Project Pie receives growth investment

Fast-casual pizza chain Project Pie said Monday that it has received a significant investment from private-equity firm Lee Equity Partners with plans to ramp up growth.

Terms of the investment were not disclosed, but Project Pie founder and chief executive James Markham described the deal as a “very significant investment.” He noted that the New York-based private-equity firm “didn’t take a majority stake right away,” as the brand launches an aggressive growth trajectory of between 200 to 300 units within five years, both domestic and international.

Based in Carlsbad, Calif., Project Pie has six units open, including three in the U.S. and three in the Philippines. The chain expects to reach 20 domestic locations before the end of 2014.

Lee Equity Partners, which also owns the Papa Murphy’s Take ‘N’ Bake Pizza chain based in Vancouver, Wash., is one of a growing number of investors targeting the rapidly expanding fast-casual pizza niche.

Last year, Atlanta-based private-equity firm Georgia Oak Partners made an undisclosed investment in the Your Pie chain, based in Athens, Ga. Chipotle Mexican Grill is backing the Boulder, Colo.-based Pizzeria Locale concept and Buffalo Wild Wings Inc. took a minority stake in Los Angeles-based PizzaRev last year.

Project Pie was founded in October 2012 by Markham, who previously helped develop and launch the fast-casual pizza concepts MOD Pizza, based in Seattle, and Pieology, based in Fullerton, Calif.

Markham said the partnership with Lee Equity Partners validates his efforts in developing a concept that will be “a great brand — the next Chipotle — not just a brand people know.”

Project Pie will grow as both a franchise and company-owned chain, Markham said. The goal is to maintain a ratio of about 30-percent of the system company owned to better understand how to support the franchise side, he added.

“They’re the big boys, not some celebrity backer,” Markham said of Lee Equity Partners. “I feel unbelievably fortunate to be involved with a group like Lee Equity Partners, which really knows the formula for growth and how to do it properly.”

Currently, Project Pie has signed four domestic franchisees with commitments for 51 locations in four markets: San Diego, Los Angeles, the San Francisco Bay area and New York City.

Over the next few months Project Pie units, which are typically about 2,000- to 2,200-square feet, are scheduled to open in San Diego, the Los Angeles suburbs of Valencia and Glendale, Walnut Creek outside San Francisco, and in Manhattan, said Todd Owen, Project Pie’s vice president of franchise development. A company-owned unit is scheduled to open this year in Boulder.

The concept has an average check of about $12.41, with two tiers of pricing: a cheese pizza is roughly $6 and a build-your-own pizza with unlimited toppings is about $7.85, though pricing may vary by market.

Thomas H. Lee, president of Lee Equity Partners, said in a statement, “I see the tremendous growth potential for a brand like Project Pie, which is why we’re excited to help grow the business alongside James Markham to be the leader in the fast-casual pizza segment. James is a pioneer and visionary in this industry, and we believe that this is a brand and concept which can succeed across the country and internationally.”

Lee Equity Partners acquired the Vancouver, Wash.-based Papa Murphy’s Take ‘N’ Bake Pizza chain in 2010. Last year, Papa Murphy’s was rumored to be a possible candidate for an initial public offering.

Lee Equity Partners has been involved in a number of other high-growth consumer-oriented acquisitions, including Snapple Beverage Corp., General Nutrition Cos., PETCO Animal Supplies Inc., Ghirardelli Holdings Corp., Banana Boat and Sterling Jewelers Inc.

North Point Advisors LLC served as exclusive advisor to Project Pie for the transaction with Davis Wright Tremaine LLP as legal counsel. Lee Equity was represented by Dorsey & Whitney LLP.

Contact Lisa Jennings at [email protected].
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