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Pieology closes units amid a ‘restructuring’

The fast-casual pizza chain has closed six locations as it opts to focus on franchising.

Pieology is closing some locations during what the company is calling a “strategic restructuring” of the brand to focus primarily on franchising.

The fast-casual pizza chain has closed six company locations in Northern California, Pieology confirmed. Earlier local media reports said the closures were due to the company's move from company-owned locations to franchisee-operated units.

In a response late on Wednesday, Pieology blamed the closures on a combination of “high rent and increasing minimum wage” in the Bay Area. The company said it has identified “a combination of franchise buyers, retail tenant lease takeovers and some closures for these properties.”

The closures, the company said, “will allow Pieology company operations to invest in new and existing markets.”

Earlier, the company issued a release explaining that it is shifting to franchising, which it called “a period of strategic restructuring.”

In the release, the company said it is shifting its business strategy “to focus on a primarily franchised business model both domestically and internationally.”

The company said that this strategy would allow its restaurants “to better serve and support the communities in which they are located.”

Pieology had 135 locations at the end of 2017, according to information from Technomic’s Top 500 Chain Restaurant Advance Report. That’s up from 78 two years earlier. At least 34 of those locations were company-owned as of 2016.

The Rancho Santa Margarita, Calif.-based chain’s system sales grew by 15.5% in 2017 to nearly $108 million, according to Technomic.

Pieology is one of a generation of fast-casual pizza chains that have emerged in recent years and worked to grow aggressively in the burgeoning market. Panda Express invested in the chain in 2016.

That year, Pieology bought rival Project Pie in what at the time was seen as the beginning of a consolidation trend in the space.

The fast-casual pizza sector has a handful of strong chains, led by MOD Pizza and Blaze Pizza, which grew system sales by 80% and 49% in 2017, respectively, according to Technomic, while chains such as &pizza have received huge investments.

On the other hand, Buffalo Wild Wings last year shuttered its PizzaRev locations and sold the brand to an investment firm run by former McDonald’s CEO Don Thompson.

For Pieology, shifting to franchising would enable the chain to grow more easily, while taking advantage of a growing trend of franchise-focused restaurant chains.

The chain says it is still adding locations, with recent openings in Utah, Iowa and California. It is planning to enter the New York City market this year, with openings slated for Brooklyn and Manhattan.

And the company is targeting international markets. The chain opened a location in Mexico City in February. It also reached an agreement with Comess Group to operate locations in Spain. The franchisee there plans a unit in the Santiago Bernabeu Stadium this year. The stadium is home to the Real Madrid soccer team.

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