Seattle-based concept brings Chipotle assembly model to pizza segment

September 13, 2012

June 11, 2012 | By M. Sharon Baker

Ally and Scott Svenson may be relatively new to the pizza business, but they are hardly neophytes when it comes to growing restaurant concepts into multimillion-dollar enterprises — they’ve done it twice before.

The duo founded Seattle Coffee Co. as expats living in the United Kingdom in 1995 and grew the chain to 75 stores in less than three years. In 1998 Starbucks Coffee bought the Svensons out for more than $85 million.

In 1999 the Svensons helped London-based chef Antonio Carluccio create and fund Carluccio’s Caffès, a U.K.-based Italian cafe and deli concept. They took it public on the London Stock Exchange in 2005, built it to 50 units, then sold it in 2010 to the Dubai, United Arab Emirates-based Landmark Group in a deal valued at $141 million.

Now the Svensons are back in the United States with a fast-casual venture called MOD — short for “made on demand” — Pizza. The Seattle-based five-unit chain sells customized thin-crust pizzas served in two to three minutes for $6.88. Two more restaurants are slated to open in Seattle this year, and a third is planned for an undisclosed city in the Pacific Northwest.

MOD borrows Chipotle Mexican Grill’s assembly-line model and use of fresh ingredients, offering any number of toppings on an 11-inch pie for a single price. Sauce and dough are made fresh daily, and the pizzas bake in an 800-degree gas-powered oven. Beer, wine, milk shakes and salads also are available. 

The name MOD reflects the concept’s made-on-demand promise and the youthful, irreverent sensibility of a British subculture known as mod. 

MARKET SEGMENT: fast casual
SYSTEMWIDE SALES: $5 million projected for 2012
LEADERSHIP: founders Ally and Scott Svenson, director of operations Chris Schultz
METHOD OF GROWTH: private investors, future partnerships
NOTABLE COMPETITORS: Pie Five Pizza Co., Pieology Pizzeria, Serious Pie, Top That! Pizza, Uncle Maddio’s Pizza Joint
TARGET MARKETS: Pacific Northwest

The idea for the concept grew out of the need to feed their family quickly and affordably.

“We had a giant car full of hungry boys, needing to feed them before a game and constantly trying to figure out how to do it,” said Ally Svenson, who has four sons between the ages of 8 and 15. “If I fed them quickly, that meant I would have to eat later, or if I took them to a place where I wanted to eat, it was going to cost me $120. The [solution] was always something like Chipotle, but you can’t eat that every night.”

Soon after, they joined forces with Jim Markham, a Californian who was trying to grow his pizza-by-the-slice business. The Svensons brought in their friend Michael Klebeck, co-founder of Seattle’s Top Pot Hand-Forged Doughnuts, to help refine and execute the concept. Markham eventually returned to California, starting a similar concept called Pieology Pizzeria in 2011.

The first MOD opened in Seattle in November 2008. The second opened in Bellevue, Wash., in January 2010, followed by three other Seattle-area units between June 2010 and October 2011.

While each unit is a bit different, Scott Svenson said the 2,200-square-foot location that opened in October 2011 in the Seattle suburb of Alderwood, featuring 85 seats inside and 30 patio seats, is the closest to a prototype.

MOD raised $4 million from investors to fund its expansion. Chris Schultz, a 10-year veteran of Starbucks, runs MOD’s day-to-day operations, while Ally Svenson oversees branding, communications and the in-store experience.

Scott Svenson is in charge of MOD’s funding and growth strategy, but works as chief executive of wealth management firm Freestone Capital Management. He also heads up The Sienna Group, his family’s investment company.

In addition to Top Pot’s Klebeck, MOD backers include Lindsey Schwartz, CEO of Schwartz Brothers Restaurants; Adam Brotman, vice president, digital ventures at Starbucks; Jim Alling, chief operating officer of T-Mobile; and Paul Twohig, COO of Dunkin’ Donuts.

MOD now employs just over 100 people and is projected to make $5 million with its first six shops in 2012, Scott Svenson said.

Like other entrants to the still-
undeveloped fast-casual pizza market, MOD faces several challenges, said Darren Tristano, executive vice president of Chicago research firm Technomic.

“It’s a very saturated Italian and pizza marketplace, with full- and limited-service restaurants as well as independents,” he said. “At [MOD’s] price point, they still have a lot of Chipotles to compete with and sandwich, Asian and other choices within a consumer’s consideration. It’s going to be a difficult battle within fast casual for a share of the stomach.”