One artisanal pizza chain just got a key new ingredient: $15 million.
Six-year-old MOD Pizza's new funding comes on top of $11 million raised since its 2008 founding. Investors include partners at Madrona Ventures, Frazier Healthcare Ventures, Century Capital, and an array of former execs from
Why are investors salivating over the Seattle pizza concept? The reasons are simple:
Riding a trend.
As baby boomers age, they have more disposable income -- and more refined tastes, even when it comes to fast food. Their craving for better pizza has driven the birth of dozens of upscale chains that aim to take chain pizza to a more refined level. The trend is so hot, the National Restaurant Association formed a council to support the growing sector. And 15-unit MOD isn't the only startup that's attracting investors.
Last year, Buffalo Wild Wings invested in 2-year-old PizzaRev, which has plans to bust out of its home market of California and expand into six additional states by year-end, growing from nine to 28 units. And in 2010, uber-investor Mark Cuban bought into organic-focused Naked Pizza of New Orleans.
MOD -- which stands for Made On Demand -- brings organic dough and gourmet ingredients to a pie that's cooked in three minutes flat, allowing impatient diners to eat well.
Seasoned team.
The MOD team has ample experience in growing chain restaurants, especially CEO and co-founder Scott Svenson, who with his wife Ally Svenson founded and grew Seattle Coffee Co. until its 1998 sale to Starbucks. Svenson then served as president of Starbucks' European division until founding the Italian-deli cafe chain Carluccio's, which went public in the UK in 2005. The company's advisory board is packed with former Starbucks, Dunkin', Qdoba, and McDonald's.
Skin in the game.
Investors like owners who put in their own money, and they've got that scenario here. Svenson re-invested in this funding round, and was an initial investor as well.
Moving into franchising.
MOD will finish out the year mostly opening company-owned units, a spokeswoman says. Seven more restaurants will open by the end of August in western states and Texas, and the chain forecasts hitting 35 units by year-end.
By next year, look for the company to begin offering franchises for sale. The franchise model can allow a chain to grow quickly without much need for capital investment, better leveraging the investor money MOD has raised. The chain estimates it will nearly triple again in 2015, to 90 units.
The coming years will see a scramble as the better-pizza players try to grow fast, dominate the emerging sector, and become the first national brand name in this niche -- the Pizza Hut of artisanal, better-quality fast pizza. With this $15 million cash injection, MOD is positioned to be a serious competitor.
