-heiss-plans-to-continue-to-deliver-on-promise-of-flavorful-pizza-for-all-2711774" target="_blank" rel="nofollow">www.facebook.com/buddyspizza</a>),&nbsp;<a href="https://twitter.com/buddyspizza?utm_source=1851franchise.com&utm_medium=article&utm_campaign=buddys-pizza-the-detroit-style-pizza-originator-names-its-new-ceo-burton-heiss-plans-to-continue-to-deliver-on-promise-of-flavorful-pizza-for-all-2711774" target="_blank" rel="nofollow">Twitter</a>&nbsp;(@BuddysPizza) and&nbsp;<a href="https://www.instagram.com/buddyspizzadet/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=buddys-pizza-the-detroit-style-pizza-originator-names-its-new-ceo-burton-heiss-plans-to-continue-to-deliver-on-promise-of-flavorful-pizza-for-all-2711774" target="_blank" rel="nofollow">Instagram</a>&nbsp;(@BuddysPizzaDET).

Buddy’s Pizza, the Detroit-Style Pizza Originator, Names Its New CEO, Burton Heiss; Plans to Continue to Deliver on Promise of Flavorful Pizza for All  

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Heiss Will Replace Buddy’s Former Acting CEO, Jim Balis, of Backing Private Equity Group, CapitalSpring

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For emerging franchisors, growth is almost never a straight line. After founders bootstrap their early expansion and prove the concept in a handful of markets, they face a critical question: When is the right time to bring in strategic capital?According to&nbsp;<a href="https://www.linkedin.com/in/erik-herrmann-205aa624">Erik Herrmann</a>, partner and head of the Investment Group at&nbsp;<a href="https://www.capitalspring.com/">CapitalSpring</a>, the answer isn’t tied to a single milestone but rather to a convergence of signals indicating a brand is ready to scale beyond its original footprint.<h2>From Local Success to Regional Ambition</h2>One of the clearest signs that a franchise brand is ready for institutional capital, or for a partner like&nbsp;<a href="https://1851franchise.com/capitalspring/info">CapitalSpring</a>, is the transition from local success to regional ambition.“It’s about having demonstrated a solid proof of concept, building out the unit economics and the positioning of the concept,” Herrmann said. “Some proof of portability beyond one specific local market is a key indicator. We find that you tend to hit this inflection point after growing organically and locally. You want to go and take it to the next level and go regional, and that tends to be a good time to bring in an investor.”At this stage, brands are no longer proving whether the concept works. They are determining how fast and how far they can grow. Strategic capital becomes less about survival and more about acceleration.<h2>Why Unit Economics Tell the Real Story</h2>For investors, the most compelling franchise brands are not defined solely by consumer demand but by&nbsp;<a href="https://1851franchise.com/capitalspring/how-capitalspring-is-fueling-prime-pizza-next-era-of-expansion-2731270#featured">the strength of their business model.</a>“The first thing to remember is that if you are a franchisor, the product you are selling is not the one the end customer is buying,” Herrmann said. “You aren’t selling hamburgers, you are selling a hamburger franchise. You are selling a business model. From an investor standpoint, how good is that business model relative to what else is out there? There are thousands of models, so you need to stand out and have a real clear differentiation and point of view in the category. The franchisee is investing capital in the brand. What kind of payback can they expect to achieve on that? That is what is really going to drive the decision.”Equally important is affordability. Lower startup costs can dramatically expand the pool of potential franchisees.“You may have two concepts that generate the same returns, but one has much lower startup costs,” he said. “There are going to be more people who can invest in that model. How broad is that potential base of franchisees is certainly a key factor for investors?”<h2>Growth Capital vs. Traditional Financing</h2>Another key consideration for franchisors is understanding the difference between growth capital and traditional financing, and knowing when to shift from one to the other.“The nice thing about franchising is that it is not capital-intensive,” Herrmann said. “It really depends on where you are in your life cycle. An early-stage franchisor might be losing money because they are investing in infrastructure to start, for example. The more corporate stores the brand operates, the more capital-intensive it is. But with franchising, you can also grow to thousands without putting a dollar in.”So why bring in capital at all? Often, the motivation goes beyond funding. “The reason you see growing franchisors using capital is that they either want to take money out of the deal, or they are looking for a strategic partner to help with growth,” he said.<h2>The Value of the Right Partner</h2>Ultimately, the decision to bring in strategic capital is less about timing the market and&nbsp;<a href="https://1851franchise.com/capitalspring/franchise-investment-partner-capitalspring-2731017">more about finding the right partner</a>.“The key is working with a partner that brings real turn-key value and has done it before,” Herrmann said. “You are selling a business model, so how do we refine it to really stand out? Do we have the right product scope or does it need to be tweaked? The right design and branding? Is there a way we can cost engineer the build-out to make the ROI more compelling to the franchisee?”Beyond operational improvements, experienced investors can unlock growth opportunities that might otherwise remain out of reach. They open doors with multi-unit developers, bringing established relationships with large franchisees and the know-how to reach them. “It’s not just about selling franchises,” Herrmann said. “It’s also about making sure you have the resources to ensure they are supported and have the infrastructure to be successful.”When it comes to institutional capital, Herrmann is clear that the decision should be tailored to each brand’s goals.&nbsp;“There really isn’t a one-size-fits-all,” he said. “It’s about what your objectives are as a franchisor and the areas that you need help with. It is a very personal decision.”To find out more information, please visit&nbsp;<a href="https://1851franchise.com/capitalspring">https://1851franchise.com/capitalspring</a>.

The right time to seek strategic capital is when the fundamentals are proven, the ambition to scale is clear and the need for a value-added partner outweighs the cost of giving up equity.

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Buddy’s Pizza, the Detroit-Style Pizza Originator, Names Its New CEO, Burton Heiss; Plans to Continue to Deliver on Promise of Flavorful Pizza for All

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