How pizza tech startup Slice is taking its $85 million in funding to help independent pizzerias beat Domino's at its own game

Slice Rewards 2

Domino's generated more than 70% of its sales through its digital channels last year thanks to top-of-the-line tech solutions the pizza giant provides its franchises to drive e-commerce orders. By contrast, most independent pizza operators are stuck in the dark ages.

Some use pen and paper to take orders or low-tech cash registers, said Ilir Sela, the CEO and founder of the pizza-ordering platform Slice.

"These are highly unsophisticated owner-operated businesses that are predominantly offline," Sela said.

Sela plans to level the playing field for mom-and-pop pizza joints. Slice announced Tuesday plans to roll out two new tech platforms: Slice Register, a point-of-sale system, and Slice Rewards, a loyalty program. 

By digitizing the ordering process and adding a loyalty program, Slice aims to drive more e-commerce sales to its 15,000 independent pizza partners who have fallen behind Big Pizza when it comes to technology, Sela said. 

"The goal is to keep local [businesses] thriving and empower these small businesses with the tools and services that are typically enjoyed by big franchise companies like Domino's," Sela said. 

Sela founded Slice more than a decade ago to give pizza operators tools to run their e-commerce business. Slice, which has raised $85 million, handles everything from online orders to digital marketing. 

Unlike third-party delivery companies that don't share consumer data, Slice provides customer data and insights to operators so they can optimize sales. It also charges a flat fee of about $2.25 per order. The fee is the same, whether it's one pizza ordered from the Slice app or 10 pizzas. 

Ilir Sela, CEO Slice

Most third-party delivery companies charge restaurants anywhere from 20% to 30% per order, which eats away at profits. 

Slice estimated that it has saved small businesses more than $200 million by charging less for digital orders compared to third-party apps such as DoorDash, Grubhub, or Uber Eats

But over the years, Slice's success has led to disruption for its merchants. Most didn't have sophisticated POS systems to handle the large volume of orders that Slice was driving to their restaurants, Sela said.

"In some cases, we're managing over 50% of their volume [and] that was starting to disrupt their workflow," Sela said.

For example, on a typical Friday night, a busy pizza parlor might generate 200 orders from a variety of channels — the Slice app, fax and phone orders, and walk-ins. 

All those orders would have to be processed by pen and paper or entered into an old-school POS system that wasn't designed for high-volume pizza orders.

"It's a massive headache," Sela said.

In November, Slice took a step to solve that problem when it bought Instore, a San Francisco iPad POS system.  

Slice, which has added about 2,000 restaurants since late spring, did not reveal the purchase price. 

Matt Niehaus, the former CEO of Instore, is now Slice's senior vice president of payments. He and Slice's tech team have designed the Instore POS system to meet the unique demands of Slice's 15,000 pizzeria partners.

Now called Slice Register, the POS system is expected to streamline all orders into one channel.

Installation of Slice Register is expected to be offered for free to pizzerias to get them up and running in the first few months. 

Niehaus said merchants will get "close to $3,000 in hardware from Slice" and pay no software fees in 2021. The only thing pizza restaurants will have to pay are processing fees, he added. 

"We're making this very, very attractive to them on multiple levels. But the ultimate goal is to bring them into the digital age and make them as big and as profitable as the Domino's franchise," Niehaus said. 

Slice is layering the digital payment system with a new rewards program, borrowing from the same playbook as large chains that have turned to revamped loyalty programs during the pandemic

On Tuesday, Slice is launching a universal rewards platform for every pizzeria on its network.  When customers order through the Slice app, a pizzeria's website, or Google, they earn points. 

Rewards can be used at any pizza restaurant on the Slice network, making Slice's loyalty program one of "the largest rewards programs of its kind," Sela said. To put that in perspective, Domino's has about 6,400 stores in the US.

Launching the two technology platforms ultimately helps Slice continue to convert analog orders into digital transactions. 

For example, a customer ordering a pizza delivery over the phone will now be entered into the Slice Register system. At that point, the restaurant captures valuable consumer data such as phone numbers and addresses.  

This allows the restaurant to automate marketing to a customer and streamline orders. 

Once you're in the system, Niehaus said employees answering the phone can call up a customer's past orders because it's now stored in Slice Register. That saves time especially if someone is re-ordering the same meal. 

But more importantly, the pizza restaurant can incentivize consumers to order online by giving them a $5 off coupon on their next digital purchase. Moving those customers online is "the best thing" for pizzerias because many lose revenue when staff gets overwhelmed with phone and FAX orders, Niehaus said.

"That is what we're promising to do for our shops is drive their business more online because that is their lowest cost channel at scale," Niehaus said.

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How pizza tech startup Slice is taking its $85 million in funding to help independent pizzerias beat Domino's at its own game