Mod Pizza, famed for its build-your-own pizza options, could be hitting rough financial waters. The company assumed new leadership in an attempt to avoid bankruptcy.
With 44 store closures and counting, it is still unclear if the chain will be able to avoid the same fate as many other popular chins which have been forced to file chapter 11 bankruptcy this year.
This could spell trouble for the 500-plus Mod locations spread across the U.S. Stay tuned, because every one of them could be affected.
What’s Next for Mod Pizza?
Nothing’s set in stone yet for Mod Pizza.
Insiders hint that “plans are not finalized and could still change.” It’s a nail-biter as the company teeters between major financial restructuring or possibly having to shut down altogether.
2024 Hit Mod Pizza Hard
The bankruptcy and possible closure of Mod Pizza may come as a surprise. In reality, the year did not start off on a positive foot for the nationwide franchise.
At the most recent quarterly earnings, bosses at the company had already admitted that they had shut 26 restaurants throughout the first three months of this year. Rising prices and a lack of customers quickly took its toll on the business.
Behind the Dough: Mod’s Financial Moves
A Mod Pizza spokesperson conveyed urgency and hope: “We’re working diligently to improve our capital structure and are exploring all options to do so.”
The chain’s struggle reflects a broader trend of financial pressures mounting within the restaurant industry.
From Seattle to Nationwide
Born in Seattle in 2008, Mod Pizza didn’t just stay local.
They’ve since spread their wings to over 500 locations across 28 states, becoming a major player in the fast-casual dining game.
Texas Loves Mod Pizza
With 113 locations, Texas is the state with the most Mod Pizzas.
This is a key battleground for the chain, especially now as they navigate these financial difficulties.
Mod’s West Coast Stronghold
Mod’s roots are deep in the West Coast.
Home state Washington boasts 72 locations, Oregon has 32, and California supports 46. These key areas are crucial to Mod’s strategy and success in the American market.
The Financial Recipe: Investments and IPO Ambitions
Back in 2019, Mod Pizza caught a $150 million lifeline from Clayton Dubilier & Rice.
Further showing ambition, the chain filed for an initial public offering in 2021, aiming to solidify its slice of the market.
Business Was Booming Last Year
The sudden collapse of Mod this year might come as a shock to some, given that just last year, the pizza chain was looking like a prosperous franchise.
In system sales this year, Mod Pizza earned $700 million in system sales last year. Instead, the new CEO who was appointed in January, Beth Scott (replacing Scott Svenson), closed 26 underperforming locations in April and have shut down even more since.
Mod Was Set To Achieve Big Things
The most tragic part of the string of closures of Mod Pizza (along with many other fast food chains) is that the company seemed to be in a position to flourish.
Before the closures, Mod Pizza was one of the fastest-growing chains in the entire country, only to be met with closures and potential bankruptcy by 2024. The restaurant also had much bigger plans than mere growth.
Mod Had Big Plans For The Future
Mod Pizza was seemingly thriving, having profited by hundreds of millions of dollars becoming one of the fastest-growing chains in the entire country. However, they were not planning on stopping there.
There were plans for the pizza chain to grow to the point of having 1000 branches across the country within five years, according to Restaurant Business. The fact that 2024 is that fifth year, it is enough to leave a bitter taste in anyone’s mouth.
A Costly Menu
Rising costs have forced many restaurants to hike prices, a move that has unfortunately thinned out customer visits.
This industry-wide trend spells trouble not just for Mod but for many in the fast-food arena.
Industry-wide Turmoil
It’s a tough time all around for eateries.
Giants like Applebee’s and TGI Fridays, along with smaller chains like BurgerFi, have had to close locations. Economic pressures and changing dining habits are hitting everyone hard.
Red Lobster in Hot Water
In a shocking development this May, Red Lobster filed for bankruptcy, closing nearly 100 locations.
This massive shutdown signals deep troubles within the seafood dining sector, mirroring challenges across the industry.
Beloved Restaurant Rubio’s Has Taken A Hit
San Diego-based restaurant, Rubio’s, is also among the latest victim of the decline of sit-in dining.
The coastal grill has shut down dozens of California locations, 48 locations in California closed down, including 13 in San Diego alone, the grill’s birthplace. A Rubio’s spokesperson said: “While painful, the store closures are a necessary step in our strategic long-term plan to position Rubio’s for success for years to come.”
The California Wage Crunch
Over in California, the recent hike in minimum wage to $20 per hour for fast food workers is putting extra strain on chains like Mod.
This significant increase is part of larger economic shifts that are testing the survival of many restaurant operations.
Mod Pizza Is Committed To Social Impact
There is another reason why losing Mod Pizza would be shame. Mod’s employment procedures are based around social impact.
Often seen as employment activism, Mod makes a conscious effort to open the door to people who are commonly not given a chance. The MOD Squad team is made up of people who often face employment barriers such as the previously incarcerated and those with developmental, intellectual, or physical disabilities.
Mod Is An Ethically Conscious Chain
Mod is not only deeply involved in employment activism but cooperates with organizations like the National Restaurant Association’s Educational Foundation and the FareStart program, which provides food-related career pathways to help people out of poverty.
Mod also engage in animal ethics, fair labor policies, and environmental projects. Community-based fundraising projects have included child hunger, mental health awareness, and suicide prevention.
The Closing Bell Tolls for Pizza Hut in Indiana
Just this June, 15 Pizza Hut locations in Indiana closed abruptly, leaving employees and patrons in shock.
A broader conflict threatens a further 129 locations across Illinois, Georgia, South Carolina, and Wisconsin, illustrating the fragile nature of the franchise model.
Consumer Habits Are Changing
There is probably little solace in the struggling of Mod Pizza just being one of many. Eat-in restaurants are feeling the strain, particularly since the pandemic. Not only this, but customer habits are shifting more towards convenience than ever.
Dennis Gemberling, founder and principal of hospitality industry consultancy group, Perry Group International, said customers are gravitating more towards either “grab and go” food or full dinners, leaving fast-casual restaurants like Mod behind.
Casual Restaurants Mean Something Different To Customers Nowadays
For customers looking for a convenient meal or a bite to eat on the way home are becoming less and less interested eat-in diners.
Consumers want either the full wine-and-dine experience or to just have their food brought to their front door. Gemberling said that full-service restaurants are becoming “more of a specialty operation to go to for the after-work crowd, or on holidays and that type of thing.”
Is There Hope For Mod?
Although prospects for Mod Pizza are looking pretty bleak, there may still be some hope.
An anonymous insider of the company told the New York Post that the situation is fluid and plans could change. While optimism is admirable, looking at the general trend of restaurant chains in recent years, the situation looks dire. Despite its customizability and fast turnover, Mod just is not making ends meet.
Anonymous Source Is Feeling Optimistic
An MOD spokesperson is still holding out hope that Mod will be able to continue serving its customers. They even said that a plan was underway to get the chain back on its feet.
“We have a brand guests love, a passionate team and a solid turnaround plan underway that is making progress,” they told Restaurant Business. “Since this is an ongoing process, it would be inappropriate to speculate on the outcome.”
Casual Dining Might Become A Thing Of The Past
Whether our most beloved fast-food chains survive the culling, the nature of dining out seems to be changing as customers opt for quick and convenient dining over the eat-in experience.
Gemberling said: “I call it the demise of hospitality where everybody wants grab and go delivery. The whole market is starting to dwindle. Gone are the days of the Martini lunch.”
