A Bigger Slice

Monday, October 15, 2007

Buscemi's adds licensees, profits

This was shaping up to be one of the best years for The Original Buscemi's Inc. since the company's emergence from bankruptcy in 2000.

Six new licensees have opened this year and nine more are expected to open by year-end, said company President and CEO Anthony Buscemi.

But the company's progress took a dark turn at about 10:30 p.m. on Sept. 27. That night, two men entered the Original Buscemi's Party Shoppe at 22044 Gratiot Ave. in Eastpointe and shot two employees, killing one and injuring another.

"It was just an absolute senseless act," Buscemi said. (See story, Page 36.) For Buscemi and several other members of the corporate staff, the shooting hit especially hard because it occurred at the company's first store, where several corporate employees once worked.

Buscemi's was founded in 1956 by Anthony Buscemi's father, Paul Buscemi, as a small grocery store that also sold pizza and subs. The company went public in the mid-'80s under the name Buscemi's International with hopes of becoming a national chain.

But growth was slow, and the company began looking for major investors in the 1990s.

In 1997, the Buscemi family agreed to sell stock to Kenneth Mitan for about $1.8 million. Even though Mitan became president, he never provided the money, Anthony Buscemi said, and a civil suit was filed. Mitan in turn accused Buscemi of improperly collecting franchise fees, according to news stories published at the time.

In 1999, Buscemi and his family decided to force the company into an involuntary Chapter 7 bankruptcy. In 2000, the family pulled the company out of bankruptcy by paying about $400,000 to buy company trademarks and pay legal fees.

Buscemi, 47, said those were desperate times.

"We stopped growing for two years," he said. "We couldn't even advertise. So, little by little, we nurtured it back. During all of this, we never wavered on the quality of the product." Buscemi said his company survived partly because of a core group of franchisees and licensees who sided with the family and declined Buscemi's suggestion that they take down the company's signs.

Mike Abro, a licensee for the past 10 years, was one of those owners.

"I said: 'No way. It won't work.' When customers come in and are talking on their cell phones, I can hear them. They don't say, 'I'm at a party store.' They say, 'I'm at Buscemi's.' " Besides, Abro said, the cost of being a Buscemi licensee is minimal. Until about two years ago, Buscemi's sold franchises. Now, it sells licensing agreements instead. Buscemi said the licensing format provides greater flexibility and simplifies the process.

Most Buscemi's locations are conversions of existing party stores "" or liquor and small grocery stores "" to Original Buscemi's Party Shoppes. The conversion includes a one-time $10,000 fee, building and equipment cost of $20,000 to $35,000, as well as other costs for signs and inventory. After that, the company charges a flat $700-a-month licensing fee.

Buscemi said the new locations will boost Buscemi's systemwide sales to just over $41 million this year, up from about $30 million in 2006.

Revenue for the operating company, The Original Buscemi's, should exceed $1 million this year with about a 20 percent profit margin, Buscemi said. That's a big improvement from a few years ago when, Buscemi said, he was pumping some of his own money into the company to keep it alive.

Tony Michaels, CEO of Warren-based Big Boy Restaurants International L.L.C., said he's noticed Buscemi's comeback.

"I grew up on the east side, so I remember heading over onto Gratiot to Buscemi's Pizza," Michaels said. "They've got a great product. They are good people, and they really, really care about quality." While Buscemi's sells subs, the company's signature item is its thick square pizza that can be bought by the slice without pre-ordering or waiting for the order to be made.

Buscemi chuckles when asked about Little Caesars, which introduced its Hot-N-Ready pizza product about four years ago. With the introduction of Hot-N-Ready, Little Caesars began promising customers that pizza will be ready when they walk in the door.

It's easier for Buscemi's to provide hot, fresh pizza at all times of the day than it is for Little Caesars, Buscemi said. That's because it takes about the same length of time to make a Buscemi's pizza as it does a much smaller Little Caesars pizza, he said. Detroit-based Little Caesar Enterprises Inc., one of the nation's largest pizza chains, said in a statement its Hot-N-Ready product is an example of how the company has always "focused on providing our customers with high-quality, great-tasting products at a great price." Buscemi said market conditions are driving party store owners to seek out Buscemi's. That's because owners are facing rising operating costs and are competing against larger grocery stores.

The result: Margins are declining, and they are looking for an additional source of revenue.

Sales of Buscemi's subs and pizza range from $6,000 to $15,000 per week. Typically, about 60 percent of sales are used to cover labor and food costs, and the operator is left with a 40 percent profit margin.

Until recently, Buscemi's stores were mostly located on the east side of Wayne and Macomb counties. Next year, Buscemi's plans to concentrate the company's growth in Oakland County.

Abro, who now owns two Buscemi's, said he is convinced the company has a bright future.

"When I got into this, we had 13 to 14 stores," Abro said. "I think they are going to have 200 stores in 10 years." A look at the growing ranks of Original Buscemi's Party Shoppes: In 1996: 18 stores In 2006: 35 stores On Oct. 1, 2007: 50 stores Still to come in 2007: Nine more stores Source: Company reports

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The Original Buscemi's Party Shoppe Pizza
32200 Groesbeck Highway
Fraser, MI

Phone: 586-296-5560

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