Source: David Dorsey, Fort Myers News-Press, November 2020
Commentary by Jim Shiebler
In recent months, the iconic red-roofed Pizza Hut restaurants have been going dark in Lee County. Some of them even have had their roofs painted over, dark gray or black or other colors besides red.
Although Pizza Hut still exists, with nine Lee County locations still open, all of those are found in strip malls or Publix-anchored shopping centers.
The standalone locations have become like dinosaurs.
Sometime between 2003, when the Pizza Hut Italian Bistro was built at 3902 Del Prado Blvd., in south Cape Coral, and last year, titanic changes in fast-casual pizza-eating consumerism took place.
The changes had me feeling nostalgia for the late 1980s, when at age 16, I had my first job, busing tables, washing dishes and making pizzas at a red-roofed Pizza Hut in Pagosa Springs, Colorado.
I looked via Google Maps and saw that iconic “hut” roof is still there, but it has been painted brown and now serves as home to a retail outlet selling ski and outdoor clothing and equipment.
You won’t find a ski shop coming to the former Pizza Hut standalone locations in Lee County, but you may or may not be seeing restaurants there either.
The one at 11498 S. Cleveland Ave. in Fort Myers, just south of Page Field and on the west side of U.S. 41 at the north corner of Oak Drive, shuttered earlier this year.
The property sold last year for $900,000.
Abraham Cherem, owner of One Real Estate Partners near Fort Lauderdale, bought it. For the next two years, NPC International, which owns about one-sixth of Pizza Hut franchises, will continue paying him even after the restaurant closed, honoring its lease agreement.
In the meantime, Cherem said he would court new tenants.
“We bought it a year ago knowing it was going to go ghost,” Cherem said. “We like the corner. We like the location. It was a big Pizza Hut with a salad bar and seating. But we want to repurpose it.
“They renewed their contract with us. So they have two more years with us. We would like to see a really, nice commercial place there. We look forward to making a nice property there. We may tear it down and put something else there. It all depends on the tenant and what we decide. This will be decided two years from now. It’s difficult to know right now.”
Jim Shiebler of Marcus & Millichap brokered that deal, representing the buyer and the seller.
“It’s interesting, right?” Shiebler said. “Pizza Hut, you’ll see them being repurposed. They’ll be converted to other restaurants. But they still have the shape of that original roof.”
With the one near Page Field, the buyer and the seller each got what they wanted.
“Short-term lease, very low rent and good upside,” Shiebler said. “This is pre-pandemic. It was a win for the seller and a win for the buyer. It was a win for the seller, because there was only a little bit more than one year left on the lease. It was an older seller. Their risk tolerance reduces, because they’re concerned about the time and the effort and the unknowns.
“The buyer is a younger generation, high-risk tolerance. He looked forward to them leaving, because then he could look for a new tenant and increase the rent and increase the value. One person’s problem is another person’s opportunity. It’s one person’s challenge, about where they are in their life. And someone else has an opposite collection of those traits.”
Bob Taplinger, 77, owned the Fort Myers standalone Pizza Hut for about nine years, selling it to Cherem last year.
“It was great,” said Taplinger, who lives in Sarasota and owns other commercial properties, including some 7-Elevens, scattered across Florida. “They maintained the building. It was a great, great lease. We had a wonderful rapport with them. They were a great tenant.
“We were very, very clear to tell the buyer that the lease was soon going to open. We didn’t have much confidence that the tenant was going to remain. We didn’t want to risk a vacancy and hour and a half away. That was why we were selling it.”
Cherem lucked into NPC International renewing the lease for two years, just after he bought the property.
NPC International’s financial struggles – $900 million in debt – are what prompted the shutting of so many of the standalone locations.
In Cape Coral, the one off Del Prado has an asking price of $1.3 million.
“The one in Cape Coral is an upgraded exterior and a much larger property,” Shiebler said. “There are nuances to each deal. It’s a much better location. The growth in Cape Coral, the population is forecast to double by 2040.
“It could be converted to any type of restaurant,” Shiebler said, noting it has a full kitchen and walk-in freezers and refrigerators. “It’s a real nice restaurant inside. Huge parcel. Plenty of parking. Giant traffic count. A lot of people are moving to that area.”
The COVID-19 pandemic has complicated things, though. Casual dining has suffered. Take-out pizza has thrived, which accelerated the demise of more red-roof Pizza Huts while boosting the same franchise’s “grab-and-go,” strip mall locations. It’s a lot cheaper to maintain a 1,200-square-foot strip-mall spot than a 3,000-square-foot standalone property.
“We’re in an economic climate with casual dining really suffering,” Shiebler said. “I think it’ll be a local or regional restaurant who buys that space. Like Pincher’s Crab Shack. Or Stevie Tomato’s or even a Beef O’Brady’s. Or a mom-and-pop, like a one-off tenant.”
It could become something else, but if it does, that likely would mean the end of the iconic roof.
“In many cases, the cost of converting a property like that would be greater than demolishing and rebuilding there,” Shiebler said.