Pieology Acquires Competitor, Unleashes Pizza Wars
With so many new fast-casual pizza concepts out there, many industry watchers see Pieology’s recent acquisition of Project Pie as the first move in an eventual wave of consolidation that will trim the number of players in this rocket-fueled segment.
Pieology CEO Carl Chang has “long said that consolidation was the future for the fast-casual pizza segment,” adding that purchasing Project Pie is his company’s “first big move of hopefully many more to come.”
With 105 units, Rancho Santa Margarita, California-based Pielogy also says it has more than 750 commitments in its pipeline in various stages of development. Its acquisition of Project Pie is intended to position the company to enter new markets that are complementary to its existing turf, while also allowing the company to accelerate its growth rate.
“I’ve always been predicting and believing that consolidation would happen, and what I consider the second- and third-tier players in the space would eventually fall by the wayside,” Chang said.
Looking forward, he predicted that the pipeline of new pizza players entering the field will taper off, noting that he’s already seen a number of upstart pizza brands go under near his home in Southern California.
He expects the chain to approach 200 open units by the end of 2016—which seems like a very tall order to this reporter. Chang added that most of the company’s franchisees fall into the “sophisticated multi-unit operator” category, which allows the company to reduce its needs at the headquarters.
“Knowing my background and wanting to teach and mentor … it becomes challenging in our concept early on if we have 100 single-unit operators,” he said about opening Pieology up to smaller ‘zees. “At this stage in our growth, we’ve chosen not to entertain too many single-unit operators just because it’d be difficult to service their needs.”
Panda Express, which bought a minority stake in Pieology earlier this year, improved the pizza chain’s buying power and economies of scale—further separating it from smaller brands that are also seeking to make it big time.
“When you’re looking to join a group in the fast-casual pizza segment, and when you look at somebody like us, look for the competitive advantages,” Chang said of anybody considering investing in a pizza concept. “We, now in partnership with Panda Express, operate like a 2,000-unit chain from a buying power perspective—you’re partnering with a group that can save you three, five, seven points of margin—that’s significant, real money.”