Pizza is a staple in the eating repertoire of American households. Over 300 slices are consumed every second of the day in the United States, and that number is only expected to grow.
To feed the need of this obsession, the country currently has around 61,000 restaurants serving pizza, comprising a $30 billion per year industry.
With those kinds of numbers, it’s easy to see why someone would go after a piece of the proverbial pie by opening their own pizza restaurant. A franchise location of MOD Pizza would certainly do the trick.
MOD Pizza operates under the idea of “Made On Demand.” They are a pizza chain that serves artisan style pizza and salads in a fast-casual environment.
Items are made in front of the customer and ready for consumption in just minutes. This model of preparation has become increasingly popular among quick service food locations in the last few years and appears to be a winner with consumers, as well.
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The Beginnings of MOD
MOD got its start in 2008 after founders Scott and Ally Svenson struggled to find good food that was both affordable and fast.
They were searching for places to purchase food for their growing family that wouldn’t break the bank, but would also offer choices of higher quality and nutritional value.
They began thinking of pizza and the routine way most pizzas are served, and they knew there had to be a better way. They opened their first store in their hometown of Seattle in 2008 and MOD Pizza has been expanding ever since.
The Svenson’s based MOD on the philosophy of people over pizza. They believe that taking care of their employees is their most important mission.
With above-average wages and opportunities for their employees to give back to their communities, MOD is a shining example of a good employer.
While they are still a business whose goal is to make money, they believe that taking care of their people should never come second to the bottom line.
Made On Demand Pizza
Revolutionizing the pizza industry is no easy undertaking. There are thousands upon thousands of pizza restaurants in the United States who all seem to do a pretty good job of selling their pies.
Formulating a new concept to stand out from the crowd is critical and MOD has figured it all out. Allowing each individual to order their own pizza with their own toppings means no more compromising and no more having to order more pizza than you can eat, just so everyone gets what they want.
At MOD, each eater steps up to the counter and tells the maker what kind of pizza or salad they want. It is made in front of their eyes and then cooked for approximately three minutes in a special oven. Single serving pizzas just how you like them.
It’s a smart concept, especially when considering the price point.
Families are much more likely to go to a restaurant that will allow everyone to get what they want, if it is reasonably priced. MOD’s price point is perfect for budget-conscious eaters. The combination of choice and cost opens their market up to an increasingly large audience.
Their Franchise Stats
MOD began selling franchises in 2013. Since that time, their store count has grown to around 330 locations across the United States, as well as in the United Kingdom.
Their franchise locations are growing at a steady rate, with their net growth score coming in at 72, and having zero turnovers. These statistics tell us that not only are more MOD locations opening than closing, but they also have not yet had any franchises close or lose their license. From this, we can infer that the locations are doing well and at least making enough money to cover their operating costs to stay open.
MOD has not yet released information regarding franchise license renewal terms, which is unsurprising considering they did not start selling licenses until 2013, and each of those licenses has a 10-year term.
In approximately 5 years, we will be able to get an idea of what renewal terms look like, as well as how many franchisees are willing and able to purchase those renewals.
Currently, MOD is selling their licenses for $30,000, which is comparable to other restaurants with similar success rates. The part that makes MOD stand out as a better option is the estimated total investment, which is much lower in comparison to some of the others.
MOD estimates that to open one of their locations would cost between $714,000 and $985,000. A lot of similar franchises have estimated total investments of well over $1 million. Having a lower total investments means that your restaurant has the ability to make that money back and start turning a profit faster.
In addition to the franchise license, the franchisee is also responsible for paying some ongoing fees to the franchisor. MOD Pizza is currently charging its franchisees a royalty fee of 5 percent of gross sales.
They charge this fee for the use for the MOD Pizza name and logo at the restaurants. On top of that, they also charge a 3 percent fee for advertising.
All advertising for MOD Pizza is purchased and designed at the corporate level, so franchisees do not need to worry about it on their own. Print, radio, television, and internet advertisements draw in hungry pizza lovers to MOD locations around the country.
To recoup some of the cost associated with purchasing this ad space, MOD charges the franchisees since they, too, are benefiting from it.
A low startup cost should not be the only reason to invest in a franchise. Cheap means nothing if it won’t make you money in return. Checking on MOD Pizza’s track record, it appears that they have been successful.
According to their statistics, they have not lost a franchise yet, meaning none have had to go out of business, nor have any lost their license due to non-compliance with MOD’s practices and standards.
Getting Your Franchise Launched
The process of getting your new franchise off the ground can be a daunting task. It takes a lot of money, between the license fee and the capital required to obtain store space, equipment, etc.
While MOD does not provide financing assistance for its new franchisees, there are several financial institutions that will assist business owners with loans.
After the license has been secured, and the restaurant space rented, the new franchisee will need to learn the ins and outs of the business to know what MOD expects of its new location.
To assist with this, MOD offers both classroom and on-the-job training. With all franchised restaurants, there are rules and guidelines that must be followed to ensure product and service consistency across all locations.
New franchisees will need to know recipes and protocols so that they can operate the same as the other locations around the country and the world. They need to know and be able to do the things that make their restaurant part of the MOD Pizza chain.
People Over Pizza
Following the Svensons’ model of taking care of their employees is also important when it comes to operating a MOD franchise. They are very concerned about providing a rewarding environment for their workers, as well as livable wages and benefits.
They also believe in creating a path to offer their employees room for true advancement. It is important to them that the people who work for them feel valued and have the opportunity to enhance their lives.
Not only does MOD believe in valuing those who work for them, but also believe in offering second chances to those who may have undesirable pasts.
MOD is open to and even encouraging of, the hiring of ex-convicts, those with past struggles with drugs or alcohol, or with physical or mental disabilities.
They believe everyone deserves a chance to prove themselves. The Svensons made this hiring practice a part of their MOD philosophy to fulfill their need and desire to make a positive social impact.
Deciding on a MOD Franchise License
For most people, the notion of opening a franchise business comes to them from a desire to open their own business and be their own boss.
Starting a business, even with all of the money and effort that it takes, can be an incredibly rewarding experience, both mentally and financially.
But when opening a franchise, you must make sure that you are choosing the best fit your personality and abilities. Even if all of the numbers are right, if the company does not match with your ideals and morals, it will not be a smooth business relationship.
Choosing to join the MOD Pizza organization comes with a few responsibilities.
Not only are you agreeing to create product according to their standards, and to pay all fees associated with that franchise, you are also agreeing to adhere to their company culture guidelines.
Choosing to hire convicted felons is not a priority for every business owner, but it is for MOD.
If you, as a franchisee, are not comfortable with the processes and philosophies employed by the company, it is probably not going to be a good fit, and you should seek a different franchise license to purchase.
If you are able to get on board with MOD’s philosophies, it would be an incredible investment. They are expanding at a steady pace and have a lot of potential as a niche restaurant.
They do offer territory rights to their franchisees, so opening the first MOD Pizza in your area secures your claim to open additional locations.
These on-demand-style quick service restaurants are becoming incredibly popular with consumers and getting in on the action now could prove to be very profitable for the new franchisee.
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