Fast casual chain &pizza is starting a franchising program to help it grow outside of its East Coast strongholds and reach 300 units by 2030, according to a press release emailed to Restaurant Dive.
CEO Mike Burns told Restaurant Dive the chain was open to selling some of its 39 corporate locations to franchisees to sweeten the deal for early operators. The brand wants about 10% of its future store base to be company-operated so it keeps its finger on the pulse of operational realities.
Burns said the new franchising program builds on a series of changes implemented at the chain since he took over as CEO about 15 months ago. Those changes, Burns said, were necessitated by structural shifts in the fast casual pizza market sparked by the COVID-19 pandemic.
“Fast casual pizza is dead,” Burns said. But &pizza hopes to bring back.
Fewer stores, hotter pizzas
To prepare for the franchising push, &pizza has moved to consolidate its store base, Burns said. It closed 11 underperforming company-operated units that were concentrated in markets like New York City, where fast casual pizza is less competitive with regional pizza varieties.
&pizza also shifted from in-house tech to partnering with firms like Toast and Olo, significantly reducing corporate overhead costs, Burns said.
The brand has also made a number of operational changes to make its pizza more appealing to the off-premise consumers who now comprise the majority of its consumer base.
“Pre-COVID, 70% of our business was dine-in, every fast casual pizza place was the same way,” Burns said.
Now, 70% of business is off-premise, necessitating changes to packaging and food, he said.
To make sure pizzas stay hot, &pizza has redesigned its packaging. The chain has also changed its dough prep process in a two-store test, though its dough recipe remains unchanged.
“Historically, fast casual pizza was made with thin crust for dine-in. Now, you get it delivered and it's cold. So we've tried to change the game,” Burns said. “We're rolling it a little bit different, so it's a little bit thicker, it holds heat.”
The brand is making its topping portions more generous too, Burns said. This tactic improves the value proposition of individual pies and helps hold the heat more.
In another shift, &pizza’s strategy is moving away from discounting and toward food-forward, value-oriented marketing, he said. The brand only discounts for special occasions, like Pi Day (March 14,) and April 20. That decision, taken 12 months ago, hurt topline sales briefly, Burns said.
“This is the first week we've rolled over all the discounting from the past and we're back to flat [same-store sales] again, which shows us that strategy worked,” Burns said. “And to be flat in this environment, especially in the epicenter of political craziness in [Washington,] D.C., is a huge victory right now.”
Deploying edgier marketing
Going forward, &pizza hopes to drive its brand identity by embracing edgier marketing, something Burns discussed in previous interviews with Restaurant Dive. The April 20 discounts — $4.20 dough knots — is part of that. Burns described 4/20, an unofficial weed-themed holiday, as the chain’s “Super Bowl.”
“We handed out &pizza branded rolling papers last year,” Burns said.
The chain was also willing to touch issues other restaurant brands have backed away from, and offers its employees a day of paid leave to attend demonstrations.
“Other companies are telling employees, ‘Turn your head around, tuck your shirt in’ And we're like, ‘Hey, you believe in this, we'll pay you to go march with whoever you want to march with,” Burns said, adding that the brand had a strong presence at D.C.’s Pride events last year, as other companies have abandoned rhetorical support for LGBTQ civil rights.
But edgier marketing can cause a backlash. An ill-considered promo for Marion Barry knots mocked the deceased mayor of Washington, D.C., who was arrested in a joint FBI-Metropolitan Police sting operation in 1990. The LTO led to a local scandal.
“We underestimated the impact that he had in the community,” Burns said. But Burns said sales were not seriously impacted after the company apologized and met with community leaders in D.C.
College towns and drive-thrus
There are markets tailor-made for edgy marketing: college towns.
“We should be in every SEC school or near it,” Burns said. “Our average customer is 19-to-30-years-old, a 50-50 split male-female.”
Prior to Burns’ arrival, the brand was expanding in the Northeast.
“The only thing cheap in New York City is pizza. So for us to go in with a premium pie for $13 when I can get a giant slice with grease dripping down my arm as I walk down the street for $5 didn't make a lot of sense,” Burns said. Now, &pizza’s focus is turning to Mid-Atlantic, Southeast and Southwest markets where everything — real estate, construction and especially labor — is cheaper.
“Our food and labor prime cost is sub-57% and that's with our average wage being $21 an hour,” Burns said.
The chain’s AUV is roughly $1 million, a level that “in Charlotte or Savannah, or Baton Rouge should print cash because the labor line's significantly cheaper,” Burns said.
&pizza made changes to its real estate model as well, shifting from a scattershot development strategy toward one focusing on 1,200-square-foot locations. It previously had footprints ranging from 800 to 3,000 square feet.
But process changes intended to improve off-premise food quality could open up more real estate. The chain is testing changes to its dough, including moving from baking the whole pizza at once to parbaking the dough in the morning and finishing the pizza in its conveyor oven. This has dropped the cook time for a finished pie from two minutes and 20 seconds to 57 seconds on average, Burns said. That cook time is comparable to what many fast food items require, opening up the possibility of drive-thrus.
“We think we can be the first fast casual pizza chain to operate a drive-thru business — not a pickup window — but a legit drive-thru: drive up to the speaker, order my food, get it at the window,” Burns said, adding that it would likely take until 2027 for &pizza to integrate drive-thru into its development strategy and operations.
