Founded in 2008, Seattle-grown MOD Pizza allows customers to customize their pizzas according to their taste. Their unique business model eventually paved the way for 135 sites across the US. In June 2016, the chain opened their doors to their first UK site in Leeds. Recently, the chain revealed plans for new locations, raising MOD Pizza's number of planned UK sites to five.
QSR Media UK spoke with MOD Pizza's UK CEO John Nelson to discuss their strategic expansion plans, and how they plan on luring in UK consumers. Below is a transcript of the interview.
QSR: What makes your pizzas different?
MOD: There are three main things that differentiate our offering from that of the competition:
1) You can have what you want on your pizza. Customers have the option of 34 toppings - have all or none your pizza will always be the same price, we do not charge for extra toppings. Given the world we now live in, where customers want their product their way, we are the only pizza company in the UK doing this
2) Speed. We cook our pizzas in under 5 minutes
3) Our tomato sauce is made fresh in store every day. We use Californian tomatoes which are much sweeter than regular tomatoes, which helps to make our pizzas taste profile quite unique.
QSR: What is your brand philosophy?
MOD: When MOD Pizza started its philosophy was to figure out how to pay people as much as possible while delivering a quality product as cheaply as possible. To achieve these aims while making the business profitable, it becomes a matter of volume. The average rate of pay for our workers will be about £8.40 p/hr and in London it will be ahead of London living wage. We’re very proud of this.
QSR: Who is your target market?
MOD: Well really who doesn’t like pizza? It is a huge market. I’ve seen everyone from kids to grandmas and granddads at MOD in the US. As you’d expect we are over indexing on 16-24 year olds, but we’re starting to see the church broadening, as has been the case in the US.
QSR: Who do you see as your competition?
MOD: I personally believe that consumers have a series of brands that they use. So sometimes I might have a Wagamama’s, another time I might feel like a Nando’s or a Pizza Express. There are a lot of chains in a consumer’s repertoire and our aim is to make MOD one of those brands. So the way I view it, we are competing against all those chains.
I don’t think people plan weeks ahead where they’re going to eat out. I think they make their mind up about 10-15 mins before eating. This holds especially true for faster dining experiences where you may be heading to the pub or a movie after your meal. I think we’re competing against everybody.
QSR: What is your price point? How competitive are you on price?
MOD: We are really competitive on price. It’s worthwhile saying that we blind tasted our toppings because the first thing we needed to get right is the product. Inside London we will charge £7.87 for an 11 inch pizza. Outside London the price is £7.47. We also have mini-MOD pizzas which will be £4.47 in all locations. Our pricing is also mirrored with our ‘lighter option’ salads.
QSR: The UK fast casual market is a very competitive one. What made it an appealing one for you to enter?
MOD: Nothing has happened in pizza for 40 years. Predominantly its table service with the choice of about 15 different pizzas. MOD Pizza, with our customisation, is a very different offering to anything available here. Additionally, the US do fast casual a lot better than us and this is a true fast casual dining experience. You’ll wait in queue, order your pizza and we’ll have it out to you in 5 mins. Finally, the US market is also very competitive and MOD was doing extremely well against stiff competition in retail parks in the US, which makes us think it will do the same here. So these factors made it a very attractive proposition for us.
That being said one of the concerns we had in opening in the UK was ‘how do you recruit, retain and train staff to offer the level of service they are offered in the US?’. Customer service in restaurants can be hit and miss here. The feedback has been great with customers being made to feel welcome. Being looked after, loving the American type service they’ve been offered- I think this is great news for us too.
QSR: Why did you choose Leeds as your first location?
MOD: Leeds, being the third biggest city in the UK and with a large student population made it an ideal place to launch the concept. Also, Yorkshire folk are known for being shrewd with their cash, which makes it a good testing ground. I think were we to have opened in London to begin with we could have fooled ourselves into thinking performance would have flowed through to other sites when London is not representative of the rest of the country. Opening where we have, we know that if we can perform well then it’s great news for expanding the footprint of the brand.
We’ve also chosen to open our first outlet in a location with a lot of competition too to help us understand how the UK customer will use us.
QSR: With so much choice what have people tended to order?
MOD: Ironically, customers tend to stick to the traditional pizza types from our ‘classic’ range when they first try us, so our ‘Mad Dog’ pizza was initially very popular but we are seeing that change as they begin to experiment. I suspect that our ‘Mad Dog’ will continue to be one of our best sellers.
QSR: What have you learnt since opening?
MOD: First of all the customer feedback has been great. I think you always hope for it but we’ve been really astounded by how positive people have been. All the feedback has shown that people think the pizzas taste great and offer fantastic value for money. Second we’ve been surprised by the popularity of our vegan offering. It takes us 3 days to go through what one of the MOD regions in Seattle takes a month to go through in dairy free cheese. Given people’s changing dietary preferences, I think that this puts us in a good position to be seen as a restaurant of choice for the Vegan community.
QSR: Are there any things that you’ll have to tweak before opening more sites?
MOD: There are no showstoppers but what we’ve realised is that the model itself requires explanation. Customers are taking time to get used to the fast pace of the offering, having to choose their toppings- it can be a bit overwhelming for some people for the first time. We just need to educate customers as to how the ordering process works. But as we’ve streamlined this we are seeing more repeat customers come through so they are liking it. We have some customers who are coming back daily which has really surprised me.
QSR: Where are you planning to open over the next 12 months?
MOD: We’ve got 5 stores planned by Christmas this year. We’ve already opened in Leeds. Brighton will be opening in August, then Intu Gateshead, followed by Leicester Square and finally Nottingham. We expect a further 15-20 sites to open next year, predominantly focusing on Birmingham and below.
QSR: What strategy will you adopt for further outlet openings?
MOD: We wanted to choose 5 very different sites in the UK to test. As part of our desire to push the brand we wanted to make sure we knew it would work in strong locations in big cities in a variety of location types: retail parks, shopping centres, leisure parks, high streets and then of course central London.
So we’re trying to learn as much as we can with these first five sites. And I think that is important when you are bringing in new brands.
QSR: How big do you think you can get?
MOD: When I look at our competition and see 380 Nando’s, 400 Pizza Express’, over 1000 McDonald’s I see a lot of potential for our brand and I’d love to think that we’d have 300-400 MODs in 10-15 years. That would be wonderful.
QSR: Does Brexit affect your plans?
MOD: No it doesn’t. Given we’re small we can be nimble and not as affected by the economic uncertainty as some of our competitors might be. In fact MOD was started in the US in 2008- right during the beginning stages of the financial crisis. And because of its price point, MOD performed particularly well during tough times as consumers traded out of fine dining, trying to find ways to stretch their budget.
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