pizza Rapid Fired Pizza

Fast-casual pizza chains still growing despite segment struggles

Existing chains and new concepts push forward

Anyone who thinks the fast-casual pizza market is dead hasn’t talked to Ray Wiley.

The former Subway operator, who started a chain in 2007 called Hot Heads Burritos, decided to open a fast-casual pizza concept two years ago. The chain, Rapid Fired Pizza, now has 15 units and 10 locations under construction, and it expects to have 30 restaurants by the end of the year. 

“We think we’ve opened more stores than pretty much any brand in their first year,” Wiley said. “We were pretty enthusiastic when we started.”

Rapid Fired Pizza

Ray Wiley of Rapid Fired Pizza

The fast-casual pizza segment has shown some significant cracks over the past several months. Pie Five, among the first concepts in its space, reported weak same-store sales last year and closed locations in Minnesota and Chicago. Last year, Project Pie closed several locations before Pieology acquired the chain.

Buffalo Wild Wings Inc., which invested in three-unit PizzaRev in 2013, appears to be reducing its role with the chain. The company stopped expanding PizzaRev last year and closed two locations in the Minneapolis area this year. 

But the challenges have not discouraged several fast-casual pizza chains from aggressive growth plans.

The segment’s two biggest chains, Blaze Pizza and MOD Pizza, plan to add dozens of new locations this year. San Antonio-based newcomer Urban Bricks Pizza has deals with franchisees for 120 locations, with leases for 25 units in addition to the 11 units open and six locations under construction. 

MOD Pizza

Rapid Fired Pizza, which is based in Kettering, Ohio, has reached development agreements with a pair of experienced restaurateurs, including Michael Kern, the former CEO of Long John Silver’s.

The pizza chain’s founder remains optimistic about the segment and its future, despite some recent issues.

“There’s definitely concerns,” Wiley said. “It’s like any other business. I was in the sandwich business. We saw competition from Firehouse [Subs], Jersey Mike’s, Penn Station. That industry took on some competition. But a number of chains are doing quite well on an [average unit volume] basis.

“We’d all like to be the only player out there. But that’s not reality. There are going to be some ups and downs.”

Rapid Fired Pizza

New segments emerge quickly in the restaurant industry. An idea takes hold, others jump in and investment frequently follows. Concepts grow aggressively, seeking to gain an advantage over competitors. Some competitors eventually fall off. In recent years, frozen yogurt concepts and better burger chains emerged and grew, and some fell off.

Fast-casual pizza has also followed this pattern. The segment has lured some highly successful operators — Buffalo Wild Wings and Chipotle Mexican Grill got involved in early-stage concepts. Private-equity groups and even newfound investors poured money into concepts, helping fuel the growth of Blaze Pizza, MOD Pizza, &pizza, FiredPie and 800 Degrees, among many others.

Sammy Aldeeb, who, like Wiley, is a former Subway franchisee, opened Urban Bricks in 2015. He said pizza’s popularity should differentiate itself from frozen yogurt and other segments that struggled after an initial surge. 

“Pizza is pizza,” Aldeeb said. “It’s not dessert. So it’s a stronger business model altogether. Pizza is not going anywhere.”

Urban Bricks

Blaze Pizza and MOD Pizza have emerged as the biggest of the bunch, aggressively spreading locations across the country.

Last year MOD Pizza added 100 new locations. The chain now has more than 200 units in 20 states and the U.K. Revenue last year more than doubled, and the company has raised more than $150 million in capital from various sources.

The company plans to add another 100 locations this year, which is actually a slowdown, with plans to open in fewer new markets this year.

“It will feel a lot more manageable,” MOD Pizza co-founder and CEO Scott Svenson said. “We’ve grown up a lot in the last year, both in terms of our ability to execute on that rate of growth and the size and experience of the team.” 

Mod Pizza

He said the company plans to focus on “getting better while getting bigger.” 

Svenson acknowledged that the chain “went through a reversal of some of the tailwinds” the company had experienced, with same-store sales slowing after Memorial Day. Same-store sales still grew last year, but at a slower pace than the company had become accustomed to.

Blaze Pizza started the year with 173 locations and saw system sales growth of 83 percent last year. Same-store sales rose 5 percent through February. 

The Los Angeles-based company opened locations in Disney World and the Staples Center last year, and has an endorsement and investment deal with LeBron James, who periodically sends the chain a shout-out on social media.

Blaze Pizza

“LeBron continues to make a difference for us,” said president and COO Jim Mizes.

Blaze plans to keep growing, with a goal of hitting $1 billion in system sales by 2022.

“Many of the conveyor fast-casual pizza guys are going to have to fall back and either be local city or regional players,” Mizes said. “The guys who cook with fire, built a brand based on design and experience, are going to be there. And it looks like Blaze and MOD are the leaders.”

But the segment continues to attract other players, and franchisees are jumping on board.

Urban Bricks

Urban Bricks has deals with franchisees for 120 locations. The company has its own delivery program, something most fast-casual pizza chains have avoided. And it’s testing drive-thrus with full glass so customers can see their pizzas being made. The chain also serves beer and has rotating ovens to bolster the customer experience.

“It’s a very consistent business,” said Aldeeb, who looked into being a fast-casual pizza franchisee before starting his own concept. “Everybody eats pizza. You can be a millionaire and eat pizza, or you could be a college student with a college student budget and eat pizza.”

Rapid Fired Pizza, meanwhile, said its growth rate is deliberate. The company established a system franchisees could easily adopt to ensure that the product consumers receive is consistent, regardless of conditions in the restaurant that day.

The company also insists on going big into a new market. 

“It’s not a good idea to just put one store in an area,” Wiley said. “Our strategy is to go into an area and put five stores up within a metropolitan area within the first year. If you get a number of stores in a market, you can use media and use the whole market in terms of advertising. It creates more synergy and is easier to market that way.”

Contact Jonathan Maze at [email protected]

Follow him on Twitter: @jonathanmaze

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