Growing up in the 1970s, Sunday afternoon in Pittsburgh was watching the Steelers win, while drinking Iron City Beer and consuming Mancini’s bread with Isaly’s chipped ham and butter. What does that have to do with real estate investing?

Picking the survivors

When we invest in real estate, we are making a long-term bet on the tenant, building, neighborhood, interest rates, inflation and local/national/ world politics! I would have bet significant money years ago on the long-term strength of Mancini, Isaly’s and Iron City Beer. But only one—Mancini’s—has survived intact and thrived for several generations. What might we learn for the history of these operations?

History Tells a Story

Iron City Beer by 1970 had been produced for over 110 years. Pittsburgh Brewing Company was once the third largest in the USA. The firm survived prohibition by producing soft drinks, ice cream and “near beer,” along with running a cold storage business.  In 1977, the introduction of IC Light was targeted for young beer drinkers, and it captured 80% of all local beer sales. 

But all good things end one day.  The firm was acquired in 1986 by a firm from Australia, and six years later it was sold again.   The very next owner ended up in jail, convicted of fraud. The next owner bought the business out of bankruptcy…and then filed for bankruptcy 10 years later. In 2007 another firm bought the brand out of bankruptcy and continues to produce Iron City…but from another city!  A once strong tenant follows 100 years of success with repeated starts and stops.

Christian Isaly came to America in 1833 and for generations the family delivered bottled milk and cheese door to door from horse-drawn carts. By the 1970s, Isaly’s was a successful chain operating across Ohio, West Virginia and western Pennsylvania.  One of their top-selling products was Chipped Chopped Ham (which, with four large boys—and I was the smallest—we would consume several pounds watching one Steelers football game on TV). 

In the 1980s, the Isaly family retired, selling the brand to the Deily family who carried on traditions until 2015. Isaly products can still be purchased at certain food chains and independent stores and over the internet.  Heinz Field (for NFL games; now Acrisure Stadium) sold Isaly’s chipped ham sandwiches. PNC Park (for MLB games) provided Isaly’s Whitehouse Cherry ice cream. The Isaly stores, though, have disappeared. A bet on Isaly’s as a tenant would have failed over the long haul.

Mancini’s Bread started in 1926 when James Mancini opened a one-room bakery in McKees Rocks (down the Ohio River from Pittsburgh). By 1977, the firm was run by Mary Mancini Hartner (niece of James). Mancini’s bakes over 10,000 loaves/day and employs 48+ people and operates 24 hours/day. 

BOTTOM LINE

All three—Isaly’s, Iron City Beer, and Mancini’s—were started as family-owned businesses, and all three firms were dominant in their respective markets in Pittsburgh in the 1970s.  

Why did only Mancini’s survive and thrive into the 21st century as a family-owned business?  

Both Isaly’s and Iron City Beer were sold out of the family.  Iron City Beer was pushed too far too fast to satisfy the needs of investment bankers to “win big or go home”. 

Isaly’s was also negatively impacted by market changes outside of its control (including the decline of deli shopping and changes in state-controlled milk pricing).  

Mancini’s long-term success was helped by subsequent generations committing to stay true to the historic mission of the firm. They continue to produce “The Best Italian Bread in the World”!

Maybe all good things must end someday. At least it is true that all things change over time, and as real estate investors, we must always be monitoring the market and our tenants and acknowledge that we must change how we react when data suggests that change is happening!