The cofounder of MOD Pizza, the fastest-growing restaurant chain in America, reveals how its hiring strategy was key to its meteoric rise during the recession
- MOD Pizza is America's fastest-growing restaurant chain, beating out popular chains like Shake Shack and Jersey Mike's, according to Nation's Restaurant News' latest ranking.
- MOD cofounder Ally Svenson recently told Business Insider that the chain never prioritized growth, instead focusing on filling a need for its customers and employees.
- MOD's purpose-driven business model, which utilizes the practice of "impact hiring," or hiring people with significant barriers to employment, leads to a greater degree of employee enfranchisement and, therefore, better customer service, she said.
- Visit Business Insider's homepage for more stories.
In 2019, MOD Pizza raised a whopping $160 million with plans to open 1,000 locations total.
But MOD, currently the fastest-growing restaurant chain in America according to Nation's Restaurant News, started off by tiptoeing onto the restaurant scene during the worst economic meltdown since the Great Depression.It was in 2008, as the financial crisis wsa beginning, that Ally Svenson and her husband, Scott, decided to found MOD Pizza in Seattle. They set out to create a business that would have an impact and that would meet the needs of families and diners experiencing the effects of the recession.
"It's not a logical time to open a restaurant or to launch a business. But we used it to our advantage," Ally Svenson recently told Business Insider in an interview.
The Svensons implemented a one-price model to provide a strong value proposition for recession-era customers who had limited disposable income.
"Just building a fast-casual pizza business for the sake of building a big business was not something that justified the investment for us. But being able to build something that changed lives and had a purpose beyond its product was very interesting to us," she said.
They envisioned their new company as making a dent in rising unemployment numbers in places where gainful employment would have the greatest impact. Impact hiring, a term that refers to MOD's practice of hiring people with significant barriers to employment, has been central to MOD since the beginning, and Svenson said it has contributed significantly to its above-average employee satisfaction and, therefore, to its customer service.
"We didn't really know at the time how significant that was until we started to watch this type of employee," she said. "These individuals became so committed. Their work ethic was incredible, and this translated into pretty tremendous customer service."
But it would take five years of experimentation before the Svensons were ready to expand. Ally Svenson said that they wanted to fail fast in order to find out what worked and what didn't.
"When we opened the first location in Seattle, we really opened the laboratory to create the category of fast-casual pizza. We had so much to figure out, so we took years to get it right and to make sure that what we had was a sound business that was worthy of scaling. Once we knew that we had accomplished that, we then had to ask whether or not this was a growth that we wanted to pursue," she said.
The Svensons strongly considered keeping MOD a regional brand. Staying in the Seattle area would allow for the Svensons to regularly visit each location and to keep the network of restaurants closely connected to each other.
Ultimately, it came back to the "why" of MOD: impact. For the MOD "squad," that need is food insecurity, and the opportunity is to combat it, both inside and outside of the restaurant space. MOD facilitates mealpacking events at its restaurants, often partnering with local businesses and organizations. Employees have also been eager to participate.
"Many [of our employees] have stepped forward and shared their stories around how they grew up with food insecurity, so they've been very motivated to give back. We're a for-profit business, but our purpose is to make a positive social impact," Svenson said.The Svensons are very protective of the MOD brand: only 25% of the chain's more than 400 restaurants are franchise locations. Those restaurants are run by a total of nine franchise partners.
Even now, while MOD is the fastest-growing chain in America, Svenson said the team remains cautious and thoughtful about growth.
"We haven't been growing for the sake of growing. We've been growing in response to a need and opportunity," she said.