Competition | September 2013 | By Sam Oches

Pizza’s Arms Race

Long dominated by delivery and takeout players, the pizza industry is in the midst of a fast-casual revolution. And everyone wants to be the Chipotle of pizza.

Blaze Pizza has 150 units in the pipeline.
Blaze Pizza, created by Wetzel's Pretzels founders Rick and Elise Wetzel, has 150 units in the pipeline. Blaze pizza
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All Rick and Elise Wetzel wanted was to have some pizza for lunch.

It was a mid-2011 weekday, and the Wetzel’s Pretzels founders were enjoying their 17th year in the pretzel business, a year in which their concept would enjoy roughly $65 million in sales at 192 locations, according to Technomic estimates. The two weren’t exactly planning to expand their foodservice portfolio to include a national fast-casual pizza joint, but … they wanted pizza for lunch. And with no obvious restaurant suitors in their Pasadena, California, hometown, the pair ended up at Chipotle on that fateful day.

“It was sort of this ‘aha’ moment when we looked at it: ‘Why can’t we do this to pizza, do what Chipotle did to the burrito or Mexican food?’” Rick Wetzel says. “That was sort of the spark that went off.”

That spark quickly grew quite literally into a blaze: Blaze Pizza, the Wetzels’ fast-casual pizza concept, debuted in 2012 and will have 15 stores open by the end of this year, with 150 stores in the pipeline. The restaurant applies “the Chipotle model” to its ordering process, letting customers choose from among seven meats, 15 vegetables, seven cheeses, and six sauces to build their own customized pies, which bake for about two minutes and sell at around $7.

The Wetzels were hardly alone in realizing that pizza was the next fast-casual frontier. In the last few years, new pizza brands have sprouted up across the U.S. (especially in Southern California), all with the lofty aspirations of being the national “better-pizza” leader. But while it’s common for new operators to pay lip service to their pie-in-the-sky goals, fast-casual pizza can actually put its money where its mouth is; the fledgling category is built on the backs of industry veterans with resumes as long and varied as the toppings bars inside their restaurants.

Take Matt Andrew as an example. The cofounder and former president of Moe’s Southwest Grill launched Atlanta-based Uncle Maddio’s Pizza Joint in 2009 after two years developing the menu and an airtight, 10-year business model. Andrew says he assembled an executive team with more than 50 combined years of franchise experience—a team including other former Moe’s execs—and is using their expertise to “sprint toward” top-dog status in the fast-casual pizza space.

New Kids On the Block

Several brands are competing to be the national fast-casual pizza leader.

Blaze Pizza

Uncle Maddio’s Pizza Joint

The Pizza Studio

PizzaRev

Live Basil

Pie Five

Project Pie

800 Degrees

MOD Pizza

“It happened before in the better-burger category, it happened in the better-sandwich category, [and] the better-coffee category when Starbucks came on the scene,” Andrew says. “Being in the better-pizza category and being the trailblazer in the better-pizza category is a very appealing proposition.”

The rest of the better-pizza category is littered with familiar faces, fat wallets, and operational know-how. Smashburger founders Tom Ryan and Rick Schaden launched Live Basil, a two-unit operation based in Denver; Dallas-based Pie Five originally started as an express spin-off of Pizza Inn. 800 Degrees out of Los Angeles is owned by Umami Burger parent Umami Restaurant Group, while cross-town peer The Pizza Studio is headed by former Baja Fresh and Burger King executive Ron Biskin and fellow L.A. brand PizzaRev is financially backed by sports-bar giant Buffalo Wild Wings. Another California-based brand, Project Pie, was founded by James Markham, who previously conceived MOD Pizza and Pieology.

And Blaze Pizza doesn’t just have the Wetzel’s Pretzels success to tout; executive chef Bradford Kent is one of the most highly acclaimed pizza chefs in the country, and the brand counts former California first lady Maria Shriver, basketball superstar LeBron James, Boston Red Sox chairman Tom Werner, and Panda Express founder Andrew Cherng among its investors.

“Those guys have lots of help, lots of connections. They also have helped put a spotlight on the brand, so I kind of can use them like endorsement deals without having endorsements,” Wetzel says. “We’ve done this before; I’ve done Wetzel’s, and some of these investors are with Wetzel’s as well, so we assembled it and were able to go out and put together a top-notch headquarter team.”

With strong financial support and operational systems in place, fast-casual pizza brands are rushing to secure top-shelf, multiunit franchisees and grade-A real estate locations. Despite the fact that no brand has even cracked the 30-unit mark, the better-pizza category already accounts for hundreds, if not thousands, of units in development across the country. Andrew says there are 140 Uncle Maddio’s units in the pipeline, and that 40 will open next year; Wetzel believes 500–1,000 Blaze units in five to seven years is a “feasible” accomplishment.

The better-pizza players have several other things in common. Their executives all toss around the words artisan, choice, and control and regularly reference other fast-casual categories, like Mexican, sandwich, and burgers, in conversation. The stores all boast a wide range of crusts, toppings, sauces, and cheeses. They all bake their pizzas in specialized ovens in just a few short minutes. Most are focusing on a personal-sized, Neapolitan style of pizza—characterized by a light, thin, flaky crust—and offering a laid-back, modern dining room and beer and wine services.

And they all want to be the Chipotle of pizza.

“Everybody’s saying this is the Chipotle of pizza. I’m really getting tired of that,” says Randy Grier, CEO of Pie Five parent Pizza Inn Holdings, with a laugh. “But I think it’s a reference that maybe helps consumers understand the concept.”

Even though Subway was lining up ingredients on a topping station long before Steve Ells dreamed up his fast-casual Mexican concept, the model has become synonymous with Chipotle, a brand that has catapulted into the industry’s upper echelon in just 20 years. Companies new and old are taking cues from Chipotle’s use of high-quality ingredients and customization, but more importantly, they’re realizing the potential that fast casual offers in reinventing an American staple.

“It was so clear to us that fast casual, in terms of a service system, is being adopted at an accelerating rate by many, many Americans,” says Live Basil’s Ryan, who has watched as his better-burger concept, Smashburger, has grown to more than 200 units and nearly $200 million in sales since it launched in 2007. “It seems to be the right balance of service, convenience, speed, and quality, if you will, that just makes the whole fast-casual segment, regardless of the product, very popular to consumers. It fits into their lifestyle.”

Live Basil is taking a slightly different route than its better-pizza peers, growing only through corporate-owned stores and at a slow, calculated rate. The brand is following in Smashburger’s footsteps by offering market-specific menu items, and where Smashburger’s signature was its smash cooking technique, Live Basil’s is a basil plant at the order counter that can be used as an ingredient.

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