🎧🍌 Arming the Pizza Rebels | Ilir Sela (Founder and CEO, Slice)
Why MrBeast Burger failed, bootstrapping to $3 million in profits, how to pitch investors on a unique business model, turning down a nine figure acquisition, and the benefits of a multi-product model
Ilir Sela is the Founder & CEO of Slice, the online ordering and all-in-one software platform that helps independent pizzeria’s manage and grow their business. Ilir started the company in 2010 as MyPizza, rebranded to Slice in 2015, and now serves over 20,000 independent pizza shops. Slice has since raised over $125 million and is supported by investors like GGV, KKR, 01 Advisors, Primary Ventures, FJ Labs, and RiverPark Ventures.
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In this episode, we discuss:
The three reasons small pizza shops are growing 24x faster than big chains
How franchising and "reverse franchising" works
Ilir's biggest mistakes building a franchise business before starting Slice
How to explain a new business model to investors
The customer acquisition benefits of a multi-product model
Bootstrapping Slice to $3 million in profit
Turning down two acquisition offers, one that would have made him nine figures personally
Why MrBeast Burger failed
Why we don't need more cloud kitchens
Empowering entrepreneurs to open their own local pizza shops
Building a strong board
Advice for founders selling to small businesses
Thanks to Zac and Xavier at Supermix for the help with production and distribution!
Find transcripts of all prior episodes here.
Turner: How's it going?
Ilir: Oh, living the dream.
Turner: We're here in your office.You guys make software for independent pizzerias and we are currently in a podcast studio that looks like a pizza shop.
Ilir: The one and only where you'll record in an actual pizza booth.
Turner: Yeah. I thought we could start it off with: can you talk about what the most interesting thing in pizza or the pizza market is?
Ilir: Pizza is incredibly fascinating, especially in the US. What I've learned is that pizza is a staple. It is a massive industry. It's probably the most overlooked aspect and why Slice exists.
There are 80,000 pizza shops in the US that collectively manage about $48 billion in sales, and that doesn't include Costco Pizza. It doesn't include frozen pizza. These are pizzerias of which about 25% are the big chains combined. I call that Big Pizza: Pizza Hut, Domino's, Papa John's, Little Caesars.
It's about $47 or $48 billion in sales. Of that, about $30 billion is independent. That's like Joe's Pizza or Maria's Pizza Shop in every town in the country. Pizza basically represents almost half of all takeout delivery shops in the country.
Turner: Why are there so many independent pizza shops? Because when I think of some markets where there’s a lot of consolidation, there are a couple big players and small businesses don't exist.
Why is it still so fragmented despite the success of Domino's Pizza, a publicly traded company, one of the best performing stocks in the public stock market over the last two decades? What's the structure that's going on?
(Domino’s had a higher return to investors than Google since their 2004 IPOs. Source.)
Ilir: Yeah. One of my biggest mistakes in my career was to not parallel path my Slice journey with an investment in Domino’s in 2010. I should have put $50,000 in Domino’s and then also started Slice because much of Slice’s vision was inspired by the success of Domino’s in terms of their focus on digital and how they've made their franchisees very successful.
In terms of why there is continued growth in independents – in fact, in 2022, it was a record year for independent shops in the space: 4,800 net new locations opened up in just one year, an all time record. Compare that to about net 200 new big chain locations, there are definitely more independents opening up than the chains. Why? I think there are probably three reasons.
One, it has to do with pizza. Pizza is an American staple. It is a food that is incredibly affordable. It travels very, very well. In some cases, it's probably better delivered than eating it at the shop.
(Pizza is a ~$50b industry in the US. Source.)
And then it's a social product. It's probably one of, if not the only food product that is social that you can order when there are friends over or it’s family pizza night. Maybe there's an event. So for those reasons, it has become a staple.
The second reason I think is because the cost of pizza is actually relatively inexpensive in terms of making it. A large cheese pizza still costs less than $3 to make. The average retail price of a pizza in the US is about $17. So you have some really good margins. It's a very good business if you know how to operate it.
And I think the third part is that a lot of people, I call them makers, want to bring something unique to the world. It’s sort of synonymous with baking, right? People are very passionate about this product.
They want to try out different styles, and they want to turn that passion into a business. Big chains take that creative freedom away. So the only other option is to be independent.
Turner: Yeah. I didn't think about that creativity aspect. With most food, of course it all tastes different, but it all kind of looks the same. If you get a sub, it just looks like a sub no matter what's in it. Same with a burger. They maybe taste different – some are way better – but with pizza, you can do some very interesting things, not even just with the taste, but also how they look.
Ilir: Yeah, you've got the type of bake, the types of toppings, you can do a lot of things with it fermented dough or a different kind of ovens, and it's a fascinating category. I think it tends to attract some of the most creative makers in the food space.
Turner: Your family has a deep history of pizza. Could you kind of talk through that and maybe that will translate more into what you're doing?
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