As the US-founded MOD Pizza finishes its first year of UK operations, CEO John Nelson tells Casual Dining Magazine that this is only the beginning.
It seems 2008 was a good year for pizza. Yes, it was bad for banks, interest rates, the property market, disposable income and pretty much everything else, but not for pizza. Pizza, it seems, loves a recession.
I say this because the two pizza restaurant businesses that we’ve spoken to for this issue were launched around the same time that Lehman Brothers gave up the ghost. London’s Franco Manca (featured on page 48) arrived in Brixton in the same year that Scott and Ally Svenson launched MOD Pizza in downtown Seattle. Now, eight years on, MOD Pizza has nearly 200 sites in the US and has arrived on UK shores, opening four sites since the beginning of this year (Brighton, Leeds, Metrocentre Gateshead and London). With the arrival of Nottingham, there will be five by the time 2016 is through, with 10 more planned over the next 12 months. MOD’s UK expansion has seen Sir Charles Dunstone and Roger Taylor come on board as joint venture partners, and John Nelson brought in as CEO. Nelson, formerly operations director of Nando’s UK, took some time out last month to tell Casual Dining Magazine just why this pizza proposition is perfect for the UK’s eating out market.
The thing is, there’s a lot of pizza around. New burger operators entering the market justify their arrival by comparing burger potential to the daunting size of the Italian restaurant sector. So what do pizza restaurateurs do? Well, for starters, the product has to stand up against the competition. As the sourdough craze continues, that’s no longer enough to differentiate – there needs to be more to the offer. Franco Manca’s most expensive pizza, for example, will always be cheaper than a PizzaExpress margherita, which is an attractive USP. Similarly, price point is what MOD could market itself on, but with a twist. When visiting a MOD, you can get an 11-inch pizza for £7.47 (£7.87 inside of London), which is pretty good, right? Throw in the fact that it also includes any toppings you want at no extra cost and you’ve found MOD’s USP.
“I have to say it has gone down an absolute blast,” says Nelson. “It has gone down really well, we’re delighted. Brighton is only three months old, but we’re seeing progress. Leeds has been going for five months and we’ve seen sales increase by 30% – again, we’re delighted. Our customers are already starting to learn how to really use us and we are seeing great repeat custom.”
Nelson knows that MOD isn’t alone in the competitively priced pizza market. Again, Franco Manca is mentioned, but then there are the others, new or established, that are making waves in a pool that’s arguably spilling over. For want of a better cliché, in the current economic climate, Nelson is confident that MOD has arrived at the right time, with the right offer.
“Quality and price are always going to be important points for consumers,” he says. “If you can go out as a family and feed everyone with a couple of pizzas and drinks for under £30, it becomes quite appealing. When I go out with my family to some restaurant concepts, the price of our dinner can lead to real bill shock! That stops consumers from visiting as often as you’d want them to. In Leeds, we’re seeing customers returning on a weekly basis, which is quite unusual. It’s really encouraging. That’s driven through quality and affordability
in my mind.”
CEOs, MDs, restaurateurs and many other management roles are always keen to stress just how important the teams are to the business in question. Quite right, too – we’re talking about hospitality after all. However, when talking to Nelson about the people who make up the MODPizza business (The MOD Squad, as they’re called), the sincerity he delivers this expected point with conveys a genuine passion and commitment that often falls short through predictability.
“It’s not bullshit PR nonsense,” he says. “We recognise that the guys and girls who work in the restaurants are the lifeblood of what we do – we celebrate individuality. As we progress and develop in the UK, the core that we build our business on will be the people in the restaurants.”
Once ensuring that individuals are hired on personality, after probation MOD starts a ‘squader’ on £8.25 an hour, avoiding any negativity associated with minimum wage entry levels.
“Then they progress to supervisor level (‘captains’), with an opportunity to earn up to £11,” explains Nelson. “We want to make sure we’re not involved in any minimum wage debates – that in itself opens the door to high calibre people coming in and applying. We ran a job fair for Metrocentre and had 185 applicants in two days. That was driven through word of mouth, promoting our message online, and offering a good rate of pay. I should say that the reason the pizzas are a little more expensive in London is because that post probation pay of £8.25 becomes £9.40.”
What’s more, the hiring policy of MOD (US and UK) is about allowing individuals to work in a fast-paced, exciting environment who might not ordinarily get that chance. In the States, that means working in the communities with disadvantaged young people and individuals who have spent time in prison. Nelson explains that if you get “three strikes” in America, it’s very difficult to then get a job. The business is trying to change that. In the UK, they’re particularly focused on working with youngsters from disadvantaged backgrounds. At Metrocentre, for example, four of the starting team are from a charity that MOD has worked with who specialise in helping individuals from broken homes. It’s part of the ethos that Nelson is most proud of and an element that will be harnessed through every new site.
“It’s not an apprenticeship or anything like that – we’ve just chosen four great kids who we really believe in,” he says. “We’ve done it Leeds and Brighton, we’ll do it in Leicester Square and we’ll do it in every single restaurant we open.”
Can it deliver?
For all the commendable attributes that MOD Pizza embodies, the fact remains that the product has to be in demand in order for the business to succeed. If a guest doesn’t like the pizza, my guess is they could walk five minutes in any direction before coming across another restaurant specialising in Italian fare. On top of that, MOD also has to live up to the expectations that come with a brand that’s arrived from the US. As we saw with Five Guys, Shake Shack and the rest, there are plenty of UK consumers who are fanatical about American casual dining restaurants arriving in our cities. Crikey, just look at the Cronut, for crying out loud. Surprisingly, it seems that transition has been more than manageable.
“The product has been seamless,” says Nelson. “When it came to recreating supply chains, we’re lucky that a lot of our produce is from Europe, so in some ways it has been easier here. We’ve been lucky with our oven supplier, which is crucial because every dough reacts differently to different temperatures. To find someone that has helped us ensure that the pizza you taste in Seattle is the same you taste in Brighton has been great. I found myself going back to the UK after spending time in US, craving the product, which is pretty cool.”
Is that pizza a style and product that the UK’s consumers want on a grand scale? The first few sites are performing well and there has been positive feedback from guests up and down the country, but as Nelson and the UK team watch their American cousins near the 200 site mark, does he believe that MOD can be as successful over here?
“I honestly do believe it,” he says. “It’s one of the reasons I joined this business. The product and the environment are superb, as is the price point. Consumers will discover that, and then discover the other cool stuff that we do. Like how we look after our Squad, the informal nature of training, and putting their needs first, as well as the customer’s. In the UK, in terms of service, it’s pretty hard to find someone that wants to look after you like they do in the US. That’s been our core focus. It’s made a massive difference in terms of return visits.”
Of course, MOD UK can’t be expected to be identical to the US business. As previously mentioned, there will soon be 200 MOD Pizza restaurants in America, and although Nelson and his team are ambitious, he’s calm when it comes to delivering growth in their own way. He’s very open in saying that they’re still learning what’s right for them and what’s right for the brand. In the locations MOD has initially opened, a wide range of leisure purpose is ticked off. Brighton is a destination site; Gateshead is a regional shopping centre; Leeds is a leisure park; and London and Nottingham are city centres. Each will perform differently during certain day parts and times of the year as a result. Once they’re happy with certain areas, more MODs will undoubtedly arrive.
“America is going at a rate that I’ve personally not witnessed – they’re doubling in size,” says Nelson. “They were 85 this time last year – at the end of this year there will be 200. They also have to operate in 19 different states and three different time zones. You can imagine the complexity involved. Their plan for next year is another 100. We will not be going at that rate.
“We have a five year plan of 20 to 30 a year, once we’ve established ourselves in the right market places,” he concludes. “While I subscribe to clustering as a theme, you can have too much competition. For a new brand, you can get lost in noise. It’s about being careful and steady about where we go. There is still so much to learn in terms of where’s right for us – by February next year we will have sorted out the property pipeline in terms of how many and where for 2017.”