MOD Pizza raising $15M in expansion effort
MOD Pizza, a local venture brimming with former Starbucks brass, is raising a hefty war chest to grab a bigger slice of the U.S. casual fast-food market.
Seattle Times business reporter
Local pizza-parlor operator MOD Pizza is padding its war chest to embark on a growth campaign across the land.
The Bellevue company, launched in 2008 by longtime entrepreneurs Scott and Ally Svenson, has grown to 15 company-owned locations in Washington, Oregon and California.
Now the couple, backed by high-profile advisers and a management team forged at Starbucks, JPMorgan Chase and Disney, aims to have 35 to 40 locations by year end, and 100 stores by the end of 2015.
Most of the stores, which have a stark, industrial look, are expected to be company-owned, but there will also be some franchising.
The expansion includes already-signed deals to set up beachheads in Houston, Phoenix and Denver, big markets that will test MOD’s mettle in its quest to carve itself a big slice of a fast-casual-food market dominated by the likes of Chipotle and Panera.
The company is close to completing a $15 million funding round to fuel this expansion, more than doubling the total capital invested in MOD since its inception, said Scott Svenson.
MOD stands for made-on-demand — because patrons can endlessly customize their crispy pizzas. They can choose any ingredients they like; the 11-inch pizzas are then thrown into a high-speed oven and cooked in a few minutes, and they all cost the same -- $7.17 — except for the basic cheese pie, which costs a dollar less.
The Svensons wanted to create a “modern interpretation” of a pizza parlor, in the middle ground between a high-end restaurant and a pizza-by-the-slice joint. They wanted it to focus on high-quality ingredients and quick service — a walk up to the counter, sit-down eatery where customers could go with kids and feel they belonged, while knowing they’re getting a good meal, said Ally Svenson.
“We created MOD because we needed MOD, personally,” she said, referring to the fact that the Svensons launched the business while raising four boys.
Opening at the start of the financial crisis, they also wanted to provide good value, and offer relatively high compensation to employees: Starting salaries are $10 per hour and those who work more than 25 hours a week get health benefits and paid time off, Scott Svenson said.
That encourages employee loyalty, improves customer service and helps create a culture that will be fit for expansion as longtime staffers help open new stores, he said.
So far the chain has about 350 employees, and Svenson expects that every new store will add 25.
MOD is embarking on a challenging path, as fast-casual pizza brands have been popping up left and right and seem poised to battle for market share.
Competitors include California-based Blaze Pizza and Project Pie. The latter is the brainchild of James Markham, who played a big role in the founding of MOD and also in Pieology, another fast-growing fast-casual pizza chain.
Darren Tristano, executive vice president for food-retail consultancy Technomic, said there are big opportunities for fast-casual pizza joints, which fill an unmet need between delivery pizza and restaurants more focused on dinner offerings.
Upscale pizza may follow the trail blazed by high-quality burgers and become a $1 billion to $2 billion market in the next five years, but some 15 to 20 brands are going to be chasing that market, with “some big winners,” he said.
It’s not the first time the Svensons have come up with a food-retail concept. During a stint in the U.K., they created Seattle Coffee Co., which in 1998 was bought by Starbucks for about $83 million in stock.
That became the kernel of the Seattle coffee giant’s European growth, and Scott Svenson eventually became Starbucks Europe president. The Svensons also helped developed another U.K. chain, Carluccio’s, focused on Italian food, which went public in 2005.
Their track record has helped them recruit executives such as John Dikos, former director of franchise development at Qdoba, and vice president of design and construction Brad Baker, who previously worked in store development at Starbucks and McDonald's.
The company’s advisory board includes Dunkin’ Donuts executive Paul Twohig, Starbucks chief digital officer Adam Brotman and T-Mobile chief operating officer Jim Alling, also a former Starbucks executive.
There’s “a lot of Starbucks blood pumping through the veins,” Ally Svenson said.
Ángel González: 206-464-2250 or email@example.com. On Twitter: @gonzalezseattle