Little Caesars adds modular units to its development portfolio

Little Caesars launched its PODs program in December, giving the nation’s third-largest pizza chain a shot of adrenaline that could accelerate its footprint in the coming years.

The POD program adds a modular unit to the company’s prototype portfolio, offering franchisees the ability to open units much quicker and requiring a much smaller space to do so. The modular units are constructed off-site in partnership with Las Vegas-based Kitchen Podular, then transported to their destination on a truck.

Related: Why more restaurant brands are embracing modular buildings

Little Caesars’ first POD location opened in December in Keokuk, Iowa, and while it’s too early to understand full performance metrics, the system’s franchisees are showing significant interest, according to Bryan Ketelhut, the chain’s national director of non-traditional and development services.

“We have the first one open and a few more in development and there is a lot of interest from the franchise community. A lot of them want to see how the first one goes and we are able to tell them that first experience has been a great experience. I anticipate a lot more coming into development this year as franchisees can see it, visit it, walk through it, and understand it,” Ketelhut said during a recent interview.

To be sure, Little Caesars is hardly the only restaurant concept experimenting with modular prototypes. Smalls Sliders has nearly 200 such units open or under development, for instance. Several coffee chains are also experimenting with modular concepts, as are açaí concepts, chicken concepts and a few Domino’s franchisees.

There are plenty of benefits, according to companies that have embraced the trend, including speed-to-market, cost and energy efficiencies, and more prevalent real estate opportunities. Ketelhut reiterates that it’s too early for Little Caesars to understand the full realm of benefits for his company, but he is optimistic there will be several.

“The biggest selling point for us was to get to market a lot faster. We have quite a lot stores in development that are traditional freestanding, inline locations. There are a lot of developers out there that like to purchase the land and develop stick build locations. What attracted us to this, is it requires less acreage that a franchisee would have to acquire – a quarter instead of over an acre they would typically need with a large stick build,” he said.

And, while the modular unit is being constructed off-site in Las Vegas, the franchisee is able to complete all of the on-site work prior to the unit’s actual arrival. The process takes about three months from start to finish.

“Everything is manufactured and permitted off-site. After 90 days, it’s shipped on a tractor-trailer and dropped by a crane on a concrete location. Then we Caesar-ize it on site and go right to market and start selling pizzas,” Ketelhut said.

In addition to speed-to-market, Ketelhut adds the POD is “innovative looking and really stands out,” which is providing a bit of a competitive advantage along a restaurant-heavy corridor in Keokuk.

“As a customer, it’s something you would want to stop by and take a look at,” he said.

The unit could also qualify for a full tax write-off for operators in certain markets because it’s considered a piece of equipment. And, there is also the potential for energy savings; traditional, freestanding units are about 1,400-to-1,600 square feet versus PODs, which are a little over 1,000 square feet once the glass enclosure and storage spaces are added.

Ketelhut wouldn’t disclose Little Caesars’ current unit count or ultimate development plans with this added protype. According to Technomic Ignite data, the chain finished 2022 with about 4,175 locations and, in November, the company announced several new franchise agreements with multiunit opportunities remaining in “regions across the U.S.” He did note that this new program will be a big part of Little Caesars’ development plans moving forward.

“This could be a huge tailwind and it goes back to those site requirements. Finding a quarter acre site is a lot more feasible and cost effective, so this gives (franchisees) another option,” Ketelhut said. “We have a lot of white space throughout the country for new development. We are growing and growing at a fast rate, and this is another tool for us to do that.”

Contact Alicia Kelso at [email protected]