Dive Brief:

• MOD Pizza plans to expand its current store count to 1,000 locations within the next five years following new $160 million equity financing led by Clayton, Dubilier & Rice, according to a press release. The company has now raised $339 million in equity to date.
• The new capital will be used to help the brand improve customer experience through tech-focused investments like digital ordering channels. It also plans to grow its off-premise initiatives, its loyalty program MOD Rewards and personalized marketing programs. 
• Clayton, Dubilier & Rice partners Ken Giuriceo and Paul Pressler have joined MOD's board of directors. 

Dive Insight:

Once dubbed the fastest-growing restaurant company in the U.S., MOD Pizza is showing no signs of slowing down. The chain posted a 220% increase in sales in 2016 and in 2018 grew another 44% reaching nearly $400 million in sales, according to Technomic. It also increased its store count by 34%, adding 102 locations. Late last year, the chain hired former Friendly's and Johnny Rocket's president and CEO John Maquire as its new COO, and he was largely responsible for overseeing the 100-count restaurant expansion plan.

While MOD's growth is undoubtedly impressive, it will need to move quickly to use its new funding toward technology and an enhanced customer experience. When it comes to the top-your-own pizza concept in general, customers are showing less excitement over visiting queue-style restaurant chains. With 100% growth in MOD's digital orders over the past year, customers are turning more toward off-premise than they are the dine-in experience, and MOD said in its press release that it will continue to innovate to meet this growing digital demand. 

Innovation will be key as other pizza chains have been doing just that to enhance the off-premise experience. Domino’s recently added in-car ordering technology to its lineup alongside its blockchain-based AI tech, while Pizza Hut started testing delivery bots with FedEx earlier this year. Papa John's has partnered with DoorDash nationwide. Meanwhile, competitor Blaze Pizza is eyeing an IPO within the next two years and has plans to expand its store count as well as its delivery and takeout options. LeBron James backs the chain, which has levied targeted attacks on competitors like Domino's.

Continually capturing the off-premise crowd will be key to maintaining MOD's rapid sales growth. Technomic's Top 500 report shared during the recent NRA show revealed that fast casuals are now growing in the high single digits annually as opposed to double-digit growth seen within the last few years. This means that while there is still plenty of growth in fast casual pie, most everyone is getting a smaller slice these days. The broader spread means that competition is fierce and that decisions about how to deploy marketing and development dollars will need to be carefully thought out.