This article appears in the January-February 2021 issue of PMQ Pizza Magazine. Click here to read it in our digital edition.
By Rick Hynum
For founders Scott and Ally Svenson, Seattle-based MOD Pizza started out as “a crazy social experiment,” aimed at creating positive social impact as well as making a profit. Today, it’s the fastest-growing pizza chain in the country. How did they do it? Scott Svenson says it all comes down to one thing: believing in, trusting and rewarding his employees. It’s a mantra he has repeated in every media interview since the first MOD location opened in Seattle in 2008. And the results, he believes, speak for themselves.
That first MOD store’s doors swung open during the Great Recession—hardly an auspicious time for launching a new business. Not to mention that he and his wife had already built—and eventually sold—two highly successful U.K. brands, Seattle Coffee Company and Carluccio’s, an Italian-style deli concept. So it’s not like they needed the money. But they had different plans for MOD, prioritizing purpose over profits and creating jobs that offered a living wage, health insurance and other benefits.
According to Nation’s Restaurant News, MOD Pizza reigned as the fastest-growing restaurant chain in the country in 2018 and 2019 and moved to No. 3 in 2020, with 467 stores, sales growth of 26.21% and system-wide sales of $493.1 million. It’s still outpacing other pizza chains in terms of growth, as we reported in last month’s Pizza Power Report. Impressed both by MOD’s phenomenal growth as well as its genuine people-first philosophy, we talked with Scott Svenson about how—and why—the two go hand-in-hand.
PMQ: MOD Pizza’s business model sounds a lot like a social enterprise—a for-profit business that also seeks to address social problems and make a positive difference. Do you think of MOD as a social enterprise?
Svenson: I guess the answer would be yes. When we started MOD, we referred to it as a crazy social experiment that would combine the best of a for-profit business with the heart of a nonprofit, whereby the more successful we were, the better and bigger social impact we would make.
PMQ: So why did you decide to carry out that experiment in the fast-casual pizza sector?
Svenson: This goes back to 2006, 2007. We had moved our family back from the U.K., where we’d had a wonderful experience that included starting and building Seattle Coffee Company and Carluccio’s. When we got back to Seattle, we had every intention of not getting back into the restaurant space. We’d started two concepts, both successful, so the thought of starting a third just felt like we were setting ourselves up for failure. Instead, we were searching for a way to give back and make a positive impact on the community and society at large. We were doing two things at the time: exploring other business opportunities outside of restaurants and retail while getting involved with nonprofits, writing checks and doing the things you do when you want to give back.
We had been asked to look at various restaurant and retail concepts and inevitably said no. Then someone suggested we take a look at the pizza industry. My wife and I have had a longstanding love affair with all things Italian. So we took a look at it and started to get drawn into it. We saw a very fragmented sector with a shocking lack of innovation that goes back 30-plus years. We started pulling together this idea of applying the more contemporary, lifestyle-relevant model of fast-casual to the big, well-loved category of pizza. At the same time, we thought about how we could apply our desire to give back and overlay that on top of what we did best: starting and building businesses. The combination of those things led us to starting MOD. We would start this journey of seeing if we could build a successful business that we could also use to make a positive social impact.
PMQ: MOD Pizza has been either the fastest-growing restaurant chain or one of the fastest-growing chains for three years now. What’s the secret behind this phenomenal growth?
Svenson: I think it’s two things. We have a product and an experience that customers have come to know and love, and we’ve had a reason for growing: We believe that the bigger we become, the more people we can employ and the bigger social impact we can make. We think about our business as a flywheel with four elements. The first is an authentic purpose, a reason for being—why we’re trying to build this business. That leads us to inspired and engaged people. If you have an authentic purpose, which is largely about and for your employees, you will, hopefully, be able to attract, engage and inspire a group of people to show up and make it their own. That leads to delivering a great customer experience and, therefore, having loyal customers. Which leads to the fourth element, which is a successful business. If you have loyal customers, you’ll build a successful business, which allows us to invest back in that first element—our purpose and impact. Our flywheel represents this mutually reinforcing cycle, with all four dimensions working together harmoniously. But it starts with making sure your people feel loved. And I think our MOD team does feel loved.
PMQ: MOD also focuses on impact hiring—that is, hiring people who ordinarily have a hard time finding jobs, such as those with disabilities, the formerly incarcerated and recovering addicts. How has that played into your success?
Svenson: Our mission is all about providing opportunities to people who otherwise face barriers to employment and to give all of our team members a platform to improve their lives. If you provide these people that opportunity and you really believe in them, get behind them and develop them, it’s incredible the way they show up and reward you with loyalty, the way they’re engaged. It has been a really positive experience for us.
It has also created a ripple effect. Team members get more excited to do the hard work, because they can see through the eyes of other team members what a difference we’re making. It has been very much our secret sauce. It’s made us a better company and made the whole journey incredibly gratifying and rewarding.
PMQ: A lot of pizzeria operators struggle to hire and retain good employees. What’s the one piece of advice you would give them?
Svenson: We all have challenges, and this is not an easy industry to work in. One of our core beliefs is in the power of expectations. People pretty much live up to the expectations you have of them. There has been a lot of research on this subject—it has been proven scientifically that people are heavily influenced by the expectations of others.
If [a restaurant owner] finds it difficult to hire or hold on to good people or if the attitudes or expectations of a certain age group are difficult to deal with, I suspect the people who believe that are showing up with that expectation front-of-mind. And the employees sense it, and that influences their behavior. Operators often start with the default assumption that they can’t trust their employees. Therefore, they need a big operating manual that tells employees exactly what to do and [establishes] control procedures to catch people if they’re not doing what they need to do. Particularly for large chains with a very distributed workforce, given what’s at stake, I think they feel they have to do that. But that’s something we’ve turned on its head. We’re not doing it that way. That’s not the kind of company we want.
One of our core beliefs is what we call “wide boulevards and high curbs.” We start with the assumption that we can trust you [“wide boulevards,” i.e., giving employees a certain amount of leeway in which to operate] until you prove us wrong [“jumping the curb”]. And I think that, because we expect that we can trust them, most of our team members show up and act in a trustworthy way. So I think there is real power in expectations and the way you communicate to people as well as the way they feel that you are perceiving them and expecting them to do their job.
PMQ: Most of MOD’s stores are company-owned, but you do have a select number of franchisees. What do you look for in a franchisee?
Svenson: About 85% of our stores are company-owned. That’s a reflection of the fact that we love our business and want to open and run as many stores as we can. We haven’t been able to get into every market we want to, which is why we’ve brought on nine incredible franchise partners that we feel very fortunate to have as part of the MOD family. We are open, in a very selective way, to having more strong, philosophically aligned franchise partners. Our litmus test is, do they understand who we are, buy into our philosophy and want to live it? And second, are they the type of people we would enjoy working and hanging out with? Life is short. We want to enjoy it and surround ourselves with people that raise us up and inspire us.
PMQ: How has MOD taken care of its employees during the pandemic?
Svenson: We’ve done a really good job of keeping our people physically safe in the pandemic—not only safe but fed. Prior to the pandemic, if you were a MOD Squadder and working a shift, you got a free meal. That was an important part of our offering. During the pandemic, we extended that. Even if you’re not on a shift, you can come into a MOD store at any time and bring your entire family, and we’ll feed you for free. No questions asked. That’s a benefit we plan on extending after the pandemic. It has not been taken advantage of. It has been used the right way.
PMQ: Overall, how has the pandemic changed MOD?
Svenson: MOD is predominantly an on-premise concept. We view ourselves as a community gathering place offering human interaction and connection. During the pandemic, we’ve had to exercise some very different muscles. We’ve really had to lean in to our digital and off-premise offerings. That’s been good for us. It’s forced us to raise our game, and we will benefit substantially over the long term from it.
But we do believe that, when the pandemic passes—which it will—people will continue to yearn for a place to connect in the community. We’re not giving up on that feature of our concept. But we know that the need to be accessible and convenient will never go away. Therefore, all the work we’ve done on our digital and off-premise channels will continue to be a part of our future.
All the trends that were already underway [before the pandemic] have accelerated and compressed into a much shorter time frame. We’ve just brought the future forward. And we’ve never been more excited about the future and more confident about what lies ahead of us. The pandemic has challenged us, but I do think we’ll be a stronger company coming out of it.
Rick Hynum is PMQ’s editor in chief.