Slice: Pizza unchained

Ilir Sela likes to call himself “third-generation pizza”. A 38-year-old Albanian immigrant, his extended family has owned so many pizzerias he has trouble counting them all. So when he launched a business, in 2010, to offer independent pizzerias the technology to compete with the likes of Domino’s, Little Caesars, Papa John’s and Pizza Hut, the first thing he did was to sign up his brother-in-law, his cousins and his friends.

Among them was Blerim Marku, the manager of Pizza Club in Edgewater, New Jersey, and a third cousin of Sela’s who grew up with him in the New York City area. At the time, Pizza Club was doing its takeout and delivery business by phone, the old-fashioned way, despite knowing that “Papa John’s and Domino’s were making a killing with ordering online,” Marku says. The problem was that small pizza shops weren’t tech-savvy enough to build custom online ordering systems, and digital aggregators like Grubhub and Seamless were far too expensive.

When Sela offered his cousin an inexpensive way to take orders digitally—a service he called MyPizza—Marku enlisted. The result: Pizza Club sales, which had been lukewarm, heated up, and Slice is now helping the shop do around $1 million a year, in line with a typical Domino’s location. “We needed it,” Marku says.

Today Pizza Club is one of more than 8,200 pizzerias in 2,200 cities and towns in every state across the country employing Sela’s pizza-ordering platform, now rebranded as Slice. Backed by $20 million in financing, New York City-based Slice is growing fast. It processed about $100 million worth of deliveries last year. Forbes estimates that with expected orders of $250 million this year, Slice should produce $25 million in revenue.

It has the potential to become much larger. Pizza, after all, is a $45 billion market in the United States. But as the chains have expanded digitally, local pizzerias have fallen behind. Domino’s, in particular, has been credited with reinventing itself as a tech company, cranking up online sales to more than half of total sales in the US. While independent pizzerias represent 55 percent of the country’s 75,000 pizza restaurants, they account for a declining 41 percent of sales, according to trade publication PMQ Pizza Magazine. Yet Sela believes consumers have been abandoning local shops—even those with fresher ingredients, better flavours and ties to their communities—mostly because they lack the ability to take mobile orders. “The vision,” Sela says, “was how to unite local pizza to provide technology and convenience. Papa John’s and Domino’s and Big Pizza are kind of eating their lunch.”

Sela’s family comes from a small town called Debar, on the border of Macedonia and Albania, that is crazy about pizza. It has about five pizzerias for just 15,000 people, and its expats have opened at least 50 pizza spots in the US. When the Selas arrived in the 1970s, they moved to Staten Island, where they, too, started opening pizzerias and where ethnic Albanians, many of whom immigrated to the US through Italy, have long been prominent in New York City’s pizza community. “My grandfather and my uncle and my dad ran Charlie’s Pizza on 75th and Third in the ’70s, and then opened John Anthony’s, now Slice of Brooklyn,” he says. “It’s a pretty small community, and they were some of the original pioneers.”

As much as Sela loved pizza, he decided to study technology. In 2003, after getting a computer science degree from City University of New York-College of Staten Island, he launched Nerd Force, a web-design company that morphed into a tech-services firm that sent IT guys around in yellow vehicles. In 2008, he sold Nerd Force for $500,000.

Sela used the money to start MyPizza, offering local shops two benefits. First, selling digitally increases order size as customers tend to add profitable items like mozzarella sticks or a 2-litre soda. Sela says his clients’ average order size has risen from $18 over the phone to $30 with the platform. Second, with online sales comes data, helping local shops better serve and target customers with loyalty programmes and discounts.

Early on, the company was just Sela and an engineer working on the website. He didn’t have much of a marketing budget, so he wrapped banners around a car and parked it in front of shops he hoped to enlist. “I would make sure the owner saw the car,” he says. “That gave us credibility, and they thought we were bigger than we were.” The guerilla marketing helped Slice expand to more than 80 restaurants in the New York area with no outside financing and minimal staff. He kept costs low by setting up a back office in his hometown in Macedonia, where he now has 300 employees, mostly doing data entry and account management.

Slice’s selling point against larger, non-pizza-specific ordering platforms starts with price: It charges $1.95 an order (plus a small percentage to cover credit-card fees) regardless of the size of the order, which is far lower than the 12 percent to 35 percent cut that Grubhub, DoorDash, Postmates, Uber Eats and other services take. “Pizza is a value product,” Sela says. “In order to pay a 25 percent commission, [local shops] need to raise the price of a large pizza from $12 to $16.” But that, Sela says, “forces more people to buy Domino’s and Papa John’s.”

The fees were a big reason Matthew Porter, co-owner of Sofia Pizza Shoppe in New York City, signed up. Although Porter was also using Seamless, he worked to move his customers to Slice by putting stickers on his boxes and offering discounts on Slice orders.

“Financially, it just made sense,” he says. In addition, while Grubhub and the other ordering systems aggregate as many restaurants as they can—and then charge them an extra fee to be displayed prominently on the site—Slice does not encourage customers to try new restaurants or different cuisines.

Sela was already doing $40 million in pizza orders in 2015 when, looking for funds and expertise to scale the business, he took his first seed funding. Then last spring, Sela and Ryan Scott, Slice’s chief marketing officer and a former executive at Grubhub and Seamless, convinced Jeff Richards, managing partner at GGV Capital, to fly from Silicon Valley to meet them at the International Pizza Expo in Las Vegas.

Sela, an outgoing and energised salesman, pitched the opportunity to build a business that could compete with Big Pizza by uniting tens of thousands of mom-and-pop shops. He also sees opportunities for Slice to help its ­customers get better pricing on boxes and menus—and to ­expand outside the US.

“As a venture capitalist,” Richards says, “so many times we hear tech people trying to work inside an industry they are trying to learn. This was a guy from the industry, who grew up with red sauce in his veins, and who knew there was a huge problem.” And huge ­problems, Richards and Sela know, create huge ­opportunities.