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800 Degrees receives $7 million in financing

800 Degrees receives $7 million in financing

The fast-casual pizza concept 800 Degrees Neapolitan Pizzeria has shifted into growth mode with the recent injection of $7 million in minority equity financing.

The investment comes from a fan who has asked not to be named.

The funding will be used to accelerate growth throughout the greater Los Angeles market, with a goal of opening 10 units in Southern California by the end of 2014.

Los Angeles-based 800 Degrees opened in the city’s Westwood neighborhood near UCLA in January 2012, offering build-your-own Neapolitan-style pizzas baked to order in a wood-fired oven. The concept was developed by Umami Burger founder Adam Fleischman along with former Michael Mina chef Anthony Carron and restaurateur Allen Ravert. Umami Burger parent Umami Restaurant Group holds a minority stake in 800 Degrees.

Carron said the original 800 Degrees location has “blown away all of our expectations.” With lines routinely around the block, the restaurant is being expanded to add a separate entrance and space for a larger retail and takeaway business.

The second location is scheduled to open in August at Los Angeles International Airport, or LAX, in a licensing deal with HMS Host.

Before the end of 2013, a third location, which will be company owned, is scheduled to open in Santa Monica, Calif. By New Year’s Eve, a fourth is scheduled to open on the Las Vegas Strip as part of a new MGM Resorts International arena under construction in front of the Monte Carlo and New York New York resorts.

In the fall of 2014, another 800 Degrees is scheduled to open in Las Vegas in the redeveloped Sahara Hotel and Casino, which is being rebuilt by SBE Entertainment as SLS Las Vegas. SBE is an owner of Umami Restaurant Group.

Meanwhile, Carron said the company plans to open another four to five 800 Degrees units around the Los Angeles area, looking in Hollywood, Studio City, Downtown, Pasadena, Marina del Rey, Orange County and possibly San Diego.

The concept is one of a rapidly growing number of brands hoping to become the “Chipotle of pizza.” In the Los Angeles area alone, brands that have launched in recent years include PizzaRev, which recently received a minority equity investment from Buffalo Wild Wings Inc.; Pizza Pizzeria; Pizza Studio; and Pieology.

Leading the pack in terms of aggressive growth out of Los Angeles is Blaze Fast Fire’d Pizza, founded by Wetzel’s Pretzels co-founder Rick Wetzel and his wife Elise, which currently has two units open but another 56 franchise locations in development across the country. Among those deals is a 10-store agreement to bring the brand to New Jersey, announced this week. In addition, an existing franchise group in Los Angeles has upped its agreement from five to 25 Blaze locations in the works.

In Los Angeles, however, 800 Degrees was the first of such pizza brands to open. Carron said others have benefitted from watching 800 Degrees’ success with the model. “That proof of concept is benefitting those that came later,” he said. “So their growth curve has been shorter.”

Newer players also appear to be focused on the assembly line service model as the “magic of the concept,” he said. “And that’s not really correct.”

At 800 Degrees, the focus is on the quality of food and experience — including the artisan crust made in the true Neapolitan tradition, said Carron. Toppings include items like organic chicken, mozzarella that’s made locally for the restaurant three time a week, and dough that is made fresh in house and hand-stretched.

“It’s experiential,” said Carron. “Others are more focused on getting people in and out and making it convenient. I want to be the brand that people get excited about when we come to their neighborhood.”

Unlike most other fast-casual pizza players, 800 Degrees is not looking to franchise, Carron said. Those that do franchise will grow their chains faster, he said. “But we have no ego associated with number of units or things like that. We’d like to be known as best in class.”

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout

TAGS: Finance News
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