Matt Merrill, director of franchise operations for 1000 Degrees Pizza, had in the back of his mind what he wanted the future of his fast casual to be. He imagined scale beyond the 21 restaurants spread across 10 states. He envisioned action in the M&A space and the construction of a budding multi-brand platform.
Amandeep Judge, who owns a sizable brokerage for Coldwell Banker in Toronto, Canada, bought into Merrill’s desires—both literally and figuratively—a month ago when the commercial real estate veteran officially acquired 1000 Degrees.
“I mean he's just been doing real estate for the past 10, 15 years or so,” Merrill explains. "With that type of experience on the commercial real estate side of things, he's bringing quite a lot to the table. I'm really excited about the whole thing because since we got this influx of additional investment, we're able to do things that we were never able to do before.”
With new capital coming in, Merrill says the brand will introduce “a new era of 1000 Degrees Pizza.” More specifically, that means brining in systems that can help expand the business, including implementing reputation management, fixing the supply chain, offering franchisees more robust marketing programs, and getting into the virtual kitchen space. Merrill is interested in optimizing the menu, as well. As it stands now, 1000 Degrees—which sells Neapolitan and Roman-style pizzas—offers more than 50 cheeses, sauces, meats, vegetables, and other toppings. The goal is to focus on food costs by removing redundancies and opting for additional premium ingredients.
The biggest feat, however, will be 1000 Degrees’ pursuit of another restaurant, not too long after it went through the same process itself.
“That might be kind of strange from the outside looking in,” Merrill says. “This is something that I have in the back of my head, I mean, we want to grow rapidly and I think the best way and the best approach of growth right now with today's market is through acquisition. That's my belief. I know a lot of the big players right now are doing the same thing, but we're aggressively looking at quite a few different companies to purchase.”
Merrill and his team will search for concepts that complement the pizza chain and pull resources together to cut expenses. The M&A move doesn’t necessarily have to be pizza either, he says.
The intention is very much like what’s been seen in the quick-service industry in the past couple of years. In 2021, Restaurant Brands International—already the owners of Burger King, Popeyes, and Tim Hortons—tacked on Firehouse Subs for $1 billion. Also, FAT Brands spent nearly $900 million to purchase Round Table Pizza, Hot Dog on a Stick, Pretzelmaker, Great American Cookies, Marble Slab Creamery, Twin Peaks, and Native Grill and Wings. Others, like 1000 Degrees, are at the beginning stages of their journey. One example is Fuzzy’s Tacos, which formed Experiential Brands in 2021 in hopes of building a multi-brand empire.
For 1000 Degrees, the best fit would be restaurants with an existing franchise infrastructure, but that’s not a deal breaker.
“I like options, and I like keeping an open mind no matter what I do,” Merrill says. “If an opportunity presents itself, we would look into it obviously. We would want something that is already franchised out, but I don't want to be pigeonholed into it. It really just depends on the opportunity. But we're open to talking to really anybody. We just want to be able to scale, and the fastest way I think we're going to get there is by acquisition. We have the resources to do that now. So it's very promising. It's a very exciting time to be part of 1000 Degrees right now.”
With that said, organic growth is on the table, too. 1000 Degrees is based in Michigan, Iowa, Minnesota, Tennessee, Texas, Utah, Florida, Delaware, Georgia, and Maryland. The priority will be growth in the two biggest markets, Texas and Florida, although Merrill didn’t rule out the possibility of opening in a new state. He estimates that 1000 Degrees will debut 10-15 franchise locations in the next three years. There will be some company-owned stores mixed in, as well; the chain recently bought its Wilmington, Delaware, location from an operator.
Merrill acknowledges overseeing nearly two dozen restaurants spread from Utah to Delaware can be difficult, but he adds that it comes down to relationships with distributors and other third parties.
“We talk regularly,” says Merrill, describing his interactions with operators. “We’re able to overcome some of the challenges that they have and that's part of refocusing on marketing for 2023—really honing in on marketing using different initiatives through TikTok and Snapchat and just changing some of the things that we did in the past. We were very heavily focused on Facebook, four, five, six years ago, and now obviously that needs to change.”
In the past two years, 1000 Degrees opened three Texas units. Almost all 21 restaurants are at pre-pandemic levels and have shown month-over-month revenue growth.
Merrill, who joined the team in 2015, one year after the chain was founded, says he has a “rock-solid plan going into 2023 that’s going to make everybody more successful.” He emphasizes that whatever is decided, franchisee interests will be kept top of mind.
“I've been with the company for over seven years now, and I really want to be able to take this to the next level,” Merrill says. “We have quite a lot of interest in us. I mean, the past press release that we had, there’s people coming out of the woodwork trying to talk to us. We love our franchisees. I have a personal relationship with every single one of our franchisees, and their success is my success. And we went through the pandemic and the pandemic was a tough situation for everybody, but we’re coming out stronger we're going to just keep pushing that envelope.”