Dive Brief:

• Mod Pizza has submitted a confidential draft registration statement on Form S-1 to the U.S. Securities and Exchange Commission for a proposed initial public offering of common stock, the company said on Monday. 
• The company expects its IPO to proceed after the SEC's review process. The company did not provide any further details on its IPO. 
• Mod's entrance into the public market will cap off a year in which it opened its 500th store despite challenges it faced in 2020, when it posted a 5% decline in systemwide sales.

Dive Insight:

Prior to the pandemic, the fast casual pizza chain, which was founded in 2008, was on a growth tear. In 2019, the company raised $160 million and set a goal to increase its store count to 1,000 locations by 2024. The pandemic slowed down its new store openings, however — the company opened 22 net new locations in 2020 compared to 64 in 2019. It continued to expand its franchisee partners, however, adding DBMC Restaurants to its roster in December with plans to open 30 locations in the South by 2027.  

Early investments in online channels helped the company bounce back from pandemic disruption. Mod initially began expanding its digital offerings in 2019, launching its Mod Rewards program in March of that year and partnering with DoorDash. These initiatives resulted in digital sales growth of 135%.

Digital channels became even more important during lockdowns and dining room closures, and Mod expanded upon this segment further. The restaurant set up curbside delivery, added third-party aggregators Uber Eats and Postmates and set up delivery for in-app ordering. 

Its digital revenue made up 40% of sales during 2020. The company also benefited from growth in its loyalty program, which surpassed 2 million members. Purchases from rewards members made up over 20% of the company's systemwide sales. Even though overall revenue declined by 1% last year, digital revenue rose nearly 275%, with digital transactions increasing 216%.

Mod's entrance into the public markets could allow it to further invest in its digital and store growth as well, much like Sweetgreen's approach. Sweetgreen's IPO performance, in which its initial stock price rose 76% during the first day of trading, could also portend success for Mod. The fast casual pizza chain has a similar build-your-own setup as Sweetgreen, but benefits from a higher store count. Sweetgreen has only about 140 stores as of September. 

While there has been a rush to go public this year thanks to low interest rates and increased investor interest, Mod is up against a ticking clock. If a restaurant IPO goes sideways, investors could quickly lose interest in restaurant stocks and make it difficult for the company and any other emerging restaurant chains to take this growth path. Eight restaurant chains, including Mod, have now either shared their intents to go public or have launched IPOs in 2021. 

Correction: A previous version of this article misstated the total number of restaurant chains planning to go public. There have been eight companies, including Mod Pizza.