By Amelia Levin, Foodable Industry Analyst Editor
Pick your pie. Choose your sauce. Choose your toppings. Fire away.
The “Chipotle Effect” has officially hit the fast casual pizza sub-segment with artisan-style, build-your-own, customizable pizzas made using high-quality ingredients. And this category shows no signs of slowing down anytime soon.
According to research firm Technomic, fast casual pizza had the largest annual-sales gain of 22% in 2014. Store count growth, which increased 27%, has driven much of this sub-segment’s growth, not unlike the acceleration of “better burgers” in the last five years. During the next five years, at least 2,000 fast casual pizza stores are projected to open.
The fast casual segment in general makes up 15% — or about $34.6B — of the $231B limited‐service segment with an expected growth of about 9% to 10% this year, according to Technomic. Within that group, category sales stand at $38B for pizza compared to burgers at a whopping $75M. Still, the fastest growing segment only takes up 3% of total menu composition in the fast casual marketplace, so there is plenty of room for growth.
Top Pizza Players
Leading the pack since 2008 has been Uncle Maddio’s, a New-York-style fast casual pizza concept developed by Moe’s Southwest Grill Co-Founder Matt Andrew, who saw the potential to develop a customizable pizza concept similar to his successful burrito chain. Thanks to a growing franchise program, the Atlanta-based chain has grown to 40 locations nationwide with plans to open 13 more stores by the end of this year. But that’s not all: Uncle Maddio’s has 250 locations in development spread out among 55 franchise groups, and by the end of 2016, the chain plans to open nearly 100 locations with an overall target of 1,500 new stores.
Andrew attributes at least part of this growth to consumer preferences for that hand-tossed, fold-over pizza cooked in gas-fired ovens for which the Big Apple is known.
“Forty percent of this space is dominated by customers who are interested in New-York-style pizza compared to Neapolitan at 17 percent, so we feel bullish about where we sit in the category,” says Andrew. “But though it seems we’re all competing, the people who prefer wood-fired or coal-fired pizza are not necessarily our customers.”
Andrew’s referring to a growing group of contenders looking to get their piece of the pie. They may have their own unique versions, but they share the same standards for quality ingredients, value, speed of service, and of course, customization.
Pie Five, a growing Uncle Maddio’s competitor, continues to blow up around the country and more than doubled its sales in 2014, according to Technomic. Pieology is expected to nearly double its 60 units, and the chain recorded systemwide sales of about $45M in 2014 — 230% higher than in 2013.
MOD Pizza took the No. 1 consumer sentiment ranking (69.87) in Foodable Labs’ Top Fast Casual Pizza Brands. Like Pie Five, MOD also doubled its sales last year. Close behind, Consumer Capital Partners’ Live Basil (same ownership as Smashburger) ranked No. 2 in consumer sentiment with a sentiment score of 69.45.
Also ranking high, there’s another group that’s growing as fast as the segment and one that includes Blaze Pizza, PizzaRev (a recent Buffalo Wild Wings investment), and Pizzeria Locale (a Chipotle investment). The sheer fact that equity firms and veteran chains like BW3 and Chipotle – not to mention sports players, music makers and high-profile CEOs — are investing in these fast casual pizza concepts indicates they see potential for strong growth in this category.
High-Quality Ingredients, Artisan Made
Consumers appreciate the taste of these artisan quality pies. For just a few dollars more, they are willing to pay more for a higher quality pizza cooked-to-order by friendly staff at speeds comparable to quick-service pizza chains. Many also sport a more “polished” restaurant design and inviting ambiance. As such, these concepts have become highly scalable and highly competitive.
Pitfire Artisan Pizza, an LA-based 8-unit pizza concept (with another in the oven) developed by chef-trained Paul Hibler, subscribes to a hybrid service format where customers order pizza from a counter and sit down to receive their pies tableside. Quality and locally sourced ingredients take first precedence here. And everything is customizable — signature pizzas like the burrata cheese pie with caramelized onions and a lightly dressed salad of wild arugula and hazelnuts atop a crispy crust stand out.
PizzaRev, which opened its first location in California just over three years ago, has adopted a fairly aggressive growth strategy to sell its artisan-made pies, according to former music mogul and Co-Founder Rodney Eckerman. Leveraging BW3’s franchise program and other resources, the chain has expanded into Minnesota, South Dakota, Utah, and Texas with locations being developed in Colorado, Massachusetts, Nevada, New York, and Ohio.
“We make our own dough every day, grind our own cheese from blocks every day, and cut fresh vegetables every day,” says Eckerman. “In this food-forward world, not taking any shortcuts with frozen product and focusing on the best quality ingredients and service has helped us compete a growing ‘food hobbyist’ group that includes many Gen Y and Gen X customers. We’re on a food-forward mission, which is really a retro concept. It’s about how we get back to the 1970s before food became layered with petroleum products.”
The core of the concept is the “stage,” where customers can choose their toppings, including all-natural chicken and organic sauces, and watch their 11-inch, Roman-style pizzas – clocking in at less than 500 calories each – cook in a custom-built, gas-fired stone deck oven that can cook up to 20 pizzas at once.
Customization and Millennials
It’s this “stage,” or open, assembly-style serving line, where customers can hand-create their meals that catapulted Chipotle to quick success.
Some attribute the rise in custom, artisan-made pizza to the growing power of Millennials, who put ingredients first and appreciate the added control over their meals.
While burgers and sandwiches are still the most customized items (61%, 66%), an overwhelming group of consumers prefer to build their own pizza (80%), according to recent research from Technomic. A large share of that group consists of Millennials, born between 1977 and 1992, and Gen Z’s, spanning the teenage years and born as early as 1995.
Blaze Pizza, founded by Elise and Rick Wetzel of Wetzel’s Pretzels, and with the investment backing from Maria Shriver, movie producer John Davis and Boston Red Sox co-owner Tom Werner, centers on this notion of build-your-own. The chain currently leads fast casual pizza players with a sales growth of 450%.
Each day, staffers make dough from scratch, allowing the dough to ferment for 24 hours to produce a light, crispy crust. As the 11-inch pizza travels down the service line, customers can choose between a variety of 40 toppings, including fresh-made sauces, vegetables, artisanal meats and cheeses. In just 180 seconds, the pizzas are cooked at about 550 degrees in a gas-fired, dome-shaped oven resembling an authentic wood-burning oven. A variety of signature pies were developed by Executive Chef Brad Kent.
“Our customizable approach resonates not just with Millennials but also with families because everyone can get whatever they want,” says Adam Cummis, president of Blaze Pizza’s Chicago franchise run by Levy Family Partners, which has a 15-store agreement for this area and South Florida.
At the 60-unit, going on 100-unit MOD Pizza, which also centers on the build-your-own concept, families are the target as well. “We have always believed in the appeal of fast casual to meet the needs of modern busy lifestyles, especially because we have our own busy family, which includes four hungry boys,” says Scott Svenson, founder and CEO. “What could be better than combining the quality, speed and value of fast casual with pizza?” Customers can ‘MODify’ their 9-inch pizzas with a variety of sauces and toppings.
“Our regulars generally are building something very unique and personal,” he says. “It’s a great way for them to express their individuality. The market is enormous and we are just scratching the surface with this concept.”
Even though leading quick-serve pizza chains Little Caesars, Domino’s, Pizza Hut and Papa John’s still hold 70% of the pizza market share, they continue to duke it out for the lunch crowds, offering hot and ready pizzas and cheap slices. But it remains difficult to compete with that Chipotle-loving crowd who, like their Mexican food, want affordable, high-quality and healthy pizza they can customize and eat within the confines of their lunch break.
Case in point: Sales at PizzaRev were once split between 80 percent at dinner and 20 percent at lunch. Now, the chain runs 50/50 for lunch and dinner, Eckerman says.
At Spinfire Pizza, a 2-unit concept started by Washington Redskins wide receiver Pierre Garçon and business partner Fouad Qreitem of Paisano's Pizza, pizzas (customizable with over 30 toppings) cook in just 90 seconds in a 900-degree rotating oven.
“During lunch, everyone in the office can enjoy their own specialty pizza, calzone or salad without breaking their budget, and get in and out quickly,” says Qreitem. “SpinFire is designed for speed, from the way the flow begins when you walk into the dining room to the way the line is designed to maximize the speed of service.”
With an aggressive growth plan that includes several national and international franchisees, Qreitem and Garçon see no signs of their concept – or of this segment – slowing down.
Says Andrew of Uncle Maddio’s: “I think the fast casual pizza category has exploded because we’re introducing consumers to the way they want to eat today.”
First burritos, then burgers, now pizza. The modern American pizza “parlor” has certainly changed for the good. So what’s next?