MOD Pizza’s Founders Talk Purpose, Profits at RFDC
Empowering employees and building a best-in-class business “are not separate; they’re inextricably linked,” said Scott Svenson, MOD Pizza CEO, with co-founder and wife Ally Svenson.
MOD Pizza’s founders are doubling down on their efforts to employ the underemployed at their 470-store pizza chain, most recently focusing on people with intellectual and developmental disabilities, said Ally and Scott Svenson on opening day of the Restaurant Finance & Development Conference.
When the husband-and-wife team started MOD Pizza, in 2008 when the financial system was collapsing and jobs disappearing, Ally Svenson said “the last thing the world needs is another pizza place…but what was happening with our employees, the world needs gobs more of that.” She was referring to the pizza chain’s employment of formerly incarcerated people, a core group of whom went on to become the “keepers of the culture” at MOD and she believes an integral reason for the chain’s successful growth.
“If anything it has grown because so many people have experienced it. We talk about it as a ripple effect, and it’s a byproduct of the need,” she said in an interview prior to their keynote speech, with 85 percent of people with such disabilities unemployed. She’s recently created a new partnership with Best Buddies to aid and formalize MOD’s efforts.
Added CEO Scott Svenson, Ally’s husband: “I’d say the commitment is stronger than ever. We have to be intentional about helping them on their journey.”
MOD Pizza has raised $340 million in equity since starting the company, which is 75 percent corporate-owned and 25 percent franchised. The most recent tranche was $160 million in May led by Clayton, Dubilier & Rice or CD&R, a private investment firm. Is that enough to get MOD to the next stage, Svenson was asked in an interview.
“Never enough,” he joked, noting that although it’s great to have a “brand people love,” growing it fast “eats up a lot of capital.” He said his mandate was “more of the same” in terms of growth. On MOD’s fifth birthday they had 12 stores, mostly in and around Seattle and western Washington. On its 10th birthday they had 400 stores in 70 markets. Now in its 11th year, they will spend the next five years “building those markets out” to maturity. “At some point we might go public,” he mused, but they’ve raised enough capital to do what’s needed for the next phase.
On stage at the RFDC, Scott Svenson said, “We didn’t start MOD to build a pizza chain, we started MOD to figure out a way to make a difference, and make it sustainable and scalable and outlive us. This is the way we can do that.”
Moderator Nicole Miller Regan, managing director at Piper Jaffray, asked: “Can you create material equity value? How do you manage the healthy returns needed to keep this ecosystem going?”
Scott Svenson replied: “Early on we dubbed this enlightened capitalism, which is unapologetically we make a profit…we have to build stores that make a great return on capital, that employ more people. These two things are connected.
“There’s this constant yin and yang of balancing the two. Just because we get an incredible amount of gratification and joy from the impact we make on people’s lives, doesn't mean we’re not competitive. We want to build a best in class business. Those things are not separate; they’re inextricably linked.”
The Restaurant Finance & Development Conference, presented by the Restaurant Finance Monitor, Franchise Times’ sister publication, continues through Wednesday at the Bellagio in Las Vegas.